Malta: Draft bill for mandatory auto-enrollment in occupational retirement plans

Employer Action Code: Monitor

The government has invited public comments on draft legislation to require employers to automatically enroll eligible employees in a defined contribution (DC) plan offered by a licensed provider, unless an employee opts out. The comment period ends on July 17, 2025. The envisioned rollout timing for private-sector employers is by mid-2026 (within six months after implementation in the public sector, which is targeted for the end of 2025). The government's aim is to expand participation in supplemental retirement plans and increase individual retirement savings. Only 2% of the population age 18 to 60 participated in voluntary occupational retirement plans at the end of 2024.  

Key details

• Enrollment: All employers would be required to enroll their employees in a new auto-enrollment (AE) DC plan offered by a licensed provider, with the exception of employees who opt out of participation and the closed group of employees who were already participating in a local employer retirement plan when this new mandate is launched. Employers would be required to provide employees with information about the AE plan (e.g., enrollment date, details for opting out) within four weeks of employee eligibility and before enrollment. Employees who opt out would have 60 days to change their mind; in any case, all employees would be permitted to opt in or opt out once each year. Employers would have to offer re-enrollment annually to employees who are not participating in the AE plan
• Contributions: Employers would not be required to contribute but could do so voluntarily. Employee contributions, deducted from salary by the employer, would be at least 50 euros per month and may be suspended in certain situations (e.g., leave, career break). For public-sector employees, the government plans to match contributions up to €100 per month. The tax incentives for employee and employer contributions to new AE plans (if any) would be the same as, and apparently in addition to, those applicable for contributions to existing Voluntary Occupational Pension Schemes
• Eligibility: Employees between age 18 and 55 (specifically, 10 years before social security retirement age of 65) who are tax residents or habitually work in Malta and who work full- or part-time where the employment in question is their primary source of income would be subject to mandatory auto-enrollment (with the exceptions noted above). Certain ineligible employees may choose to opt in by notifying their employer
• Vehicles: Employers would be required to select and enter into a contractual agreement with a licensed AE plan provider. Plan costs and charges would be subject to caps. The plans offered by providers would be open to multiple unrelated employers. Investments would be decided and managed by the provider, utilizing lifecycle funds. Employee accounts would be portable between providers upon changing employers
• Benefits: In line with current rules for other retirement savings options, payouts from AE plan accounts would commence between ages 61 and 70, with up to 30% of the account being taken as a tax-free lump sum and the remainder in installments or as an annuity

Employer implications

Employers should monitor the progress of the proposed legislation and prepare for its implementation. While employers that already offer a plan would be exempt from the AE mandate for existing plan members, the requirement to offer a compliant AE plan to new employees would eventually mean that such employers would have to manage two plans if they choose to continue the existing plan.

Contacts

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Michael Brough

Senior Director, Integrated & Global Solutions

email Email phone +971 50 189 5816

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Leonie Spackman

Associate Director, Integrated & Global Solutions

email Email phone +44 20 7170 2488

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