In light of the launch of a regulatory structure for private pensions forwarded by the MFSA the Minister for Finance Prof. Edward Scicluna recently launched the Third Pillar pension scheme, also referred to as the Personal Retirement Scheme which is accompanied by another scheme called the Individual Savings Account. The main aim of the Third Pillar Pension Scheme is to provide the appropriate incentives to motivate Maltese residents to start saving for their retirement.
The Third Pillar Scheme was formulated to provide for a reliable retirement scheme with the aim of saving for a pension through investment in private pension packages offered by Maltese banks, life insurance companies and other financial organisations. Naturally insurance firms have a direct interest in the Third Pillar Pension Scheme and their contribution towards the functioning of this scheme depends mostly on the types of retirement insurance packages which they will be offering to any interested individuals.
This scheme would give individuals who are paving their way for their future retirement, some peace of mind. In fact the Personal Retirement Scheme provides for the provision of an annual tax credit of €2,000 and other ancillary benefits might also be provided for which may go up to €300 per family. The benefit payment would start to accrue not earlier than age 50, or later than age 70.
The other scheme, namely the Individual Savings Account may be utilised by families who want to benefit from these retirement incentives. Any interested individuals may open a tax exempt savings account with up to €2,000 per year per couple invested in these saving accounts. The account holder would also be able to withdraw the funds at any given time.
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