PersonalPensionPlans

www.laferla.com.mt

GroupPersonalPensionPlans

1 Why save for retirement?

2 How Personal Pension Plans Work

3 Investments

Next Steps

SustainabilityofStatePensions?

Thecurrentsystem“suffersfrombothissuesoffiscalnon-sustainabilityandlowpensions

inthelongrun”TheMaltesePensionsSystem,AnAnalysisOfTheCurrentSystemAnd

OpDonsForReform,WorldBankReport,2004

StatePension

1.  StatePensionAge

2.  TwoThirdsPensionq  TheStatePensionisbasedonamaximumoftwo-thirdsofyourincome,howeverthereisacapcalledthe

MaximumPensionableIncome

3.  MaximumPensionableIncomeq  ForthosebornaRer1961itis€21,749

4.  MaximumStatePensionq  PeoplereDringtodaycanreceiveamaximumof€11,895p.a.=€229perweekq  ThosebornaRer1961willbeabletoreceiveupto€14,500p.a.=€278perweekor€1,200permonth

Yearofbirth StateRe7rementAge YearofRe7rement

1952–1955 62 2014–2017

1956–1958 63 2019–2021

1959–1961 64 2023–2025

1962onwards 65 2027onwards

Incomeinre7rement

1.   Howmuchwillyouneed?q  Verypersonalandvariesaccordingtoyourcurrentsalaryandlifestyle

q  Generallyyouneedtwo-thirdsoftheirsalaryinordertomaintainyourlifestyle

q  ThecurrentStatePensionwillprovideuptotwo-thirdsforthoseearningupto€21,700,but:

a.  Willthisbesustainableinthefuture?b.  Whatifyouearnmorethanthis?c.  Whatifyouwantmorethantwothirds?

2.   Possiblesourcesofincomeq  Property?Eitherasaninvestmentorbysellingyourhome?

q  Savingsandinvestments

q  PersonalPensionPlans(asavingsplaneligiblefortaxrebates)

HowdoPensionPlanswork?

1.  ContribuDons2.  Benefits3.  Investments

HowPersonalPensionPlansWork

PENSIONFUND

CONTRIBU

TIONS15

%TAX

REB

ATE

PENSIONFUND

PENSIONFUND

PENSIONFUNDAT

RETIREMENT

CONTRIBU

TIONS15

%TAX

REB

ATE

15%TAX

REB

ATE CO

NTRIBU

TIONS

REMAININGFUNDTO

PROVIDEANINCOMEFOR

LIFE

UPTO30%TAXFREECASH

BeginSaving WorkingLife ReDrementAge

AWORKEDEXAMPLE

35YEARSOLD

65YEARSOLD

SAVINGSOF€1000PERYEAR

MSVPERSONALPENSIONPLANWITHPROFITS

Intotalyouwillhavesaved€30,000andreceived€4,500intaxrebate

Thetotalcostistherefore€25,500

Atage65,assuminga3.5%investmentreturnweproject:

FUNDSIZE €54,419

TAXFREECASH €16,326

ANNUALPENSION €2,476assuminganannuityrate

of6.5%

AWORKEDEXAMPLE

Inthisexampleitcostsyou€25,500.Yougetback€16,326asalumpsum,andthenreceiveapensionforlifeof€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"

Benefitsinre7rement

1.  Youmaytakeupto30%asatax-freelumpsum

2.  Thebalanceistobetakenasanincomeq  TheamountofincomeyoureceiveinreDrementwilldependonthesizeofyourpensionplanand

annuityratesatthatDme(interestrates)q  YouwillhavemanyopDonsastohowtheincomeispaidbutwillbeofferedtwomainchoices:

Annuityq  Providesaguaranteedincomefortherestofyourlifeq  YouwillhavetheopDonfortheincometoconDnuetoyourspouseq  Youmayalsochoosetoprotecttheremainingvalueforyourheirs

ProgrammedWithdrawalsq  Enablesyoutokeepthefundinvestedq  Youwithdrawanincomeeachyearq  IncomenotguaranteedforlifebuthasthepotenDaltoincreaseoverDme

