Social Security and Pensions in Malta: What Employers Pay

Class 1 is the social security class for employees in Malta. Every employed person on a Maltese payroll pays it, and so does their employer, at 10% each of the basic weekly wage. The contribution is worked out week by week, and the wage used is the basic wage, so the calculation is simpler than in systems that apply several separate rates for different funds.

There is one fund and one rate on each side. Self-employed people pay under a different class, which is outside the scope of this guide. The rates, minimums and caps are published each year by the Malta Tax and Customs Administration (MTCA) on its Class 1 rates page.

The employer collects Class 1 through the Final Settlement System (FSS). Each month, the employee’s share is deducted from pay, the employer adds its own share, and both are paid to MTCA with the income tax withheld on the FS5 return. The FS5 is due by the end of the month after the wages were paid. At year end, the FS3 for each employee and the employer’s FS7 reconciliation show the contributions alongside tax, and both are due by 15 February. MTCA collects the money. The Department of Social Security (DSS) administers the benefits that the contributions pay for.

The category depends on the employee’s weekly wage, age and year of birth. For employees born on or after 1 January 1962, the 2026 bands are:

• Category C: basic weekly wage from €229.45 to €559.30, at 10% each side
• Category D: basic weekly wage of €559.31 or more, at a fixed €55.93 a week each, so €111.86 in total
• Category B: employees aged 18 or over earning €229.44 a week or less, at €22.94 each side, or 10% of the wage if the employee chooses
• Category A: employees under 18 on the same low wage, at €6.62 each side
• Categories E and F: students under 18 and aged 18 or over, at 10% with maximums of €4.38 and €7.94 a week

Employees born on or before 31 December 1961 have a lower ceiling. Their Category C runs from €229.45 to €490.38 a week, and Category D is fixed at €49.04 a week each, which caps pensionable pay at roughly €25,500 a year.

The practical point for employers is the cap. A born-1962-or-later employee on a basic wage above about €29,084 a year costs the same in Class 1 as one on €29,084. For professional salaries, that makes the employer’s social security bill a fixed and fairly small line: €55.93 multiplied by the number of contribution weeks.

Because the category turns on date of birth as well as pay, collect the employee’s date of birth and ID details at onboarding and check the category each time pay changes. A pay rise that takes someone from Category C into Category D stops the employer’s contribution climbing, and a move to part-time can push a person back into a lower band.

Every employer in Malta also pays into the Maternity Leave Trust Fund, at 0.3% of the basic weekly wage. It is paid only by the employer and it is capped. For a Category D employee born in 1962 or later, the levy is €1.68 a week. For Category D employees born before 1962 it is €1.47. The low-wage and student categories have smaller fixed amounts, from €0.13 to €0.69 a week.

The levy is collected with Class 1 through the FS5, so it does not need a separate filing. It exists to spread the cost of family leave across all employers. When an employee takes maternity leave, the employer pays the first 14 weeks and can then reclaim the basic wage for those weeks, pro-rata statutory bonuses and the employer’s Class 1 share from the fund through an online claim to DSS. The same fund reimburses employers for the 10 working days of paid paternity leave.

For budgeting, add €87.36 a year per capped employee (€1.68 over 52 weeks). It is a small number, and it is easy to leave out of a cost model by mistake.

Class 1 contributions build an employee’s record with the Department of Social Security, and that record decides what they can claim. The main long-term benefit is the contributory state retirement pension, which depends on the number of contributions paid and credited over a working life. The longer and more complete the record, the better the entitlement.

The same record supports short-term benefits. These include sickness benefit once an employee’s paid sick leave under the relevant Wage Regulation Order or the default rules has run out, injury benefit, Maternity Leave Benefit for weeks 15 to 18 of maternity leave, and the paid weeks of parental leave, which are paid at the sickness benefit rate. DSS publishes the current benefit rates, and they change each year, so check the DSS site before quoting any figure to an employee.

Budget 2026 made one change that affects younger workers: contributions paid before the age of 18 now count towards pension entitlement. Employers do not need to do anything differently, but it is a useful point to mention to student and junior staff.

Employees who have worked in other EU countries can usually have periods of insurance aggregated under EU coordination rules. DSS handles that on retirement, and its guidance on coordination explains the process.

Occupational pensions in Malta are voluntary for employers. There is no general legal duty to enrol staff in a workplace scheme, which is a clear difference from auto-enrolment countries such as the UK. The state pension is the base layer, and anything above it is a benefit you choose to offer.

Employers that want to offer one can set up or join a voluntary occupational pension scheme, or contribute to employees’ personal pension plans. Malta gives tax incentives for some of these arrangements, but the conditions and limits are specific and change from time to time, so take advice and check current MTCA guidance before promising a tax benefit in an offer letter.

Because the Class 1 cap keeps statutory employer costs low for professional salaries, many international employers use part of the difference to fund a pension contribution or a private health plan. That can make an offer more competitive in sectors such as iGaming, financial services and technology, where candidates often compare packages closely.

If you plan to offer a pension, write it into the employment contract with the contribution rate, any matching rules and what happens on leaving. A vague promise of a pension is hard to administer and easy to dispute.

For most professional roles, social security adds about €3,000 a year per employee in Malta. Take a single employee born after 1962 on €70,000 gross in 2026, with statutory bonuses and COLA included in that figure and 52 contribution weeks. The weekly wage is about €1,346, well above the cap, so Category D applies.

The employer pays €55.93 a week in Class 1, which comes to €2,908.36 for the year, plus €87.36 to the Maternity Leave Trust Fund. The total employer cost is €72,995.72, an on-cost of about 4.3% on top of salary. The employee also pays €2,908.36 in Class 1, which is not deductible for income tax.

• Salary: €70,000 including statutory bonuses and COLA
• Employer Class 1: €2,908.36
• Maternity Leave Trust Fund: €87.36
• Total employer cost before any EOR fee, insurance or benefits: €72,995.72

For lower salaries in Category C, the employer pays the full 10%, so the percentage on-cost is higher until the cap is reached. Our full guide to the cost of hiring in Malta works through income tax and net pay as well.

An EOR takes the whole cycle off your hands. With Employer of Record Malta, the employee is registered on our own Maltese company’s FSS payroll, Class 1 and the Trust Fund levy are calculated and paid each month, and any maternity or paternity refund claims are made to DSS for you. Our pricing is a flat fee from €499 per employee per month.