Prime Asset Management launches IRA

Saturday, November 07, 2009 10:03 PM

Business

By Steven Jackson

Sunday, June 28, 2009

Retire with $26 million after saving $10,000 a month over 25 years, charged Prime Asset Management at the launch of its Individual Retirement Account (IRA) at the Terra Nova Hotel on Tuesday.

That amount comes from the plan's 20 per cent interest rate and tax-free status. They charged that over the same period alternative taxable instruments at 20 per cent would save $14.4 million.

Prime Asset Management's (Prime's) Managing Director Rez Burchenson (left) chats with retired head of Victoria Mutual Building Society Karl Wright and Prime's Chairman Herbert Hall at the launch of Prime's Individual Retirement Account (IRA) at the Terra Nova All-Suite Hotel in Kingston on Tuesday. (Photo:Garfield Robinson)

"For those human resource managers and general staff members, who have not taken the time to take retirement planning seriously I encourage them to start as early as possible," Managing Director Rez Burchenson told the audience, adding that most Jamaicans do not save for retirement. "Only 10 per cent of Jamaicans have any formal pension saving and pension saving are 20 per cent of gross domestic product (GDP), in some developing countries it is as high as 70 per cent of GDP."

The IRA is a personalised pension fund "for persons currently not in or contributing to a pension fund". Burchenson said that persons need to be younger than 64 years, should not be a member of another IRA, and should not be a member of a company sponsored pension plan. Prime Asset stated that the IRA tax benefits are that: contributions made to your IRA are tax deductible; meaning that it is taken out before income tax is applied; persons can contribute up to 20 per cent of their annual income per year to an IRA; and all investment gains are tax free with no time limit. Prime has some J$15 billion funds under management as at March 2008 with a return on capital employed of 30 per cent.

Prime's Chairman Herbert Hall stated that most pension plan contributors tend to pay the minimum monthly requirement and forgo maximising their pension.

"In all my years I have come to realise that 80 per cent of the people who contribute to pension funds if the option is there would say 'Thank you, please...allow me to see about my own future'. That state of mind is real and it is going to take years to move people away from that head space, into the reality that there is no way for working people will have a bright future unless they are prepared to make regular payments for their working life," said Hall.

Prime Asset Management began in the 1996 and its sole business is that of providing pension services to trustees and sponsors of approved retirement schemes and superannuation funds.

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