Planning For Retirement In Thailand

[leah79]

I am a 28 year old female, married to a Thai man for 2 years. We have a 2 year old daughter.

My daughter and I are currently living in the UK. I am a physiotherapist with a salary of 25grand p/y, and a mortgage of 120 grand.

My husband is currently in Thailand where we have a watersports business. We have just purchased 2 rai of land on Koh Tao on which we wish to build bungalows to rent.

My husband currently travels between the uk and Thailand (expensive). We are considering making the big move back over to Thailand as I have stayed in England, bar holidays, since the birth of our daughter. I am however concerned about leaving the financial security of the UK, inc my NHS pension which I have 9 qualifying years for. If I commenced work as a Physio in a Thai international hospital would it be possible to contribute to either a UK private, or Thai State pension? I understand Thailand introduced pensions in 1998, but my husband is fairly blase about their worth. Is it possible to live a 'conventional' life where we can raise a family (we would like another child), and save for a comfortable old age? Or is it more adviseable, security wise, to stay in England until we are of an age where we can retire to Thailand with our accrued funds, and my pension?

Many many thanks in advance for any advice on this matter, of course in our hearts we would like to raise our family over there, fianances and security depending.

[Irene]

I am a 28 year old female, married to a Thai man for 2 years. We have a 2 year old daughter.

My daughter and I are currently living in the UK. I am a physiotherapist with a salary of 25grand p/y, and a mortgage of 120 grand.

My husband is currently in Thailand where we have a watersports business. We have just purchased 2 rai of land on Koh Tao on which we wish to build bungalows to rent.

My husband currently travels between the uk and Thailand (expensive). We are considering making the big move back over to Thailand as I have stayed in England, bar holidays, since the birth of our daughter. I am however concerned about leaving the financial security of the UK, inc my NHS pension which I have 9 qualifying years for. If I commenced work as a Physio in a Thai international hospital would it be possible to contribute to either a UK private, or Thai State pension? I understand Thailand introduced pensions in 1998, but my husband is fairly blase about their worth. Is it possible to live a 'conventional' life where we can raise a family (we would like another child), and save for a comfortable old age? Or is it more adviseable, security wise, to stay in England until we are of an age where we can retire to Thailand with our accrued funds, and my pension?

Many many thanks in advance for any advice on this matter, of course in our hearts we would like to raise our family over there, fianances and security depending.

Your husband is correct that Thai social pension is still new and hardly dependable or comparable to UK social net. You will lose out if you drop out of the UK net. However, I thought that when one is out of the UK, one might be able to keep the status for a few years. It is essential for you to find out from the UK authority before your big decision on the possibility of maintaining the status for a few more years.

[rambling]

I'm not an expert on UK pension plans but from what I can briefly see about NHS then I think there is no doubt that this plan with its tax benefits and DB nature is more secure than anything you can get in Thailand or privately.

The question IMO is how you rank this in your priorities compared to the other implications of moving to Thailand - overall quality of life, husband, business, child upbringing etc. Big questions, only you can decide on these things.

Also keep in mind that it's not impossible to plan for retirement on your own if you decide to give up on state sponsored pension.

I would take Irene's advice and check (with the union?) if you can remain in the plan for a few years after you leave and if you can get back in. What happens for example if you go back to the UK after 12 months do you forfeit the 9 years?

I am a 28 year old female, married to a Thai man for 2 years. We have a 2 year old daughter.

My daughter and I are currently living in the UK. I am a physiotherapist with a salary of 25grand p/y, and a mortgage of 120 grand.

My husband is currently in Thailand where we have a watersports business. We have just purchased 2 rai of land on Koh Tao on which we wish to build bungalows to rent.

My husband currently travels between the uk and Thailand (expensive). We are considering making the big move back over to Thailand as I have stayed in England, bar holidays, since the birth of our daughter. I am however concerned about leaving the financial security of the UK, inc my NHS pension which I have 9 qualifying years for. If I commenced work as a Physio in a Thai international hospital would it be possible to contribute to either a UK private, or Thai State pension? I understand Thailand introduced pensions in 1998, but my husband is fairly blase about their worth. Is it possible to live a 'conventional' life where we can raise a family (we would like another child), and save for a comfortable old age? Or is it more adviseable, security wise, to stay in England until we are of an age where we can retire to Thailand with our accrued funds, and my pension?

Many many thanks in advance for any advice on this matter, of course in our hearts we would like to raise our family over there, fianances and security depending.

