In the spirit of further enhancing the fiscal measures already in place to incentivise the second and third pillar pension system in Malta, the first set of legal notices to be published this year saw the implementation of the changes to the Voluntary Occupational Pension Scheme Rules (“VOPS Rules”) and the Personal Retirement Scheme Rules (“PRS Rules”) that were announced in October 2020 during the Budget Speech for 2021.
The changes at a glance
- The maximum annual tax credit on contributions to a qualifying scheme paid by employers for the benefit of employees was increased from €500 to €750 per employee. On the basis that the tax credit is calculated at 25% of the contributions paid, this means that the maximum annual contributions in respect of which the tax credit is triggered was increased from €2,000 to €3,000 per employee;
- Similarly, the maximum annual tax credit for employees who voluntarily also make contributions into the employer’s scheme increased from €500 to €750. This increase has also been applied to the annual tax credit resulting under the PRS Rules when an individual makes contributions to a qualifying personal retirement scheme;
- The above changes are effective as from year of assessment 2022.
The importance of retirement planning in today’s world
With the ever-changing world and new realities that we are facing, perhaps it is more apt than ever to have a serious discussion on one’s retirement plans. Planning for one’s retirement often gives a person a sense of comfort in knowing that today’s efforts will reap fruit tomorrow. Furthermore, extending such plans to one’s workforce, not only helps the community at large and results in tax and other benefits, but paves the way to ensuring a workforce which will likely be more committed in their role.
- Are you thinking about introducing a work pension scheme for your employees?
- Are you thinking about your own situation after retirement?
Our Pensions Team is well placed to assist you and your organisation in analysing possible advantages and implications of joining a personal retirement scheme or introducing an occupational pension scheme for your employees, and also to provide you with specific advice taking into consideration your particular needs and circumstances.
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