Issue 3 2010 September � OCCUPATIONAL PENSION

SCHEMES...1

� RECOMMENDATIONS ..... 2

� PENSION UPDATE .......... 3

Across the spectrum Occupational Pension Schemes Many clients have been asking if they should

join their company pension schemes. There are

of course many factors to take into

consideration and the answer can vary

depending on your own circumstances, such

as:

1. How long you plan to stay in

Luxembourg?

2. Does your company offer to match

your monthly contribution?

3. Do you want to wait until you are 60

or 65 to receive your benefits?

4. Could you lose some of your benefits

if you change company within a

certain time period?

Generally you should consult the scheme

administrator at your company first to find out.

However in general it is recommended that if

your company offer to match your

contributions then generally it would be a good

idea to join this scheme, reasons being:

1. If your company matches your

€1,200 contribution per year then

you are guaranteed to double your

investment, assuming your

investment selection carries zero

risk.

2. Funding of the plan is not taxed as a

Benefit in Kind.

Someone wishing to produce an additional income of €15,000 per annum for their retirement from the age of 65, (depending on their age now), would have to save the following amounts, (based on a 5% net

return per annum).

Age 35 now: 532.26 per month

Age 40 now: 649.96 per month

Age 45 now: 832.02 per month

3. Personal Contributions are tax

deductible up to €1,200 per year.

4. Benefits are tax free as a lump

sum or life annuity (subject to

residency).

5. Benefits can be taken between 60

& 65.

6. Usually carries a Death in Service

benefit.

As you can see here there are many reasons

to take up one of these schemes, however,

you need to be aware that this should not be

where you stop with your savings planning

for the future.

If you were to save €2,400 per year for 10 years, at maturity you would have

approximately €28,000, (assuming a net 3% growth). Using an income rate of 5% as an

example you could perhaps yield an income

of €1,400 per year. Whilst this is of course a nice little benefit, it

really won’t make a significant impact

during retirement.

This is where we currently help our existing

clients save from as little as €200 per month

up to €5,000+ per month in a cost and tax efficient manner with access to many large

fund houses, including HSBC, Investec,

Jupiter, M&G and Fidelity to name but a

few.

Michael Doyle

michael.doyle@spectrum-ifa.com

+352 691 128 026

TSG Insurance Services S.A.R.L. (Luxembourg Branch) RCS Luxembourg: B 95136 - 11, avenue Guillaume, L-1651 Luxembourg.

TSG Insurance Services S.A.R.L. Siège Social: 34 Bd des Italiens, 75009 Paris

« Société de Courtage d'assurances » R.C.S. Paris B 447 609 108 (2003B04384) Numéro d'immatriculation 07 025 332 - www.orias.fr

Pension Update

There have been many articles

about the French Government

recently and the fact that they

have unveiled plans to raise the

retirement age from 60 to 62 in a

sweeping overhaul of the

pension system.

Although this of course is does

not directly affect our state

pension system in Luxembourg,

it really does show the pressure

that Governments are under to

make changes to their pension

systems.

As you are probably aware

France have extremely

strong trade unions and will

oppose this change very

strongly and have already

invoked strike action.

However such is the problem

of the state pension system in

France that Nicholas Sarkozy

has little choice even though

this could cause problems for

his re-election battle in 2012.

Although not specific to

Luxembourg this really

shows that pension reform is

sweeping across Europe.

Luc Frieden, the finance

minister was quoted, (in May

this year), as saying:

“I strongly hope to carry out

a reform of the pension

Your no-obligation

pension report

If you are interested on a

personal basis in exactly what

you will receive in retirement

then please send an email to:

michael.doyle@spectrum-

ifa.com and I will contact you

to arrange a meeting on an

individual basis and offer you

a no obligation report, which

shows you the earliest age

you can retire and also what

your benefits will be if you

decide to work until 65.

system in the next 10

months.”

As we stated during our

pension presentations,

changes are really on the

horizon and the earlier you

react to reduce your reliance

on the state the easier these

changes will be for you.

To discuss any matters raised

in this newsletter, please feel

free to contact me at any

time to arrange a no

obligation meeting.