Retirement Planning
Is a Retirement plan or a Savings plan the same as a Pension Plan?
At present one cannot buy a Private Pension Plan. In this regard Life Insurance companies are providing Retirement or Savings products as an alternative. These products do not provide a pension however are a good means of savings to have a lump sum at maturity and can be used for retirement planning.
Can I have a life cover with a retirement or a savings plan?
Yes a combined Policy incorporating both a Life Cover and a savings / investment element is possible.
What is the maximum contribution I can invest?
There is usually no maximum, but rather a minimum contribution under a Retirement / Savings Plan. This is usually about € 40 per month.
What is the type of investment in such plans ?
These plans usually take the form of a with-profits (endowment) type of investment or unit-linked. With-profits funds participate in the distribution of the returns of the Life Insurance company, whilst unit-linked funds participate in the equity market.
What is the tax position under such a plan?
Under the current laws of Malta you the Policy Holder is not liable to personal or capital gains tax when the policy matures or on earlier surrender. Furthermore there is no tax payable under the Plan in the case of a death claim.
Is there a maximum or a minimum term under such policies?
This varies from one insurance company to another. However such policies usually have a minimum term of 5 or 6 years. The maximum term is chosen by the client.
After issuing the policy can the investment element be increased?
In addition to the regular premium it is possible to make top-up payments that will be credited directly to your Policy Account. This will obviously contribute towards increasing the maturity value of the plan.
Can I stop the plan?
Most insurance companies offer surrender values if the plan is stopped prior to maturity date. The amount of surrender value, if any, is subject to various factors and to various charges. These should be explained prior to taking out the Policy.
Can the plan be issued in the name of a Child?
Various Child Policies are available. However it is recommended that a detailed discussion is undertaken to evaluate the pros and cons of issuing such a policy.
I am still confused as to which policy is best suited for my needs. What can I do?
Choosing the right savings plan is not an easy task and therefore it is recommended that you make an appointment with your insurance broker to guide you in this regard.