Maltese private pension holders multiply eight-fold since 2019

The number of Maltese residents contributing to a private pension plan increased eight-fold between 2019 and 2023, with the “exponential” increase driven by the growing interest in pension plans by domestic households.

Interest in such schemes is no doubt helped by generous incentives that see 25 per cent of the amount invested, up to €3,000, being returned as a tax credit.

However, little such interest is apparent on the occupational pension front, with just three of the 48 pension funds registered in Malta being tied to specific employment.

A new review of Malta’s pension funds by Renan Dos Santos Carinha, an analyst working at the Central Bank of Malta’s Financial Stability Surveillance Office, reveals that local residents remain a small minority of all Maltese pension plan holders.

In fact, Malta’s pension industry is largely geared towards foreign savers, which constitute some 85 per cent of all members of Malta-domiciled pension funds.

This nonetheless represents a major increase in the number of local resident pension fund holders, which made up less than three per cent of the total in 2019.

Currently, there are no Maltese residents who have retired and are receiving benefits from their funds. Mr Dos Santos Carinha wrote: “It is worth noting that resident members are entirely concentrated in four pension funds, which currently have no retired members.”

The increased interest in pension funds in the last few years meant that their overall assets grew by nearly 20 per cent between end 2019 and June 2024. Total assets under management by the domestic pension funds reached over €8.2 billion in mid-2024, down from the peak of €8.8 billion seen in 2021.

In terms of geographical exposure, the largest share of assets were securities issued by entities based in countries other than the euro area, the vast majority situated in British Crown Dependency territories, the United States and the United Kingdom, representing around 63 per cecnt of the total assets by mid-2024.

The euro area accounted for 25.4 per cent of the overall assets. Meanwhile, domestic assets were limited to 12 per cent of the overall portfolios, largely in equities.