[Joe Walshe]

I lived in Thailand for approx. 8 years and left to return to Ireland with our 4 y.o. daughter. The main reason we left was that we felt a year or two in ireland would ensure she became fluent in English. We never returned as one educational opportunity led to another and it's advantageouse for us to stay here as they (now have a 9 y.o.) can attend college as locals and not oversea student (very expensive). We will return to Thailand eventually, and with our savings etc. will retire comfortably. This little story may not help but I wonder why most Farangs in Thailand are older. There is perhaps wisdom in living overseas while you are young and earning. Joe

[Nomad97]

In answer to your situation, "I am however concerned about leaving the financial security of the UK, inc my NHS pension which I have 9 qualifying years for", you may be able to continue/keep your your UK pension alive via Voluntary Class 3 Contributions. I did when I went to work overseas and have continued to do so now that I am retired (but still too young for my UK State Pension).

That said, the UK State Pensions are currently under review by the Government and everything may change within the next year or so. I am afraid that you will need to find a pension expert and/or check out the Government White Paper (on the Internet) to find out what is possible and what is not. Finally, you will need to put things in place with the Inland Revenue (Pensions) before you leave the UK.

[traveldog]

If I commenced work as a Physio in a Thai international hospital would it be possible to contribute to either a UK private, or Thai State pension? I understand Thailand introduced pensions in 1998, but my husband is fairly blase about their worth. Is it possible to live a 'conventional' life where we can raise a family (we would like another child), and save for a comfortable old age? Or is it more adviseable, security wise, to stay in England until we are of an age where we can retire to Thailand with our accrued funds, and my pension?

Leah, I doubt very much you will be able to find employment in Thailand as a physio therapist-basically you are not allowed to do work a Thai national can do, which is why most are teaching english.....agree with the other posters...check with your pension system in GB...how many more years/months till you qualify-maybe stick it out for that or if you can "make it" with the tourism bungalow deal on Koh Tao...Social Security here is kind of interesting once you qualify with a job...you get the 30Baht health care, small amt. child care bene, maternity,death, and after 10 years of work a small pension that grows with more years of work. Hmm you and your husband need to do a lot of serious thinking...especially regards your child...good luck

[blizzard]

are you talking dollars, euros, lbs., baht? no offense lady. but it seems financially you not in good shape. im assuming dollars- 25k$ a year supporting 100k$ mortage. a child and you want another.

what you didnt say was how mut your watersports business brings in.

no offense but if i had kids i wouldnt want to bring them up in thailand. thailand is for adults,lol.

not a place where kids have a bright future.

[GuestHouse]

I'm going to take a slightly different view on this: I'll start by repeating something that could almost be my signature line -

"Your Pension is perhaps the most valuable asset you have, and is more important to your long term financial security than your job"

If you have a job that comes with a first rate pension (and you do) then your job is doubly important for its income and the pension.

I'm sure you are aware of this as your question indicates - but be aware of this next bit:

You currently have two assets that are building towards your (and your child's) long term financial security and that remain under your control, your pension and your house.

Land you bought in Thailand is not under your control, it is under the control of your husband.

Do not take offense at what follows, it is a statement of fact, not a judgment.

Currently your financial security is solid, and importantly within your control, in the UK you and your child have a host of legal protections that you would not have in Thailand, this becomes hugely important if you are going to move to Thailand and develop a business based on the land your husband owns there.

To develop the land you need capital, you have invested capital already in the purchase, you need to increase the capital in order to build/develop.

Where is that money going to come from?

If the answer is, from savings you have or the equity you hold in your house then you are immediately placing your financial security at risk. Handing over control off vital capital and removing future security that almost certain growth in your house value is creating.

Because of this need to capitalize your business plans in Thailand, they are actually a liability that in truth has no guarantee of success.

There is also an issue of handing over financial independence which I think you should take very careful council on.

To put a few things in to perspective. You are in more or less the same financial situation I was at your age. I felt I had done well, in deed I had and indeed so have you. But in another ten or twenty years the wealth and savings you have now are going to seem very meager. (Pensions I paid into a first rate final salary pension scheme between the ages of 18 and 27) now show a return of around GBP4000/year, worth having of course, bu on its own, hardly enough to keep a cat.

You are in a professional career that is set up to provide you with solid earnings and savings through your mid career years, you are at the threshold of those earnings and savings. I would be very very weary of giving them up for a life of uncertainty and no protection of your and your child’s assets.

