As announced in the last Budget and following the strong demand for the 62+ Malta Government Savings Bond (MGSB) registered in the past four issuances held each year between 2017 and 2020, 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 1959. Individuals born before January 1, 1959, will also be eligible to apply, yet as in the past issuances, 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 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 fifth consecutive year.
"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"
Although the terms and conditions of the 62+ MGSB being issued this year are 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 four 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 his/her existing holdings of the 62+ MGSB.
The interest rate will be three per cent per annum fixed and guaranteed for five (5) 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 sum of €500 up to a maximum of €10,000. The investment will be fixed for five years and will 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 will 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 the year 2026. Yet if the need arises, an individual can encash the full amount invested before its maturity date subject to a penalty equivalent to three months’ interest payable at the rate paid by the bond. No penalty will be charged where the bond is repaid before maturity to the beneficiaries of the deceased bondholder through the transmission causa mortis procedure.
Yet again this year, preference will be given to new eligible applicants made up of (i) individuals born in 1959, therefore they could not have applied in previous issuances of the 62+ MGSB and (ii) individuals born before 1959, who were eligible to apply in the past four issuances but for some reason did not participate. 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 in accordance with an allocation policy to be determined by the accountant general at his discretion.
The interest on this bond will be paid semi-annually in arrears on April 15 and October 15 of each year during the tenor of the bond (unless it is encashed before). The eligible resident individual investing in the 62+ Malta Government Savings Bond – Issue 2021 can opt to receive the interest net of tax (FWT) or gross and declare the gross investment income in the income tax return.
Applications for the 62+ Malta Government Bond – Issue 2021 will open at 8.30am on September 29 and close at 2.30pm on October 4, 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 obtain and lodge it at one of the authorised financial institutions or authorised investment service providers.
Existing holders of the 62+ MGSB who are interested to subscribe in this bond must complete application form ‘B’ (sent by post) and likewise submit it at one of the authorised financial institutions or authorised 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 phone on 2596 7125.