Retirement

[giruz]

Hello,

I'm just wondering....

How do you guys plan your retirement?

I'm 27yo, I got some money that I can't touch (and I probably will never see) in Italy. I got few more quids here in Australia that I'll be able to touch after the 30th of September (when my visa expires).

I'll be landing in UK during september and I will start working over there with my Miss (the idea is to settle over there but you never know)

Anyway,

I was wondering about two things:

1- Can I choose a plan where I can put money by myself without relying on employer contribution? I had a look online and it seems possible, what I couldn't understand is if:

a) I will have any tax break

B ) I can 'move' my employer contribution to the same fund

2- What will happen if I will leave UK? Something like, I will move back to Italy or to another country (EU or other).

3- Is there any way to save my retirement money from the monster that is the tax-man?

g.

[giruz]

no one wants to help me?

giruz

[j_cheung]

Maybe this thread can help you out ...

http://www.thaivisa.com/forum/index.php?showtopic=66197

[naka]

Really, you are asking too much ! Decide yourself what's best for you.

Basically what you need to do is get your head down, ass up and don't loose the plot.

There are no shortcuts.

Naka.

[Loom]

There are fund management companies with "systematic investment" features in the US and probably in the UK. You decide how much you want to save on a monthly or quarterly basis and your bank account will be automatically debited and the funds invested. It's a good approach since you won't have to remember to save after the initial program is set up.

Employer savings plans would generally be tax deferred arrangements and there could be penalties or at least you would have to pay tax if you leave that employer.

In the US, you can defer income tax on funds saved in retirement plans (funds that you won't use until you hit retirement age), but there are early redemption penalties.

It's a good idea to start saving as early as possible. If you can save $500/month and earn 7.5% on your investment, by the time you are 50, you'll have over $300,000. Double the monthly savings to double that amount when you reach 50.

[GuestHouse]

There are three basic ways of saving in pension schemes in the UK.

1. Compulsory Government Pension Scheme.

Provided you follow the requirement to register for a National Insurance Number, your employer will automatically deduct 'National Insurance' from your pay. This covers 'Unemployment Benefits AND Contributions to the National Government Pension Scheme'.

A point to note about this Government Pension Scheme is, once you have registered and started paying contributions you can continue to do so even if later leave the UK. The laws are currently being changed to allow you to collect your Full UK Government Pension on reaching the age of retirement AND after 30 years of contributions (from within or outside of the UK). You would also be given some credits for your contributions to the Italian Government Scheme. Thirty years may seem a long time, but if you settle in the UK for a spell you have the option of continuing contributions after you leave to ensure you get the UK pension. (Currently around 100 Pounds a week + some extras )

A point to note, if you spend any time in the UK and make these contributions, DON'T FORGET TO CLAIM WHEN YOU RETIRE.

2. Company Pension Schemes

Depending on who you work for you may have a chance to join a company pension scheme. There are two sorts 'Defined Contribution' and 'Defined Benefit'. I'll explain the difference below - The point to note is that both offer very good value, because it is usual for the Employer to pay the management fees, and often to make some additional contribution on behalf of the employee (for example paying a bonus into the pension if you stay with the company for a stated period of time). Also note that these savings are tax free, they are taken from your salary prior to tax being deducted (hence reducing your tax payments at the highest rate of tax you pay)

Because of these benefits, Company Pensions are usually a very good and secure means of getting a pension.

Defined Contribution Company Pension Schemes

These are becoming the norm - You and often your employer make monthly defined contributions, usually based on a percentage of your salary. These are invested into the stock market (within very tightly controlled pension investment funds).

At the end of the day, the investment returns a lump sum which is then used to provide you with a pension. How big that sum is, and hence how big your pension is depends on the return on investment achieved by the pension fund.

