One of the key benefits for employers is the entitlement to a tax credit amounting to 25% of the amount contributed to the pension scheme, capped at an annual tax credit of €750 per employee. 

Another benefit relates to the tax deductibility of employer contributions to approved pension schemes as a business expense, up to an annual deduction of €2,000 per employee. By contributing to their employees’ pension funds, employers not only invest in their workforce’s future but also enjoy tax relief on these contributions, reducing their overall tax liability on their income.

For employees, contributions made by their employers to an occupational pension scheme for their benefit do not constitute taxable fringe benefits. This is distinct from other employee benefits which very often would trigger tax implications for the employees.

Investment income generated within approved pension schemes is exempt from Maltese income tax (except for income derived from Maltese immovable property), providing a tax-efficient environment for growing retirement funds. This favourable tax treatment ensures that pension savings can accumulate and compound over time, maximising the long-term benefits for employees.

Employees who also make contributions to the occupational pension scheme will benefit from an annual tax credit of 25% of the amount contributed, up to a maximum annual tax credit of €750.

Certain tax benefits are also available to employees when withdrawing income from the pension scheme, upon retiring.