The Plan is aimed at Malta resident employers who wish to promote staff loyalty and encourage alignment withthe company’s long-term business objectives.
It is generally understood that management can take short-termism too far and maximise short-term profits at the expense of the long-term health of the business.

This can take the form of, for example:

Failure to carry out necessary maintenance so that machinery breaks down in the future;
Failure to effectively train the staff so that the company falls behind current market best practice;
Failure to apply sufficient resources, so that ultimately service suffers.

The Plan allows the company to establish a segregated pool of assets which can be paid to staff at some future time, when certain conditions have been fulfilled. The assets are held by an independent trustee (STM Malta) who keeps them separate from the business assets, so that employees entitled to benefit know that the assets
have been set aside and do not form part of the company’s working capital.

The types of benefits payable can be tailored precisely to the needs of the business, and we give examples of how the Plan could be used. This list is not exhaustive and a Plan could utilise more than one strategy:

End of Service Plan – A company may put aside an amount to pay an end of service bonus for “good” leavers. Payment may be conditional on the employee staying with the company for a minimum number of years.
Bonus Scheme – A bonus is often paid immediately, and once it has gone it has gone. It is possible to structure the Plan so that a bonus accrued in one year is conditional on continuing good performance with the ability to claw back part or all of the bonus if future conditions are not met.
Share Option Scheme – The company may place shares into the scheme and any bonus would then be linked directly to the metrics which value the shares of the company. In this way, staff become interested in the company as owners, through the scheme.

These few ideas are intended to give a flavour of the flexibility of the Plan and our staff will be happy to explain how your objectives could be achieved.

There is no mandatory investment strategy to be applied to the Plan. In our experience, different employers have different preferences. Where the objective is to hold shares in the employer, there is no investment alternative. Where the employer wishes to guarantee that a minimum level of payment is available at a future point in time, cash may be the only practical alternative, even if little or no interest can be earned on the fund. It may be, though, that the employer wishes to create a savings scheme, similar to a pension arrangement, where the fund is invested for long-term growth. We are able to develop risk weighted alternatives for longterm savings that include stock market alternatives. In such a case, STM Malta will be keen that the scheme invests in a diverse range of investments so as to avoid the

The content is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this publication to make (or refrain from making) any investment decisions or recommendations. STM Malta Pension Services Limited (including any companies of STM Group of companies and the officers and employees thereof) cannot accept responsibility for any loss caused as a result of any action taken or refrained from being taken upon the contents of this publication.

STM Malta Pension Services Limited (‘STM Malta’) is registered as a Retirement Scheme Administrator with the Malta Financial Services Authority. It is also authorised to act as trustee or co-trustee to provide fiduciary services in terms of the Trusts and Trustees Act. STM Malta Pension Services Limited is part of STM Group Plc, a multi-jurisdictional financial services group listed on AIM, a market operated by the London Stock Exchange.