Defined Benefit Company Pension Schemes

These are the gold lined pensions, sadly becoming harder to find. Normally you will make a contribution to the scheme based on your salary. This is invested in a pension trust (not owned or controlled by the company). The company is bound by the pension contract to ensure that at the end of the day you receive a Defined Benefit Pension. This is usually expressed in terms of % or parts of your final salary.

Example a 40/60ths scheme will give you one 60th part (1.7%) of your final salary for every year you work for the company up to a maximum of 40 years (67% of your final salary).

Because salaries normally keep pace with inflation this is a superb deal - and one not to be missed if you have a chance.

Company pension schemes often also carry substantial life assurance cover. 4xAnnual Salary is not unusual. - A great bonus as you get older and insurance becomes a lot more expensive.

And finally, if all that is not good enough, Company Pension Schemes almost always provide pensions for spouses and minor dependents, usually based on 0.5 pension for the spouse and 0.25 Pension for each minor dependent.

Minor dependent is usually regarded as legally registered child under the age of 19 or up until graduation from College/University.

Private Pensions

Private pensions are a Defined Benefit Pensions, but unlike a company defined benefit pension, you pay all costs.

There is one exception where you may be able to get a company to pay some or all of the costs - An AVC Pension (Additional Voluntary Contribution). This is a private Defined Benefit Pension that sits along side of your company pension. Many companies will provide part or full payment of the management fees of AVC.

Again Private Pensions are eligible for tax relief at your highest tax rate.

Some things to think about with Company Pension Schemes

While they are great value, they come with strings attached. The retirement age is set as the National Retirement Age. To retire early you almost always need the consent of the company.

In past years this has always been easy to obtain, but these days is problematic, because as you retire you put a load on the pension scheme.

Also, almost certainly the Company Pension Scheme will swallow your contributions if you die leaving no minor dependents - This usually works as a trade off. From the first year after retirement the pension scheme will reduce the lump sum life assurance, usually to zero at the end of the 5th year. Of course, spouses and minor dependents will continue to receive their pensions.

Something to be aware of with Pensions in the UK

The government recently (last couple of years) changed the law to prevent anyone taking a pension before age 55 but raised the amount that you are able to save in pensions to currently 255,000 pounds per year.

Here's a trick.

If you have enough income to live on or part live on from any source, you can put all of your salary into pension and get all of the tax back.!

But you can't get your hands on that money until you are at least 55 years old and possibly (because you need company agreement to retire early) until you are 65 years old.

Cash for your Mid Life Crisis

The problem with pensions is clear, they don't allow you to get at your money until you are at least 55 and possibly until you are 65. Not much comfort if you are planning on a midlife crisis.

To get around this you should consider some other investments. There are various investment funds that you have access to, and under UK tax laws you can make tax free savings under PEPs/ISAs (ask a financial advisor to explain).

These offer the advantage that you can get your cash out at any time.

So when the MLC hits, you can access your savings and head for the sun.

Edited June 7, 2007 by GuestHouse

[malcolminthemiddle]

How about an Offshore International Retirement Plan that you can take with you whereever you live?

Flexible in size and duration of contributions and currency with a multitude of funds to switch between without cost. With low management fees and with funds paid out tax free to any account you choose?

Zurich International Life do one called Vista, do a google for further information.

[Khun ?]

I would stay away from anything with life assurance in it. Specially when being sold in a country as Thailand where you have no protection concerning the broker or advisor.

Yeah I bet it will be easy to get to when you have to send in certifed letters and the likes to find out you need to pay some type of infraction and they keep 80% of your money as they have done to others I know of.

Do not let people in places like Thailand get to your money, if they was so good at making money

they would of done it with their own and not be trying to get at yours with these asnine investments

with more hidden requirements and cost than one could believe.

http://zdownload.zurich.co.uk/Internationa.../MSP(D)2589.pdf

Get a lawyer also so you can understand all the hidden facts.

How about an Offshore International Retirement Plan that you can take with you whereever you live?

Flexible in size and duration of contributions and currency with a multitude of funds to switch between without cost. With low management fees and with funds paid out tax free to any account you choose?

