Retirement plans are another way of investing in Morocco, especially for the long term (well, technically, very long term). This way of investing is also known as a good way of reducing your taxes (we’ll see why).
When I say retirement plan, I’m talking about private plans created by banks and/or insurance companies. There are also state-owned retirement plans of course, but I’m not talking about those.
Historically, governments were poor at managing retirement money for their individuals and there are multiple instances where money was stolen, badly managed, or just evaporated. So, stay away from those or at least, contribute the minimum possible.
If this is not the way you want to use for you investing strategy, please see our page for other ways of investing in Morocco.
To get a retirement plan, visit a bank or insurance company and you can easily create one. The product is widely known and all banks have one.
The returns depend on banks and/or insurance companies. This information isn’t shared online and you should ask the bank directly. In general, expect something around 3%-5% per year.
Watch out, some insurances/banks have an entrance fee. ie, each time you send money to your retirement account, they’ll take a fee. Make sure to avoid these vendors. There are multiple options out there.
Retirement plans tax optimization
From your IR
One of the best usages of retirement plans is the fact they can be used to reduce your taxes. Specifically, your salary or IR (Impots sur le Revenue) taxes. In fact, any money sent to your retirement plan is deducted from your net salary which means you’ll not pay IR on that.
For example, if your net salary is 7,000 MAD (see a detailed explanation of what a net salary means), you’ll pay 34% in IR. Now, suppose you want to invest half of that in a retirement plan. Your new net salary will be 3,500 MAD, and you’ll pay 10% of IR only on that 3,500 MAD. Of course, you’re not obliged to invest half your salary, you can invest 2,000 MAD, and then you’ll pay 20% of IR only. etc.
This is also possible if you’re an employee. Go to a bank or an insurance company and create a plan. Now, take the account information and visit your HR department. Ask them to start sending money from your salary to the said account as your retirement plan. HR people are obliged, by law, to help you with your retirement plan and send money to wherever you want (as long as it’s legal).
Also, when you switch your employer, and your new employer has a different plan in another bank/insurance, you can tell them you want to keep your own account. This is totally legal, and they should do it for you.
That said, I told you earlier you can invest half your salary. In fact, that’s the maximum you can invest. If you can live with half of your salary, you can invest the other half and pay 0% taxes on it. While I don’t recommend it, you can do it if you want 🙂
Taxes can even reach 0%
Now, you contributed multiple months and you want to take your money. If your contract has more than 8 years, and you are +50 years old, you pay 0%. Yes, nothing.
This is intensive from the Moroccan government so people would invest in the long-term and kind of create their own retirement plan (ie, not waiting for the government to take care of them).
If you don’t have these criteria, you’ll need to pay some taxes. We’ll talk about them next.
Taxation of retirement plans in Morocco
As I said, if you’re +50 years old, and you have your retirement plan for more than 8 years. You’ll pay 0%. That’s actually a good plan for investing in Morocco.
If you decide to take the money before reaching 50 years, for whatever reason, you’ll need to pay IR on that amount (following the same cuts described in this post) divided by how long you had your retirement plan.
As always, an example is better:
You had your retirement plan for 2 years and invested 3,000 MAD per month. In the end, you have 72,000 (we are not adding any interests just for the sake of the example). You decided you’ll take 70,000 MAD, here’s how it works:
- 70,000 / 2 years (duration of your retirement plan) = 35,000 MAD
- 35,000 MAD is basically 2,900 MAD per month
- You’ll pay 10% IR on this following the table here
As a rule of thumb, if you want to get your money, avoid getting the equivalent of more than 2,500 MAD per month, or 30,000 MAD per year, and you’ll pay 0%.
In the same example, if you took 60,000 MAD only, you’ll pay 0%.
This is my best try to understand how taxation work from the minimal amount of information available around. If this is not the way, please reach out so I can fix it for future folks.
Also, please note that your bank/insurance will take a cut because you decided to take your money before the duration of the contract. This changes from one institution to the other, I’ve seen it’s around 5%.
Retirement plans are a good way of investing in the long term (+20 years or more). The 0% taxes for all accounts older than 8 years and holders older than 50 years is definitely a big incentive.
However, investing in these plans assumes you plan to stay in Morocco for a long time (probably your lifetime). While it’s true you can get your money anytime you want, the returns are generally less than what OPCVMs usually give.
Remote.ma investing score:
Investing using this approach is only viable if you plan for long-term investing (getting your money after your reach 50 yo).