As announced by the Minister for Finance and Financial Services in the last budget and following the strong demand for the 62+ Malta Government Savings Bond (MGSB) registered in the past three issuances held each year between 2017 and 2019, the government is launching another issue of the market-leading 62+ Savings Bond.
This year, for the first time, the bond offer will be offered to all individuals born in 1958. Individuals born before January 1, 1958 will also be eligible to apply irrespective of whether or not they had participated in previous issuances of the 62+ MGSB. Yet, as in all issues held in the past, preference will be given to all eligible applicants who until now have not yet acquired a 62+ MGSB.
The bond offers a relatively good return over the life of the investment for a substantial number of older hardworking savers. It offers an attractive interest rate higher than that currently being offered by the market.
The bond targets individuals born in the year 1958 or before, mainly made up of persons who rely on a retirement pension and some additional income from past savings (investments) who would have saved during their working life. The low interest rate environment continued to affect negatively the pensioners who are experiencing a substantial decrease in their additional income that used to be derived from past savings. This was the main reason behind the government’s decision to reissue the 62+ Malta Government Savings Bond for the fourth consecutive year.
Although the terms and conditions of the 62+ MGSB being issued this year are very similar to previous issuances of this type of bond, this year’s issuance is to be construed to be a separate issue from the previous ones held in the past three years. In this regard, individuals who were eligible to apply in previous issuances irrespective of whether or not they invested in these bonds can apply for up to €10,000 in this year’s issue. Individuals who already acquired a 62+ MGSB can apply for up to €10,000 on top of their existing holdings of the 62+ MGSB.
The interest rate shall be three per cent per annum fixed for five years which is significantly higher than any other rate of corresponding maturity with the same risk profile currently offered by the market. Every eligible individual may invest a minimum of €500 up to a maximum of €10,000. The investment shall be fixed for five years and shall not be negotiable on the Malta Stock Exchange and cannot be transferred to any other individual.
In the case of inheritance, the principal together with withheld interest payments shall be paid to the heirs of the deceased bondholder through the transmission causa mortis procedure. The bond is intended to be held to maturity, that is, until 2025. Yet if the need arises, an individual can encash the full amount invested in this bond before its maturity date, subject to a penalty equivalent to three months’ interest. No penalty will be incurred for early redemption via transmission causa mortis.
Preference will be given to new eligible applicants made up of: individuals born in 1958, therefore they could not have applied in previous issuances of the 62+ MGSB; and individuals born before 1958, who were eligible to apply in the past three issuances but did not participate for any reason whatsoever. After the bonds are allotted to these new applicants, the remaining portion available for allocation will be allocated among the existing holders of the 62+ Malta Government Savings at the discretion of the accountant general in accordance with the allocation policy to be announced after the closure of the issue.
The interest on this bond shall be paid semi-annually in arrears on January 21 and July 21 of each year during the tenor of the bond (unless it is encashed before). The resident eligible individual investing in the 62+ Malta Government Savings Bond – Issue 2020 can opt to receive the interest net of tax or gross and declare the gross investment income in the income tax return.
Applications for the 62+ Malta Government Bond – Issue 2020 will open at 8.30am tomorrow July 15 and close the next day at 5pm, or earlier at the discretion of the accountant general. New applicants will be required to apply on application form ‘A’ which can be downloaded from the Treasury’s website or obtained from and submitted to an authorised financial institution or investment service provider. Existing holders of the 62+ MGSB who are interested to subscribe in this bond must complete application form ‘B’ (sent by post) and submit it at an authorised financial institutions or investment services providers.
More information can be obtained from the Prospectus, which can be downloaded from the Treasury Department’s website at www.treasury.gov.mt or by calling on 2596 7125.