WorkSave Pension Scheme

Overview

This article focuses on the common core features found in the WorkSave pension scheme in details viz-a-viz the processes, cost and benefits to both the employees and employers

What is the WorkSave Pension Scheme?

The WorkSave Pension Scheme is a recognised Voluntary Occupational Pension Scheme, registered in Malta as required under the Voluntary Occupational Pension Scheme Rules (L.N.123.175). It is a product which Employers can choose to set up for the benefit of their employees’ financial needs at retirement.

With the WorkSave Pension Scheme, employees and/or employers will be able to save regularly whilst in employment so that once they retire, they will be able to supplement their state pension (if any) with additional income.

The product is very flexible and can be tailored to meet an employer’s specific needs and budget.
 

How can I start a WorkSave Pension Scheme for my employees?

• Employers wishing to set up a WorkSave Pension Scheme can contact Laferla on [e-mail] to kick off the process.
• Employers will be required to complete a detailed form which includes information on the Employer, how your specific Scheme will work, and certain declarations and disclosures such as tax information and details of the company’s directors and shareholders.
• Employers will also be asked to provide some documentation, including (as applicable) registration documents, organisational structure, and ID documents of signatories and other relevant individuals.
• Once the onboarding form is submitted and confirmed, Employers will be asked to provide a list with information on those employees who will benefit from the Scheme. If you have a payroll system, this information is usually easily available in the form of a report.
• The team at Laferla will guide you through each step, from your decision on how to set up the Scheme to suit your requirements, to assisting with the Employer onboarding and employee registrations as well as all ongoing management of the Scheme.

What is the term of the agreement entered into by the employer to set up the WorkSave Pension Scheme?

• When setting up the WorkSave Pension Scheme, employers will enter into an agreement for a term of 5 years, which will be renewable annually thereafter. The Agreement sets out the terms of the operation of the Scheme and the rights and responsibilities of the parties.
• Should the Employer decide to terminate the Scheme after the 5 year term expires, they are able to do so by giving notice in due time. Any active Employee Accounts at the time of termination will need to be transferred to another qualifying occupational or personal retirement scheme as required by the applicable rules.

What are the costs to employees who participate in the WorkSave Pension Scheme?

• Annual Management Charge (AMC) 1% p.a. of the Policy Account Balance (calculated daily) in addition to any Annual Management Fees (AMF) and charges applied by the underlying investment funds/strategies.
• There are no additional fees for top ups, or if the employee requests a transfer of their pension account.
• The fees charged to employees are deducted from the account itself, and so there is no additional outlay other than the contribution which has been selected.
• When an employee requests more than 2 fund changes (known as “switches”) within a year, a charge €25 or 0.5% of the switch value, whichever is higher.

What are the costs to employers to set up a WorkSave Pension Scheme?

• There are no initial set-up fees charged to employers.
• No other ongoing charges apply.
• However, if the employer decides to terminate the Scheme and transfer all the pension accounts to another provider, a charge will apply to those employee accounts which have been active for less than 5 years at the time of the transfer. The fee ranges from €40 to €200 per account, depending on the number of years the account has been active for.

What are the benefits of having a WorkSave Pension?

1. Having a private pension in place can give individuals a certain peace of mind that they do not need to rely solely on the state pension for their financial needs once they are no longer earning a salary from employment. The state pension, whilst there to support pensioners at a basic level, is limited to a maximum amount which  is unlikely to be adequate for the majority of the workforce. Furthermore, not everyone may be entitled to the state pension, or to all of it, depending on the individual’s circumstances. It is therefore an important tool for retirement planning.
2. The WorkSave Pension Scheme is flexible and offers employers and employees the flexibility which is necessary to cater for changing circumstances over a number of years. Contributions can be changed or paused as needed, and the diverse range of investment options available, managed by top global asset managers, means that the savings can be selected to suit the individual’s appetite, whether conservative, balanced or aggressive.
3. Employees who participate in the Scheme are also eligible to Death and Disability coverage. In the case of death during the savings phase, 101% of the value of the retirement savings is payable, tax free, to the employee’s beneficiaries. The full account value is payable to the employee, also tax free, in cases of certified permanent disability before they retire.
4. When employers offer this sort of benefit to their employees, it is normally looked upon very favourably, especially when employers participate by making a financial contribution towards their employee’s pension. This is a good way of attracting new talent and retaining your existing workforce.
5. Laferla can also assist employers by explaining the benefits of the Scheme to employees in detail, and remains available to assist with any queries.
6. Furthermore, there are a number of tax benefits available to both employers and employees who contribute to a Voluntary Occupational Pension Scheme.

Need More Help?

Contact support on [e-mail] or submit a ticket.