In Malta, the state pension is an amount of money paid by the Maltese government to people who qualify when they reach state pension age.
You build up your entitlement to the state pension by making income-based contributions during your working life.
The amount you get will depend on the contributions you’ve made. The government will then pay you your state pension – a guaranteed income – for the rest of your life.
It’s important to remember that the state pension alone may not be enough to guarantee a comfortable retirement.
In this article we'll cover some basic facts, including what types of pension are available and the things you may need to think about.
A pension is essentially a long-term savings scheme. It’s a way to invest for your future and help you build your savings for life after work.
Depending on the type of pension, it works like this:
Pension schemes are different to some other types of investment. Such schemes help you to avoid the temptation of dipping into it before you need it.
Like all forms of investment, the longer you leave it, the more chance your money has to grow. However, there’s also a risk you may get back less than you put in.
If you can, it's generally a good idea to contribute to a retirement pension scheme. Once you stop working or reduce your working hours, you’ll still need an income to live on. The sooner you start thinking about where that income is going to come from, the more likely you’ll have the lifestyle you’d like in retirement.
There are other ways you can save or invest for your future. A retirement pension scheme may be a good option to supplement the state pension for the following reasons:
Your contributions may be eligible for tax credits if you meet the relevant tax eligibility criteria. A tax credit of 25% on a contribution up to €3,000 applies (maximum tax credit €750).
Some companies will contribute to your retirement pension scheme through an employee pension plan. This is also sometimes referred to as a workplace pension scheme. Check whether the company you work for offers such a scheme, and how you can benefit from it.
You may withdraw a cash lump sum of up to 30% of the value of the plan at the date of withdrawal. This lump sum is exempt from tax in Malta.
Our Retirement Pension Plan - Unit Linked is a personal savings policy designed to supplement the state pension on your retirement.
You need to reflect on:
You can start benefiting from the plan not earlier than age 61 and not later than age 70, providing the plan has been in place for at least 10 years.
It's never too early to start saving, so take a look at our retirement calculator to get a view on your financial outlook, and start planning now. Your future self will thank you.
