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A beginners' guide to Retirement Planning
What is a pension?
Your pension is the money you will live on when you retire, so saving for your pension is one of the most important investments you will ever make. Pensions can be paid from one or more of three different sources:
  • The Government
  • Your Employer
  • An Insurance Company, or other Financial Institution

Why do I need a pension?
We all need money to live on when we retire, but unless you win the lottery or inherit a large sum of money, or have accumulated certain savings or assets your pension is likely to be the main source of your income. So unless your pension is big enough, you won't have sufficient money to enjoy life to the full.
Putting money aside for retirement could be one of the biggest investments you make, maybe even bigger than buying your home.

Why are pensions important?
People are living longer and healthier lives, so it's conceivable your retirement could easily last for 20 or 30 years, maybe even longer. When you retire you will still need to pay the bills and you will want to have money left over in order to make the most of your increased leisure time.

Will I have sufficient money?
To have the lifestyle you want when you stop work it's likely you will have to make additional savings. Long-term insurance savings plans are likely to be the most appropriate option as they are sometimes specifically designed with retirement in mind. These might be marketed as ‘Retirement Plans’. They will provide you with a cash sum at retirement, which could then be used to provide you with a regular income.

However, depending on your personal and financial circumstances there might be more suitable options available which you should discuss with an authorised financial adviser.

Use our retirement planning tool to find out what you can expect to receive from the Government, and how you can make a difference.

Won’t the government look after me?
The current main source of pensions in Malta is the Government, however the level of pension you are entitled to might not be what you need in retirement to be able to do the things you enjoy.

The State Pension will give you a basic income when you retire but it's up to you to decide on the kind of lifestyle you want when you retire, and to find out what you need to do to achieve it.

How do retirement plans work?
You simply agree to set aside a sum of money on a regular basis, which is then invested for you until you reach retirement age, when it will be made available as a cash lump sum. You are then free to spend or invest it as you wish, or convert it into a regular income. The size of the cash sum at retirement will depend on how much you have paid in and what returns the investments have made.

When should I start saving?
Like many people you might feel retirement is too far away to think about. Maybe you think you can't afford to save for the future now, when there are so many other things you have to pay for everyday.

Although retirement might seem a long time away, the earlier you start saving the less it will cost you to build up the amount of money you will need. That is because the longer your money is invested the more chance it will have to grow, and if you start early enough you might even be able to afford to retire early.

Each year you delay saving for your retirement means you will have less money when you retire, or you will have to work longer before you can afford to retire.
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Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap.370. of the Laws of Malta).