Thechoiceofincomeismadeatre7rement–notnow

INVESTMENTS

•  Providescapitalguarantees•  Offerssmoothedreturnsintheformofannualbonuses•  Bonusesaretaxfreeinthehandsofthepolicyholder

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

MSVWITHPROFITSFUND

Bonus performance – past 11 years:"

CommonQues7onsAboutPersonalPensions

1.  HowdoIgetthetaxrebate?q  MSVLifenoDfiestheInlandRevenueDepartmentoftheamountyouhavecontributed.q  TheIRDsendsyouacheque(employed)ormakesadeducDonfromyourtaxcomputaDon(self

employed)equalto15%ofthecontribuDon.

2.  WhathappensifIdie?q  IfyoudiebeforereDrementthefullfundvalue(yourpremiumsandbonusesearned)plus1%is

payabletoyourheirs.q  DeathaRerreDrementdependsonwhatincomeopDonsyoumakeatreDrement.

3.  IalreadyhaveanMSVReDrementPlan,willIlosethat?q  MSVisofferingtheopDonforyoutostoppayingyourreDrementplanpremiumsandbegina

pensionplanfromtodaywithnopenalDes.ThepremiumsinvestedinyourreDrementplanwillremaininvestedandconDnuetoaccumulatebonuses.Wesuggestthatyoutakeoutapensionplanandtakeadvantageofthetaxefficiency.PleaseaskLaferlatoguideyouonthis.

4.  WhatifIwanttosavemorethan€1,000peryear?q  Wesuggestsaving€1,000peryearinaPersonalPensionPlan,tomakethemostofthetax

advantages.Ifyouwishtosavemore,wesuggestinvesDnginanMSVFlexiPlan.ThisisbasedonthesamefoundaDons,butwithoutthetaxcreditandwiththematuritybeingpaidoutfullyasatax-freelumpsum,insteadofanannuity(regularincome).PleasecontactLaferlaformoreinfo.

KEY FEATURES OF THE PLAN

TAXREBATE

Eligiblefora15%taxrebateonyourcontribuDons

COMPLETEFLEXIBILITY

CompleteflexibilitywithregularcontribuDons:•  Increase•  Decrease•  Stop•  RestartAllwithoutanypenalDesorcharges

TOPUPS

AbilitytoincreaseyoursavingsbypayingalumpsumatanyDme

INVESTMENT

MSVWithProfits–CapitalGuaranteed

DEATHBENEFIT

101%paymentondeathbeforereDrement

PENSIONINCOME

Pensionincomepayableforlife

LUMPSUM

Upto30%ofthefundvalueasalumpsum

PersonalPensionPlansSummary

KeyFeatures:q  DesignedtosupplementtheStatePensionwhenyoureDreq  PersonalcontribuDonseligiblefor15%taxrebatefromtheGovernmentq  Planisinyourownnameq  Youkeeptheplanevenifyouchangeemployerinthefutureq  Benefitscanstartbetweenage50and75q  AtreDrement:

q  Upto30%availableasatax-freecashlumpsumq  Balanceorproceedstobetakenasapensionincome

q  ContribuDonscanbeincreased,decreasedorstoppedatanyDmeq  Investments

q  MSVWithProfits–offeringcapitalguaranteesandsecurity

“Someone’ssirngintheshadetodaybecausesomeone

plantedatreealongDmeago.”

WarrenBuffe*

PersonalPensionPlans

ContactKeithLaferla

Phone:20939342|E-mail:klaferla@laferla.com.mt

WestronglyadvisethatyoureadtheKeyFeaturesDocumentandthePolicyDocumentthatoutlinethetermsandcondiDonsofyourplan.TaxlegislaDonandtheamountofrebatesyoumayreceiveinthefutureissubjecttochangeandisnotguaranteed.LaferlaHoldingsLtd.isanenrolledTiedInsuranceIntermediaryundertheInsuranceIntermediariesAct,2006forMSVLifep.l.c..MSVLifep.l.c.isauthorisedbytheMaltaFinancialServicesAuthoritytocarryonlongtermbusinessundertheInsuranceBusinessAct1998.BothcompaniesareregulatedbytheMFSA.