Personal Pension Plans www.laferla.com.mt Group Personal Pension - - PowerPoint PPT Presentation

Personal Pension Plans

www.laferla.com.mt

Group Personal Pension Plans

1 Why save for retirement? 2

How Personal Pension Plans Work

3

Investments Next Steps

Sustainability of State Pensions?

The current system “suffers from both issues

• f fiscal non-sustainability and low pensions

in the long run”

The Maltese Pensions System, An Analysis Of The Current System And OpDons For Reform, World Bank Report, 2004

State Pension

• 1. State Pension Age
• 2. Two Thirds Pension

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The State Pension is based on a maximum of two-thirds of your income, however there is a cap called the Maximum Pensionable Income

• 3. Maximum Pensionable Income

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For those born aRer 1961 it is €21,749

• 4. Maximum State Pension

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People reDring today can receive a maximum of €11,895p.a. = €229 per week

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Those born aRer 1961 will be able to receive up to €14,500p.a. = €278 per week or €1,200 per month

Year of birth State Re7rement Age Year of Re7rement 1952 – 1955 62 2014 – 2017 1956 – 1958 63 2019 – 2021 1959 – 1961 64 2023 – 2025 1962 onwards 65 2027 onwards

Income in re7rement

• 1. How much will you need?

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Very personal and varies according to your current salary and lifestyle

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Generally you need two-thirds of their salary in order to maintain your lifestyle

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The current State Pension will provide up to two-thirds for those earning up to €21,700, but:

a. Will this be sustainable in the future? b. What if you earn more than this? c. What if you want more than two thirds?

• 2. Possible sources of income

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Property? Either as an investment or by selling your home?

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Savings and investments

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Personal Pension Plans (a savings plan eligible for tax rebates)

How do Pension Plans work?

1. ContribuDons 2. Benefits 3. Investments

How Personal Pension Plans Work

PENSION FUND CONTRIBUTIONS 15% TAX REBATE PENSION FUND PENSION FUND PENSION FUND AT RETIREMENT CONTRIBUTIONS 15% TAX REBATE 15% TAX REBATE CONTRIBUTIONS REMAINING FUND TO PROVIDE AN INCOME FOR LIFE UP TO 30% TAX FREE CASH

Begin Saving Working Life ReDrement Age

A WORKED EXAMPLE

35 YEARS OLD 65 YEARS OLD

SAVINGS OF €1000 PER YEAR MSV PERSONAL PENSION PLAN WITH PROFITS

In total you will have saved €30,000 and received €4,500 in tax rebate

The total cost is therefore €25,500

At age 65, assuming a 3.5% investment return we project:

FUND SIZE

€54,419

TAX FREE CASH

€16,326

ANNUAL PENSION

€2,476

assuming an annuity rate

• f 6.5%

A WORKED EXAMPLE

In this example it costs you €25,500. You get back €16,326 as a lump sum, and then receive a pension for life

• f €2,476

i.e. you receive all your money back by age 69, but then continue to receive a pension of €2,476 p.a. for life

Benefits in re7rement

1. You may take up to 30% as a tax-free lump sum 2. The balance is to be taken as an income

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The amount of income you receive in reDrement will depend on the size of your pension plan and annuity rates at that Dme (interest rates)

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You will have many opDons as to how the income is paid but will be offered two main choices:

Annuity

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Provides a guaranteed income for the rest of your life

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You will have the opDon for the income to conDnue to your spouse

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You may also choose to protect the remaining value for your heirs

Programmed Withdrawals

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Enables you to keep the fund invested

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You withdraw an income each year

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Income not guaranteed for life but has the potenDal to increase over Dme

The choice of income is made at re7rement – not now

INVESTMENTS

• Provides capital guarantees
• Offers smoothed returns in the form of annual bonuses
• Bonuses are tax free in the hands of the policyholder

4.50% 4.50% 4.50% 3.80% 3.45% 3.45% 2.45% 3.10% 3.35% 3.35% 3.25%

0% 1% 3% 4% 5% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

MSV WITH PROFITS FUND

Bonus performance – past 11 years:

Common Ques7ons About Personal Pensions

• 1. How do I get the tax rebate?

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MSV Life noDfies the Inland Revenue Department of the amount you have contributed.

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The IRD sends you a cheque (employed) or makes a deducDon from your tax computaDon (self employed) equal to 15% of the contribuDon.

• 2. What happens if I die?

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If you die before reDrement the full fund value (your premiums and bonuses earned) plus 1% is payable to your heirs.

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Death aRer reDrement depends on what income opDons you make at reDrement.

• 3. I already have an MSV ReDrement Plan, will I lose that?

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MSV is offering the opDon for you to stop paying your reDrement plan premiums and begin a pension plan from today with no penalDes. The premiums invested in your reDrement plan will remain invested and conDnue to accumulate bonuses. We suggest that you take out a pension plan and take advantage of the tax efficiency. Please ask Laferla to guide you on this.

• 4. What if I want to save more than €1,000 per year?

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We suggest saving €1,000 per year in a Personal Pension Plan, to make the most of the tax

• advantages. If you wish to save more, we suggest invesDng in an MSV Flexi Plan. This is based on

the same foundaDons, but without the tax credit and with the maturity being paid out fully as a tax-free lump sum, instead of an annuity (regular income). Please contact Laferla for more info.

KEY FEATURES OF THE PLAN

TAX REBATE Eligible for a 15% tax rebate

• n your

contribuDons COMPLETE FLEXIBILITY Complete flexibility with regular contribuDons:

• Increase
• Decrease
• Stop
• Restart

All without any penalDes or charges TOP UPS Ability to increase your savings by paying a lump sum at any Dme INVESTMENT MSV With Profits – Capital Guaranteed DEATH BENEFIT 101% payment on death before reDrement PENSION INCOME Pension income payable for life LUMP SUM Up to 30% of the fund value as a lump sum

Personal Pension Plans Summary

Key Features:

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Designed to supplement the State Pension when you reDre

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Personal contribuDons eligible for 15% tax rebate from the Government

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Plan is in your own name

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You keep the plan even if you change employer in the future

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Benefits can start between age 50 and 75

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At reDrement:

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Up to 30% available as a tax-free cash lump sum

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Balance or proceeds to be taken as a pension income

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ContribuDons can be increased, decreased or stopped at any Dme

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Investments

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MSV With Profits – offering capital guarantees and security

“Someone’s sirng in the shade today because someone planted a tree a long Dme ago.”

Warren Buffe*

Personal Pension Plans

Contact Keith Laferla Phone: 2093 9342 | E-mail: klaferla@laferla.com.mt

We strongly advise that you read the Key Features Document and the Policy Document that outline the terms and condiDons of your plan. Tax legislaDon and the amount

• f rebates you may receive in the future is subject to change and is not guaranteed. Laferla Holdings Ltd. is an enrolled Tied Insurance Intermediary under the Insurance

Intermediaries Act, 2006 for MSV Life p.l.c.. MSV Life p.l.c. is authorised by the Malta Financial Services Authority to carry on long term business under the Insurance Business Act 1998. Both companies are regulated by the MFSA.