Private pensions schemes are available in Malta. In 2015 the Malta Financial Services Authority (MFSA) introduced a regulatory framework for the provision of private pension retirement products in Malta. Private retirement pension products are governed by a number of rules which are established by the MFSA.
The full rules can be found in the document titled ‘Pension Rules for Personal Retirement Schemes issued in terms of the Retirement Pensions Act, 2011’ which can be found here. (https://www.mfsa.com.mt/pages/viewcontent.aspx?id=599).
The following is a summary of the key rules established by MFSA for private pension retirement products:
- You will receive an annual tax credit of 25% on a contribution ceiling of a maximum of €3,000 – that is a maximum annual tax credit of €750.
- You can access your savings in your private pension retirement scheme between the age of 61 and 70 years.
- You are eligible for a tax credit only if you are 18 years of age when you pension scheme is set up and you are a resident of Malta for tax purposes.
- Your savings in your private pension retirement scheme must be invested in a ‘prudent’ manner and in your ‘best interest’.
- You can access your savings in your private pension retirement scheme as follows:
You may choose to take up to 30% of your savings in cash lump sum. This lump sum is tax free.
You will withdraw a minimum of 70% by means of programmed withdrawals either as an annuity or by drawing down your savings on the basis of sound and prudent principles or a combination of both. This income is subject to taxation.
- On your death the pension scheme will pay your heirs 101% of the value in your account Account.
- A pension scheme may provide your heirs with a payment of the cost of funeral expenses to a certain limit as a partial pre-payment of the Death Benefit.