Zurich International Life do one called Vista, do a google for further information.

Edited June 8, 2007 by Khun ?

[GuestHouse]

Good point Khun?

If the OP is going to work and live for any time in the UK he should take advantage of the UK investment funds and the first rate legal protections the UK now offers investors..

I hear this 'Off Shore' a lot. I'm an expat working in the top end of the oil and gas industry, I've been overseas for nearly twenty years - I pay a very good accountant for advice, he consistantly tells me to stay away from "Off Shore".

Invest with any outfit working out of Thailand.... What madness is that?

[Khun ?]

Guest House

I make 6 figures in the markets now days with safe investments and the taxes are no more than what these offshore scammers get on fee's and the offshore investments pile on to the funds.

Made that mistake myself from company that claims to be one of the best. Matter of fact they sell this Vista crap of <deleted>.

Mutual funds lost 80% value in just over 2 years. When I sold off in about 5 years the funds were down

about 50% still. I got back $5K of $45K because I sold before the 20 years they scammed me into

even though I was told otherwise, if I did not like the investment in 3 to 5 years I could get out no problem. I did not get copy of investment until months later mailed to me in another country.

Front end loads 7%, does anyone know where it is legal to charge a front load and not be able to get out of at will. At best these investments are variable annuties with all kinds of hidden fees and restrictions. Would be illegal in most regulated countries. If someone mentions bonus laugh and walk away. No one can run a business giving money away unless it some how comes from you to start with.

They were locked in for a % of the money for 20 years for poor investments and advice.

Never no annual statements and they will push your investments into other funds if they can make more commision and most likely get a fee for the transaction.

You do not need a middle man to get into offshore funds and do not get into anything that requires you to put in a certain amount at frequency or cannot get out of any minute you choose to.

I would not trust regulated offshore funds with what you can get in regulated markets now days with much better fee's that are not hidden and regulation that really do protect you.

Easier to pay taxes rather than hidden fee's that will cause sever performance adjustments.

Taxes should not be a consideration of when to buy or sell a investment.

[expatgaz]

Stick it all in the Thai property market and then cross your fingers.Alternatively come to Pattaya and buy a beer bar.

[Khun ?]

At least with a beer bar or property you could say you got something for it instead of of these poor investments

with half truths. Not so bad getting taken on property or beer bar rather than into someone elses pocket that you never seen or something you enjoyed for a day or two.

[Edonista]

Stick it all in the Thai property market and then cross your fingers.Alternatively come to Pattaya and buy a beer bar.

Both these advices are so wrong I cannot say which one is the worst

[Naam]

I make 6 figures in the markets now days with safe investments

to make "six figures" when the capital is "eight figures" does not require rocket science

[Naam]

Taxes should not be a consideration of when to buy or sell a investment.

my responses on this:

-i (not so) humbly beg to differ.

-WHO or WHAT are taxes?

[likite]

Hello,

I'm just wondering....

How do you guys plan your retirement?

I'm 27yo, I got some money that I can't touch (and I probably will never see) in Italy. I got few more quids here in Australia that I'll be able to touch after the 30th of September (when my visa expires).

I'll be landing in UK during september and I will start working over there with my Miss (the idea is to settle over there but you never know)

Anyway,

I was wondering about two things:

1- Can I choose a plan where I can put money by myself without relying on employer contribution? I had a look online and it seems possible, what I couldn't understand is if:

a) I will have any tax break

I can 'move' my employer contribution to the same fund

2- What will happen if I will leave UK? Something like, I will move back to Italy or to another country (EU or other).

3- Is there any way to save my retirement money from the monster that is the tax-man?

g.

In answer to the questions:-

a) Yes you can chose a private pension plan that you can contribute into which is separate to your employer - a personal pension plan and you will receive tax relief (within limits).

The short answer to this is no. The long answer to this is its possible but that would depends solely on your employer. If the employer has its own company scheme the answer will almost certainly be no.