I think also that you need to consider the education and future prospects of your child. We left Thailand almost entirely because of these issues, despite my employers providing the very best of international schooling. Kho Tao has no such options, and if they were available they would be extremely expensive.

If you do still plan to move over to Thailand

You should continue to pay Class 3 National Insurance, the suggestion is that the new rules will allow you to claim full pension after 30 years of contributions – but do keep an eye on that.

You should do your best to keep your house, letting it out is the obvious solution to paying the mortgage, but do keep savings from the rent available to ensure that the rent will cover the mortgage if interest rates increase.

You should reconsider your business model for Kho Toa. I would suggest that rather than investing more money into the business from your own savings/property at home. That you should consider selling the land on a sell/lease basis; to release capital for investment (Or alternatively mortgaging the land to finance the capitalization of your business).

Sinking all your capital into Kho Toa (in truth into somebody else’s name) is in my mind utter madness.

[blizzard]

many fine points by the house except one.

LADY YOU ARE NOT IN SOLID FINANCIAL POSITION. AND YOU CAN TAKE THAT TO THE HOUSE(bank). LITTLE AMERICAN HUMOUR!

[Penkoprod]

You should continue to pay Class 3 National Insurance, the suggestion is that the new rules will allow you to claim full pension after 30 years of contributions – but do keep an eye on that.

I am more than just a little bit skeptical about this, tbh, and its typical of this government...........leaking the good parts of a scheme, and waiting for a "bad news day" to slip all the negative parts into the public domain.

On ONE hand they appear to be saying you have a right to a full pension from as young as, say 46-47 years old, but on the other they have, in the past said there is not enough money in the overall pot to cover an official retirement age of 65, and therefore are looking at raising the retirement age to 70(?)

Something, somewhere don't add up here

Penkoprod

[kdvsn]

In answer to your situation, "I am however concerned about leaving the financial security of the UK, inc my NHS pension which I have 9 qualifying years for", you may be able to continue/keep your your UK pension alive via Voluntary Class 3 Contributions. I did when I went to work overseas and have continued to do so now that I am retired (but still too young for my UK State Pension).

That said, the UK State Pensions are currently under review by the Government and everything may change within the next year or so. I am afraid that you will need to find a pension expert and/or check out the Government White Paper (on the Internet) to find out what is possible and what is not. Finally, you will need to put things in place with the Inland Revenue (Pensions) before you leave the UK.

Is the rate of return on money that one contributes to UK State pension schemes typically greater than if one were able to control the money themselves and invest their contribution, plus whatever monies their empoyers contributes, into private-sector financial instruments instead of into the State pension plan?

[highchol]

You should continue to pay Class 3 National Insurance, the suggestion is that the new rules will allow you to claim full pension after 30 years of contributions – but do keep an eye on that.

I am more than just a little bit skeptical about this, tbh, and its typical of this government...........leaking the good parts of a scheme, and waiting for a "bad news day" to slip all the negative parts into the public domain.

On ONE hand they appear to be saying you have a right to a full pension from as young as, say 46-47 years old, but on the other they have, in the past said there is not enough money in the overall pot to cover an official retirement age of 65, and therefore are looking at raising the retirement age to 70(?)

Something, somewhere don't add up here

Penkoprod

what they seem to be saying is that you qualify after 30 years of contributons. If you start paying at 17, then when your 47 you wont have to pay any more, but you wont be able to draw on the pension until you are 70 ish.

However as you say it does not seem to add up. The scheme is in trouble now so if you have people paying 15 years less contributions then it can only get worse.

That surely means the pension will be very poor, a bare minimum safety net and maybe means tested. They may also be trying to cash in on the new european migrants to get on and help fiund the scheme. At the moment there is little incentive for them, but the promise of a pension after 30 years is a tastey carrot....

[Penkoprod]

what they seem to be saying is that you qualify after 30 years of contributons. If you start paying at 17, then when your 47 you wont have to pay any more, but you wont be able to draw on the pension until you are 70 ish.

However as you say it does not seem to add up. The scheme is in trouble now so if you have people paying 15 years less contributions then it can only get worse.

That surely means the pension will be very poor, a bare minimum safety net and maybe means tested. They may also be trying to cash in on the new european migrants to get on and help fiund the scheme. At the moment there is little incentive for them, but the promise of a pension after 30 years is a tastey carrot....

The same European migrants that are forcing down wages (and, therefore NI contributions along with it!)

The pot gets smaller and smaller on a per capita basis !!!!!!

