1.The Categories of the Funds Savings funds in Cyprus can be classifed into three categories according to the level of risk they entail: Conservative - Low-risk funds Moderate - Medium-risk funds Aggressive - High-risk funds 1.1. Low-Risk Funds Low-Risk Funds are the most popular option in Cyprus, since they mostly invest on saving or investment products that carry low investment risk, such as cash funds, certificates of deposits, government bonds of western economies (>AA+) and corporate bonds from big companies (blue chips).
1. Introduction Savings insurance and private pensions are the only non-government saving plans accepted by the Cyprus tax authorities as being valid tax exemptions. All owners of companies that are tax residents of Cyprus, as well as highly paid employees registered in the Cyprus Social Insurance system, can benefit from the exemptions. Apart from offering significant tax deductions, a private pension can ensure a lower risk and a higher net return compared to certificates of deposits.
A tax calculator is based on the following principles: ● The sum of tax reductions (namely, social insurances, savings insurance premiums, GHS - GESY contributions etc.) should not surpass 20% of income. ● In the case of natural persons, savings insurance should come with an obligatory life insurance. As an approximation, the insured capital should be at least 13 times the insurance premium (e.g. if the premium is 10,000, the insured capital should be at least 130,000 euro).
Bank deposits’ interest in Cyprus is subject to a 30% yield tax called special contribution for defence. The yield of bank deposits is either negative or very close to zero due to the expansionary monetary policy of the European Central Bank (ECB). Inflation skyrocketing in 2022 will force the ECB to raise the basic interest rate to over 1%, but this is not expected to also significantly increase the savings interest rates of bank notes.
The main terms and conditions of savings insurance plans are mentioned below in brief. 1.The minimum insurance premium is 35 euro on a monthly basis and the minimum insured capital is €1,000. 2.In case the company is insured, the contract has €1,000 as the minimum insured capital amount. 3.Savings insurance can be paid annually (via bank transfer) or on a monthly basis using direct debit. 4.The maximum age acceptable for signing a contract is 70.
1. The benefits 1.1. Reduced risk - Risk diversification Savings Insurance manages a particularly successful risk diversification, such that no independent investor could accomplish alone. Savings insurance funds place investors’ assets in multiple certificate of deposits in triple A banks institutions in the USA, Germany, UK and Switzerland. Funds of a clear investment nature invest investor’s money on bonds and stocks from different industries and countries. This practically means that the safety of the contracting party’s savings does not depend on the credit rating of any individual organisation, industry, or country.
Investment insurance is life insurance with an excellent opportunity to manage your savings by investing yourself. By choosing this life insurance, you take care of your loved ones and save for the future, making investments when the investment risk falls on you. Pitsas Insurances Cyprus, Limassol
Since 2014, Pitsas Insurance has been preparing analytical reviews that present the main life insurance products in Cyprus in comparison with the corresponding programs taking place in foreign countries. This article is available in Greek and Russian. Pitsas Insurances Cyprus, Limassol
Cyprus pension programs Youth and health are not eternal. Each of us must do everything possible to secure a decent future for himself and his loved ones. Nevertheless, the financial stability and well-being that should accompany you after retirement cannot be achieved overnight. Existing government pension programs, as good as they are, cannot provide their beneficiaries with pensions that will allow them to live according to their real needs. In particular, according to Eurostat, Cyprus have one of the lowest pension levels in Europe.