2. If you leave the UK by and large everything in pension schemes stays in the UK. There maybe some rules now to move within the EU but you can check this out in the UK.

3. Pension schemes allow tax relief against the contribution. You also have ISA's which are tax free.

As far as planning is concerned I doubt many members at 27 made any conscious plans to make a provision for a pension! Personally I never ever thought about planning until into my 40's. I never liked pension plans as they were very restrictive at retirement age etc plus there were pension charges to contend with as well.

My plan for what its worth was to use the capital built up in my home(s) over the years. Then use part or all of this capital to purchase a monthly pension from that capital when the time came. As it is I live happily in thailand on this money which gives a safe and steady return. Later on a small co scheme and eventually the state pension will kick in.

The best advise at this stage is to definetely join the co pension scheme if there is one available as you'll get the benefit of not only your own money but also the employers contributions as well.

[Boca]

To Khun? and Guesthouse.

Could either of you care to elaborate more about Zurich Vista? I have a plan with them and feel it has been performing reasonably well over the last year or so. I didn't buy this in Thailand however and I dont feel it is a scam.

Thanks

[lacunaboy]

Boca

You have a prefectly good plan with a perfectly legit company that are based in one of the most highly regulated jurisdictions in the world - so relax dude!

[rambling]

One option, if you're so inclined, is to setup a retirement plan on your own. Using something like a lazy ETF portfolio (google 'lazy...' for lots of material online). The ETF universe should cover you for all asset classes / risk appetite. Those listed in the USA are some of the most liquid, cost effective instruments to invest in for retirement age. A simple example

40% in S&P500 via SPY

20% in global market via EFA

10% in small cap US stocks via IWN

30% in bonds via SHY / AGG / TLT

Just scale your way into these positions over time and don't touch it till you retire. Starting this at your age is one of the best things you could do for your future.

2 main problems with the above:

1. you need to invest time to know what to do and how, there's a learning curve

2. you need self discipline

Finally some legalese: the above is not a recommendation, you are responsible for your money. Do your own due diligence and consult professionals in the field.

Hello,

I'm just wondering....

How do you guys plan your retirement?

I'm 27yo, I got some money that I can't touch (and I probably will never see) in Italy. I got few more quids here in Australia that I'll be able to touch after the 30th of September (when my visa expires).

I'll be landing in UK during september and I will start working over there with my Miss (the idea is to settle over there but you never know)

Anyway,

I was wondering about two things:

1- Can I choose a plan where I can put money by myself without relying on employer contribution? I had a look online and it seems possible, what I couldn't understand is if:

a) I will have any tax break

I can 'move' my employer contribution to the same fund

2- What will happen if I will leave UK? Something like, I will move back to Italy or to another country (EU or other).

3- Is there any way to save my retirement money from the monster that is the tax-man?

g.

[GuestHouse]

To Khun? and Guesthouse.

Could either of you care to elaborate more about Zurich Vista? I have a plan with them and feel it has been performing reasonably well over the last year or so. I didn't buy this in Thailand however and I don’t feel it is a scam.

Thanks

I can't offer any advice; I'm not a financial advisor. If you are happy with the way your savings have gone so far with this scheme then I think that is fine in itself.

Going back to what someone said above I think the importance of 'Saving Discipline' can not be over rated. I started my pension savings on my 18th birthday, joining my then employer's final salary scheme. It's been a habit since.

Vista increases savings per year which I think is a good thing inline with the need for saving discipline, but the charges look pretty high to me. Compared for example with saving with Jupiter's funds.

I'd talk to a financial advisor if I where you, discuss your saving objectives and then how they can be achieved with what you have now, and/or adding alternatives, for example you may or may not, according to your age, be able to sensibly take more risks with the chance of higher rewards.

