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 of 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 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 2. Two Thirds Pension The State Pension is based on a maximum of two-thirds of your income, however there is a cap called the q Maximum Pensionable Income 3. Maximum Pensionable Income For those born aRer 1961 it is €21,749 q 4. Maximum State Pension People reDring today can receive a maximum of €11,895p.a. = €229 per week q Those born aRer 1961 will be able to receive up to €14,500p.a. = €278 per week or €1,200 per month q

Income in re7rement 1. How much will you need? Very personal and varies according to your current salary and lifestyle q Generally you need two-thirds of their salary in order to maintain your lifestyle q The current State Pension will provide up to two-thirds for those earning up to q €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 Property? Either as an investment or by selling your home? q Savings and investments q Personal Pension Plans (a savings plan eligible for tax rebates) q

How do Pension Plans work? 1. ContribuDons 2. Benefits 3. Investments

How Personal Pension Plans Work Begin Saving Working Life ReDrement Age 15% TAX REBATE 15% TAX REBATE 15% TAX REBATE CONTRIBUTIONS CONTRIBUTIONS CONTRIBUTIONS PENSION UP TO 30% FUND AT TAX FREE RETIREMENT CASH PENSION FUND REMAINING PENSION FUND TO FUND PROVIDE AN PENSION INCOME FOR FUND LIFE

A WORKED EXAMPLE SAVINGS OF €1000 PER YEAR 35 YEARS 65 YEARS OLD OLD 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: €54,419 FUND SIZE €16,326 TAX FREE CASH €2,476 ANNUAL PENSION assuming an annuity rate of 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 of €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 The amount of income you receive in reDrement will depend on the size of your pension plan and q annuity rates at that Dme (interest rates) You will have many opDons as to how the income is paid but will be offered two main choices: q Annuity Provides a guaranteed income for the rest of your life q You will have the opDon for the income to conDnue to your spouse q You may also choose to protect the remaining value for your heirs q Programmed Withdrawals Enables you to keep the fund invested q You withdraw an income each year q Income not guaranteed for life but has the potenDal to increase over Dme q The choice of income is made at re7rement – not now

INVESTMENTS • MSV WITH PROFITS Provides capital guarantees • Offers smoothed returns in the form of annual bonuses FUND • Bonuses are tax free in the hands of the policyholder Bonus performance – past 11 years: � 5% 4.50% 4.50% 4.50% 3.80% 3.45% 3.45% 3.35% 3.35% 4% 3.25% 3.10% 2.45% 3% 1% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Common Ques7ons About Personal Pensions 1. How do I get the tax rebate? MSV Life noDfies the Inland Revenue Department of the amount you have contributed. q The IRD sends you a cheque (employed) or makes a deducDon from your tax computaDon (self q employed) equal to 15% of the contribuDon. 2. What happens if I die? If you die before reDrement the full fund value (your premiums and bonuses earned) plus 1% is q payable to your heirs. Death aRer reDrement depends on what income opDons you make at reDrement. q 3. I already have an MSV ReDrement Plan, will I lose that? MSV is offering the opDon for you to stop paying your reDrement plan premiums and begin a q 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? We suggest saving €1,000 per year in a Personal Pension Plan, to make the most of the tax q 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 COMPLETE TOP LUMP REBATE FLEXIBILITY UPS SUM Eligible for a 15% Complete flexibility Ability to increase Up to 30% of the tax rebate with regular your savings by fund value as a on your contribuDons: paying a lump sum lump sum contribuDons • Increase at any Dme • Decrease INVESTMENT DEATH • Stop BENEFIT PENSION • Restart INCOME All without any MSV With Profits – penalDes or charges 101% payment on Capital Guaranteed Pension income death before payable for life reDrement

Personal Pension Plans Summary Key Features: Designed to supplement the State Pension when you reDre q Personal contribuDons eligible for 15% tax rebate from the Government q Plan is in your own name q You keep the plan even if you change employer in the future q Benefits can start between age 50 and 75 q At reDrement: q Up to 30% available as a tax-free cash lump sum q Balance or proceeds to be taken as a pension income q ContribuDons can be increased, decreased or stopped at any Dme q Investments q MSV With Profits – offering capital guarantees and security q

“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 of 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.