MSV Life plc, Malta’s largest life insurance company, has become the first provider of personal pensions in Malta.
MSV Life is jointly owned by Mapfre Middlesea and Bank of Valletta.
Chief Executive Officer David G. Curmi said MSV Life registered two personal pension plans with the Inland Revenue Department, enabling savers to receive a tax rebate on their savings for retirement.
MSV Life and Bank of Valletta chairman John Cassar White said that while it was evident that more people were using life insurance savings products to save for the long term, the life insurance penetration in Malta was still 59 per cent of the EU average.
Likewise, the life premiums per capita in Malta were around 37 per cent of the European average.
Stuart Fairbairn, MSV chief officer of business development, explained that the plans were suitable for anyone prepared to save seriously for their retirement.
The tax credit of 15 per cent was only available on contributions to registered pension plans, thereby giving the plans a unique advantage over other products.
The tax credit, he said, came with certain conditions.
These included that the savings had to be left until at least age 50 and, at the time one took the benefits, the maximum that could be taken as a lump sum was 30 per cent of the accumulated value.
The balance of the policy had to be used to provide an income, which could be through an annuity product effectively guaranteeing the income payments for life.
The plans, he said, should not be viewed as short-term savings or something which could be accessed on a rainy day, but offered excellent value for the long term.
Finance Minister Edward Scicluna said the government did not feel the time was ripe for mandatory schemes, however, employers and employees who wished to launch such schemes would be encouraged and supported.
“The government’s policy of making work pay will not succeed fully if a mandatory second pillar is introduced today.
“At the same time, young people should realise that if they want to maintain a high standard of living during retirement, they have to supplement their state pension with a private pension of their choice,” the minister said.
The plans start from €40 a month.
Investors can apply for a tax rebate equal to 15 per cent, up to €300, of the amount saved each year.