Viewing posts categorised under: Pensions in Malta

The importance of retirement planning

By Jozef Spiteri
This article is published on: 1st March 2022

01.03.22

We are living in a world characterised by innovation in all fields, especially in medicine and healthcare. This vast improvement, the fruit of research and technological development which is ongoing, has contributed to a substantial increase in our life expectancy.

Since people are living longer, it is vital that the funds they build up throughout their working lives will be sufficient for them to live comfortably long into retirement.

Life expectancy for women currently stands between 80 and 83 years, whilst that for men is between 75 and 78 years, far greater than even 10 to 20 years ago, and this will continue to increase as developments in the medical sector continue. With the current retirement age standing at 65, this means that individuals must have enough savings to last for 10 to 15 years, and most likely these funds have to last even longer.

Another point to take into consideration is the lifestyle one wishes to lead when retiring and the other costs which come along with old age, such as medical and care costs. Taking these points into consideration, you may be wondering about the the best course of action to create enough wealth to cover your needs and desires in retirement.

The best way to start is to ensure that you do not keep funds in a bank account . Whilst having a cash reserve set aside is important for any emergencies which could arise, having excess funds sitting idle is a killer to the real value of that money (as in our previous article about protecting your wealth). As inflation continues to increase, the value of money earning low interest rates in savings accounts is declining, and this is why something should be done to counteract this issue.

One possible solution is investing these funds in a diversified portfolio of assets which, in the long run, will produce a return higher than inflation rates (read our article on investment performance here). This will not only protect your hard-earned cash, but it will add value to it, with the aim of providing financial security later in life and to allow, if you’re so inclined, numerous holidays around the world (or to other planets, who knows) after you retire.

Our advisers will be able to give you personalised, informed advice, to find the best possible solution for your circumstances. The service will be ongoing and adjustments can be made as your situation changes. This is something we are proud of, making sure that we are there for all our clients throughout their investment journey. All initial consultations are free of charge and carry no obligation to proceed.

Transferring Irish Pensions Abroad

By Craig Welsh
This article is published on: 7th December 2021

07.12.21

Irish expatriates, or indeed anyone who has previously worked in Ireland, may have accumulated Irish pensions along the way. If it’s unlikely that you will return to the Emerald Isle, it may be worthwhile looking into moving these pension pots.

At Spectrum, we can help you with that.

First, there must be a bona fide reason for wishing to transfer those pensions away from Ireland. It cannot be done just to circumvent Irish taxation. Professional advice from a regulated adviser should be sought.

You may be able to transfer your Irish pension to either a Malta QROPS (Qualifying Recognised Overseas Pension) or a UK SIPP (Self Invested Personal Pension). And no, you don’t have to be living in either Malta or the UK to do so. Moving them can give you far more flexibility by allowing ‘income drawdown’ and avoiding the need to buy an annuity.

Maybe you have more than one pension scheme in Ireland? In that case, you might benefit from consolidating them into one pot. Again, that makes things a bit easier to manage; we can then help you manage the investment side too.

So, a bit more detail;

Drawdown option; no need to buy an annuity. Withdrawing money from an Irish pension can be complex and inflexible, with some pretty complicated rules. For instance, you will find it difficult to access an Approved Retirement Fund (ARF) or an Approved Minimum Retirement Fund (AMRF) if you are non-resident in Ireland. And without an ARF / AMRF you will most likely have to buy an annuity, with no ‘drawdown’ option. Transferring out means you can access lump sum and drawdown options with no requirement to buy an annuity
Pension benefits can be accessible from age 50 upon a transfer, and a lump sum of 30% could be taken. How the lump is assessed for taxation depends on where you are resident, so again, advice is essential
Easier to manage when you live abroad. UK SIPPs and Maltese pensions are a bit easier for ‘expats’ to manage. In Ireland you must firstly transfer €63,500 to an AMRF/Annuity, unless you are receiving €12,700 p.a. in lifetime guaranteed pension annuity. On the other hand, UK and Maltese products have no annuity requirements
No Irish taxation. Even if you live abroad, income from your Irish pensions will be taxed at source, as income in Ireland. Withdrawing from a UK SIPP or a Malta QROPS instead means that this income can be paid gross, with no tax at source. This depends on where you are resident however and if a double taxation agreement (DTA) is in place. Again, professional advice should be sought
Death benefits. Irish pensions, once in payment, are liable to Irish inheritance taxes (CAT) on death, even if you are no longer resident there. With a Malta QROPS there is no Maltese inheritance tax on the remaining pension pot, although tax may be payable in the country of residence of the deceased or beneficiaries

Basically, transferring out could make your life easier. Each situation is different however, and a full review of your circumstances should be carried out.

If you do have an Irish pension and do not intend to return, please feel free to contact us at Spectrum for a no-obligation, initial discussion where we can explore your options.