Latest rules for our fully Flexible Malta Pension - Summary and Key Points
Flexible Pensions, perhaps should really be called "uncapped pension withdrawal". It is a way of taking benefits from a pension without buying an annuity, which allows you to take uncapped amounts out of your pension. This does away with the need to calculate the maximum pension withdrawal under "Capped Drawdown". This new flexibility has been available for EU QROPS from 6th April 2015 and is ready for use in our Malta retirement schemes.
In June 2015 HMRC suspended the QROPS list for a while to ensure that all the QROPS that were listed were adhering to the latest regulations. HMRC removed hundreds of entries, including many in Australia. Our Malta QROPS already fulfil all these HMRC rules and also offer full flexibility through revised Scheme Rules as approved by the Malta Financial Services Authority. If your existing QROPS does not offer this flexibility you could consider a transfer to our QROPS.
- From age 55 you can take income flexibly and take a cash lump sum in the normal way, usually 25%.
- The rest of the fund can then be withdrawn in its entirety or part withdrawals.
- Withdrawals could be subject to tax at your highest rate, so it may be sensible to make withdrawals over a number of years to manage local income tax.
- Flexible Pensions could be a very short contract, money in and money out.
- The pension could be a long term investment, with the added flexibility of higher withdrawals when required.
The advantages of Flexible Pensions
- The tax-free lump sum can be taken.
- Flexible Pensions allows income to be varied, with no maximum.
- You don’t have to decide on whether to include spouse’s benefits or other such options with a Flexible Pension.
- The fund can remain invested - so it could grow further.
- You can take the entire fund in one go.
- Any remaining fund can be passed on in the event of death.
- Multi-currency can be supported.
- You can invest as you wish, subject to Trustees approval.
- You can manage your local tax position more easily year to year.
There are, of course, disadvantages to a Flexible Pension plan
- Any ongoing income/or fund left invested is not guaranteed and could go down
- Withdrawals are subject to tax
- Costs can be high, especially for smaller funds
- Where do you invest money withdrawn that is not spent? It may be subject to sales taxes.
- If you don't have a need/want for the money then you need to question your motives for taking it out of the fund.
How can I apply for a Flexible Pension?
- If you are already an MC Trustees Malta Retirement Scheme member you can simply send us an email on firstname.lastname@example.org and we shall send to you an explanatory letter, some risk warnings and a benefit withdrawal form.
- If you are not yet a member of an MC Trustees Malta QROPS you can apply using the application form in the downloads section and once the pension transfer is underway we can send the withdrawal forms to you.
- If you merely want to use the MC Trustees QROPS to withdraw the entire fund in one go after transfer, this is possible, but special charges apply.