As I said, the advice I have consistently had is not to save off shore - Under UK law, off shore savings are now reportable to the tax office and you will invariably find that any tax breaks are eaten into with higher charges and punitive closure charges - Note here some offshore savings can only be held while you yourself are out of the UK (or home country), returning home forces a closure and hence a heft charge.

[Khun ?]

The Zurich vista I am in is not enough to worry about. The gains since 2000 were about nil ( 0).

The firm that put me in it never provide up dates and I forgot how to get into their website to check on it.

Also brings back horrible memories how stupid someone can be to trust these people.

It is a variable annuity structure, maybe even worse which is one of the poorest investments by most professional advisors opinion.

It would be in the bottom 20% of any advisor selection that truly cared about his investors.

Your stuck the same as I. Start something else that you can sell when you want without penalty.

Just try to figure out the all the penalty clauses. good year will most likely be mediocre when coompared to a normal

mutual fund and bad years will be terrible. Fees as mentioned above can be more than taxes on gains.

The penalty for income tax evasion can result in prison plus heavy fines for sure.

To Khun? and Guesthouse.

Could either of you care to elaborate more about Zurich Vista? I have a plan with them and feel it has been performing reasonably well over the last year or so. I didn't buy this in Thailand however and I dont feel it is a scam.

Thanks

Edited June 12, 2007 by Khun ?

[Boca]

Thanks to all for their views.

I'm reasonably happy with Zurich Vista, depsite the high fees as I'm being kept informed with how it has been performing.

I agree it's good advice to start saving early and diversifying your assets into different catagories such as funds, cash and property etc. It's just interesting to hear others views on this and how they are planning their retirement.

[Khun ?]

Hedge fund and broker I have used for many years.

Neither have been stellar but average with less risk.

One investment is domestic and international ETF's both long and short indexes, 16% average return for last 3 years.

Another has from 20 to 50 stocks much with dividend basis but also a fair amount of speculative investments

thrown in. Both are actively traded but the core has reached the maximum of 15% tax rate, over one year of holding them ( that equals a 1.5% management fee, so taxes are no worse than broker fees). Hedge fund is a good down market player and average on strong market years, contrarian style all over markets and

bonds, both international and domestic. Return since 2000 is over 300% last couple years only 15% and 8% repectively. Alot of cash and Natural resources fund 24% average for 5 year return, 3 year 35% return.

Retired from doing some of my own about a year ago.

Edited June 12, 2007 by Khun ?

[giruz]

Hi All,

I did not reply to this topic early because I'm a bit busy with my last exam (done on Monday) and with my transfer (sydney to london)...anyway...

Thanks to GuestHouse, Khun ? and likite.

What I'm not sure I understand is:

• What happens to my 'Company Pension Schemes' if I change employer? Does it work like here in AUS where I can choose my superannuation provider (no matter who is the employer)? Or do I have to transfer my contribution to a specific provider (and...I guess...pay some fees to do so)?
  
• What happens if I leave the country? I didn't get this...Assuming I'm leaving the country sometime between now and 10 years to go somewhere else (e.g. Italy, Holland or Singapore). Can I get my 'pension' as lump sum? (from what I've been reading the answers appears to be: NO)
  

Thanks

g.

[GuestHouse]

As I stated earlier I have been saving for my pension in company schemes since I was 18 years old, I have naturally moved jobs a number of times and I am no living outside the UK.

I have left all my pensions in the company schemes (Scattered among lots of baskets)

Why?

Because my pensions before 1992 have all benefitted from very generous guaranteed growth clauses.

Because the management fees for all these schemes are met by the companies I worked for (Private pension schemes can be wrecked by high fees).

Because it's always good to have lots of baskets.

Pensions left in the UK remain under UK law, including retirement age laws.

So you would, like me, enjoy first rate protection by leaving your pensions in the UK, but would be subject to the minimum retirement age of 55.

AS A GENERAL RULE.

Moving investments incurrs penalties, you should not move investments without independent advice (from someone who is not going to make money if you do move the investments).