Life is beautiful; life’s too short; live for today; carpe diem. These are some of the clichés we frequently use in our daily exchanges at work, over a coffee, at the gym or when with family and friends. We should all have a good quality of life at the core of our goals. Inevitably satisfying our daily needs, wants and luxuries drives the application of our revenues in a manner where short-term goals often divert our attention from future well-being.
It is, hence, rather sad that our focus on the pleasures of a well-funded and pleasant lifestyle today is often short-sighted and rarely long-term. Notwithstanding a rather generous welfare system, government pensions provide us with little room to enjoy present-day standards of living that are funded by much healthier salaries. Rarely do we come to terms with the reality that, upon the attainment of retirement age, we need to reduce our travelling, curtail our regular visits to our favourite restaurants and stop indulging in other pleasures of life which hungrily eat away at our credit card balance. It is quite ironic that when one has more time to enjoy life, one has less money to spend.
I am quite sure that, many on the brink of retirement, are feeling this pain. Similarly, those with no personal pension provisions can easily relate to this scenario. This is further corroborated by the low rate of private pension plans per capita contracted by the Maltese population, in comparison to our European counterparts.
I am quite sure that many on the brink of retirement are feeling this pain
Tax benefits
As we all digest these compelling thoughts on the subject, there has probably never been a more appropriate time for us to ensure that we make provisions for a personal pension plan to see us through our golden years.
With the government providing tax rebates of 25 per cent on annual personal pension plan contributions, up to €3,000 annually, the incentive to pay yourself first is too attractive to ignore. The 25 per cent tax rebate, subject to a maximum tax refund of €750 annually, means that in reality you would be contributing for nine months out of 12.
Another incentive is the fact that under current legislation, at retirement, that is, between the ages of 61 and 70, subject to a minimum number of years of contributions to the plan, you have the option to withdraw a tax-free lump sum equivalent to 30 per cent of the pot.
Limited top-up offer
Given the current low stock market values and a top-up of €175, if you purchase a unit-linked personal pension plan up to the end of October 2022, taking the plunge now could result in an investment opportunity. Additional benefits abound, especially on the investment side, with a wide range of underlying funds that you may choose from and that enable you to reach your financial objectives in an efficient and effective manner.
Ample investment choice
Our unit-linked personal pension plan offers the possibility to link your contributions up to 10 different funds. There are over 50 funds to choose from, managed by Fidelity Investments, Blackrock, Invesco, Vilhena SICAV Funds and BOV Asset Management.
Whether opting for a combination of Vilhena SICAV Funds, a Fidelity Lifestyle Fund or BOV Asset Management’s flagship Portfolio Funds, you have the facility to gradually accumulate a nice tidy pot to supplement an otherwise meagre government pension.
It is then that you could look back and say goodbye tension, hello pension.
For more information, call BOV on 2275 1627 or send an e-mail to bancassurance@bov.com to set up an appointment.
Simon Azzopardi is chief wealth management officer at BOV.
Disclaimer: Issued by Bank of Valletta p.l.c., 58, Triq San Żakkarija, Il-Belt Valletta VLT 1130. Bank of Valletta p.l.c. is an enrolled Tied Insurance Intermediary under the Insurance Distribution Act, Cap. 487 of the Laws of Malta for MAPFRE MSV Life p.l.c. (MMSV). MMSV (C-15722) is authorised under the Insurance Business Act, Cap. 403 of the Laws of Malta. Both entities are regulated by the Malta Financial Services Authority.
This is a limited time offer ending 30 September 2022. MAPFRE MSV Life reserves the right to close this offer earlier. The Product is manufactured by MAPFRE MSV Life p.l.c. and distributed by Bank of Valletta p.l.c.
Investment should be based on the full details contained in the relative Key Features Document and Key Information Document available from www.bov.com.
If you stop paying your plan before the chosen retirement date, you may not get back as much as you invested.
If you invest in this product, you will not have access to your money before the retirement date.
The income you get from this investment may go down as well as up and is paid gross of any tax applicable.
MAPFRE MSV Life will notify the Inland Revenue that you have made contributions to a Personal Pension Plan. After taking any cash lump sum the remaining fund must then be used to provide you with an income which may be subject to Income tax. Tax on this product is not withheld at source. Any statement about taxation is based on our understanding of current law and tax practice. Future changes in law and taxation, or your own financial circumstances, could affect the treatment of the Plan and the amount of tax payable. In order to ascertain your exact tax status, you should seek specific and professional tax advice in relation to your tax obligations under the Personal Pension Plan.