Retirement and Pension Schemes

Source: Dr. Marilyn Mifsud¸ PKF Malta

As published on Lawyer Monthly¸ December 2013


Lawyer Monthly took a look at retirement and pension schemes in Malta and the legal issues that need to be taken into consideration. To this end¸ we speak to Marilyn Mifsud¸

Please introduce yourself¸ your role and your firm.

I graduated doctor of laws and am currently furthering my studies in financial services at Masters level under the auspices of the University of Malta. PKF Malta is an audit and advisory firm that has recently celebrated its 25 year anniversary. PKF Malta is a member firm of the PKF International Limited network of legally independent firms. PKF International operates in the world with severe quality controls to all its member firms¸ guaranteeing the required standards in each country.

What are the main types of cases you are involved in within this practice area?

Our recent involvement in retirement and pension schemes has been largely from a research perspective given the changing financial climate and the effect this has had and will continue to have on the subject.

What are the main challenges to arise?

In April this year¸ the expenditure estimate for Retirement Pensions in Malta for the year 2013 totaled Euro 400¸400¸000¸ showing a steady increase from previous years. It has become common knowledge that the younger generations are likely to not benefit from such government pensions upon reaching retirement despite contributing monthly in social security contributions. On looking into the deficit one finds increased life expectancy and declining birth rates as a chief driver. The main challenge in this instance arises from Malta following a ‘pay-as-you-go’ approach in view of pensions which is not buttressed and supplemented by further top-up contributions of both voluntary Business and Securities Associate at PKF Malta. and mandatory nature. While these options have variously been explored at national level the further challenge lies in the consequences of the recent financial climate shift downwards which has so far rendered idyllic solutions in theory pragmatically unfeasible.

How do you navigate them?

It has been proposed in unofficial circles that the solution could lie in the setting up of a governmental fund that would be allowed to accumulate sufficient and substantial monies without utilizing the same on an ongoing basis as currently takes place. Monies from such fund could then be utilized by the government specifically to alleviate the deficit crunch on pension payments.

Have there been an