A Guide: Pensions

Retirement Annuity Contracts

Retirement annuity contracts (often referred to as Personal Pension plans) are money purchase pensions and are an option for those in Gibraltar who wish to arrange their pensions privately. This may be the case where you are self-employed or work for an employer who does not have a pension scheme in place. Retirement annuity contracts are not classified as occupational pensions although they may be funded in whole or in part by an employer. However, you cannot be a member of an occupational scheme and also make contributions to a retirement annuity contract at the same time.

A retirement annuity contract is normally established under a trust.

Retirement annuity contracts must be approved by the Gibraltar Commissioner of Income Tax if tax relief is to be obtained on contributions. Before approval is granted, the Gibraltar Commissioner of Income Tax must be satisfied that certain conditions will be adhered to. These conditions include, for example, that the individual may not have his contributions returned and will not receive any benefits before the age of 55 and that the underlying investments are of the correct type.

As with any money purchase pension, the amount of your fund when you come to retire is not guaranteed and depends on how much has been paid in, the type of investment fund or funds you choose, how those investments perform and the level of charges. A retirement annuity contract will normally offer you a range of investment funds, with differing degrees of investment risk and potential investment growth. The provider will also charge you for managing your money. You should receive a pension statement each year from the provider. It normally shows you how much you have contributed, the current value of your fund and an estimate of the value of your fund at normal retirement age.

Most retirement annuity contracts also provide a level of flexibility. For example, you can contribute regularly or occasionally, you can change the amount you pay or you can stop paying in and restart at a later date. You can also take your retirement annuity contract with you when you change jobs. If your employer does provide a scheme and is willing to contribute to it, this is likely to be a better way of providing for your retirement than a retirement annuity contract.

Occupational pension schemes; retirement annuity contracts and personal pension schemes can apply for approval for tax relief from the Gibraltar Commissioner of Income Tax.