International Pensions 106
to the appeal of Maltese policies when it comes to the regulation and taxation of international pensions. Around 90 per cent of pension schemes based on the island serve the UK market. The surge in pension schemes licensed in Malta can also be partially explained by the fact that changes to the QROPS legislation in 2012 meant that jurisdictions that failed to comply, such as Hong Kong, Guernsey, Cyprus and New Zealand, were forced to de-list a large proportion of their schemes, with some operators relocating to Malta. Another indication that Malta provides an ideal base for pension vehicles is that pension operators from countries other than the UK have begun to consider the island, with a Dutch pension operator in the process of setting up on the island. A New Framework
International pensions are currently governed by the Special Funds (Regulation) Act 2002. However, this will be replaced with the Retirement Pensions Act which has been approved by the Maltese Parliament and is expected to come into force in 2014. This reform occurred due to the fact that the outgoing legislation only covered occupational, or ‘second pillar’, retirement schemes rather than explicitly catering for personal pension services. The new law aims to solidify the regulatory and legislative framework relative to both occupational and personal pension plans. While this reform will also affect the local market, as the government is keen to introduce third pillar pensions locally, the new legislation sets out a framework that will go further to attract multinationals, European employers, high-net-worth individuals and wealthy expatriates to base their pension provisions in Malta and benefit from a costcompetitive structure within a tax-efficient framework. As in other areas of financial services, Malta’s approach to legislation and regulation in this sector aims at providing the necessary safeguards to ensure the smooth operation of pension schemes and pension funds. The regulatory framework, which requires the registration and ongoing supervision of pension schemes, as well as service providers and scheme administrators, investment managers and custodians through the MFSA, makes Malta an attractive location for accrued pension funds for expatriates living around the globe. The country’s new pension legislation is expected to be well received internationally and could lead to a new wave of licensing once it is in force. However, while the industry does not expect the number of schemes to go to the hundreds, they do expect to see significant funds under management being brought to the island.
5,000+ the number of estimated members in pension schemes licensed in Malta