An Expert Explains: The difference between personal and occupational pension schemes

There are various ways an individual may prepare for retirement. Personal pension plans, of the kind described in previous entries in this series of articles, are an important piece of the puzzle, but there are other factors that one may consider.

For example, if an individual’s workplace offers an occupational pension scheme, it is likely very much worth looking into due to some very advantageous incentives.

In this series of articles aimed at demystifying the world of pensions, BOV Manager within the Bancassurance Office Claire Falzon has explained what private pensions are, delved into pension adequacy, how you can get one going, the attractive tax rebates offered on one’s contributions, the flexibilty on offer, the benefit of having a unit-linked pension plan, and how to take the benefits of the plan upon maturity.

Here, she discusses the difference between a personal plension plan and a voluntary occupational pension plan.

“While most of the rules governing the two schemes are similar, the Voluntary Occupational Pension Scheme has one major difference.

“Such scheme is set up by the employer, whilst the employees have the right to decide whether to join or not.

“While not mandatory, most employers will contribute to the scheme, in addition to the employees’ contributions.

“In using this scheme as an added benefit to their employees, employers get to enjoy tax benefits on their contributions, which makes it one of the most cost efficient benefits which may be offered.

“The current challenges in retaining and attracting talent is pushing more companies to consider this scheme.

“It is worth noting than an individual may contribute both to the Personal Pension Plan and the Voluntary Occupational Pension Scheme, and benefit from tax credits on both plans.”

An Expert Explains is a BusinessNow.mt initiative to improve economic financial literacy by inviting industry leaders to explain technical terms in a manner that can be understood by a general audience. If you would like to suggest a term or concept for our network of professionals to break down, or if you are an expert willing to contribute to this column, send us a message on our Facebook Page.