Current guaranteed interest rate benefit expires 2015
The future benefits payable by the state pension continue to shrink. Which is why the Government is subsidising private initiatives such as company pension plans.
An occupational pension scheme can be used to reserve part of your salary for financing your later retirement. One key benefit: lower tax/social security contributions during the accumulation phase.
What many in employment don’t realise is that Government will cut the guaranteed interest rate for pension/life assurance plans from 1 Jan. 2015 from 1.75% to 1.25%, on account of persistently low capital market rates. Accordingly, customers will only get the lower guaranteed interest rate when taking out a new policy after the close of 2014. This change not only places a long-term cap on guaranteed old age pension payments but also directly impacts the calculation of disability insurance premiums.
Employees considering taking out a policy should therefore act before the end of this year, so as to secure the higher guaranteed interest rate of 1.75%. Only by taking action now can you add as much as 20% to your final pension benefits while also making savings of up to 7% on premiums for disability insurance.
For existing policyholders, nothing changes: the rate guaranteed when the contract was signed applies until it matures.
Incidentally: as an employer, the retirement/disability insurance schemes gives you the option of offering your employees both discounted premiums and additional models without the typical – and time-consuming – medical examinations.
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