Still, i wont derail this thread with any views on what the same migrants are taking OUT OF the system, though

Penkoprod

[GuestHouse]

The same European migrants that are forcing down wages (and, therefore NI contributions along with it!)

The pot gets smaller and smaller on a per capita basis !!!!!!

Still, i wont derail this thread with any views on what the same migrants are taking OUT OF the system, though

I'm a European Migrant, and believe me, I'm not forcing down wages. Nor, since I pay more tax than the average person here in Italy (or indeed the UK) earns am I taking anything out of the system.

EU Migration has been good for me, my family and a whole lot of people who actually want to work for a living.

[fletchsmile]

On NIC:

- Rules are quite complex but for guys you generally needed a minimum of 11 qualifying years out of a possible 44 qualifying years max to get any basic state pension at all. 11 years would get you 25%. 44 years would get you full state pension. 22 years gets you 50%etc. Key is less than 11 years and you would generally get zero

- For most people qualifying years refers to years of paid contributions, but there are many other ways, eg thru spouse, disability etc.

- Rules for women used to be approx 10 years for 25%. From 2010 onwards they are bringing men and women inline gradually. At 28 now you'd likely need 11 minimum.

- With 9 years to your name, you're roughly in a situation of pay 2 more years togive 25% of basic or get nothing.

- I had a similar situation to you and decided it was worth back-paying 2 years contributions. They write to saying you have years of missed contributions and you write a cheque to cover it for about GBP 350 per year (increases each year - may be more now).

- I chose to back-pay so I would get something. i.e pay GBP700 and get a 25% entitlement or do nothing and effectively lose 9 years and get nothing. Remember it was 11 minmum or nothing. On an incremental basis that's 700 quid for 25%. I am less convnced about paying further years in future now I've secured something. Each incremental 350 I pay will get just over an extra 2%. (44 years = 100%; 1 year =2.27%)

- What the basic state pension will be like in 30+ years is anyone's guess, but I thought it was worth a 700quid payment to get something.

- There are ways to continue paying voluntary contributions weekly. I believe you could set up onthly bank payments

The following web links would be useful to you:

http://www.direct.gov.uk/en/BritonsLivingA...broad/index.htm

http://www.hmrc.gov.uk/nic/index.htm

On Pensions:

- You can continue to pay for a while until you become non-resident, and even for a while after

- Hargreaves Lansdown do some guide pension guides and savings guides for free, eg guides for people in 20's 30's, 40's etc

- The guides are not necessarily targeted at non-residents, but have a lot of good general info on savings generally

http://www.h-l.co.uk/pensions_and_retireme...ledge_centre.hl

- I suggest you start reading. There are a lot of sharks/investment advisors who will happily take large chunks of your money in commissions in a good case scenario. In a bad case you'll get ripped off completely. There are very few good Financial Advisors I've come across and it pays to self-educate.

Thai Pensions:

- Forget it as a general rule. Even the better schemes limit what you can invest in. I looked at setting up schemes for our Thai employees of a company I was CFO for. I wouldn't have put my own money in as the choices were two restrictive. eg they only allowed around 25% in mutual funds/equities. 75% was in safe but low yield investments. If saving for 30 years+ there's a big oportunity cost to the over safe approach. Why earn 2-3% in safe cash when you get much more in a mutual fund. Over 30 years if the mutual fund returns earned say 7% there will be massive missed opportunity if your money was in cash. Also tied up for two long

Other Thai Savings:

- For a longer term view you could consider mutual funds. eg Aberdeen in Thailand have some good funds. There are also tax incentive schemes (eg Long Term Equity Funds) for employed people

- Personally just invest in mutual funds like Aberdeen Thailand Growth. I also invest in funds via Singapore to spread the risk. As I don't pay capital gains in either country there is to some extent no need for the income tax/capital gains tax wrappers pensions give

- I will be returning to work in Thailand in a month or so (after 2years overseas) and personally will be using these routes as savings vehicles to protect my Thai wife and daughter's future.

- Again invest some time in self reading

General Finance Comments:

- Start reading, and learning how to look after your own money

- Very surprised you have a 120k mortgage on income of only 25k. That's a high mutliple. Most banks are comfortable with only 3-4 x singe income. Have you thought what would happen if rates continue to increase? You might afford it now, but what happens if rates rose 1%,2%,3%,4%.... could you still afford it

Job Prospects in Thailand:

- Simply put. Very slim unless you fancy teaching English for 500 quid a month.

- It's difficult to get good jobs from inside Thailand. It takes time to find. You can try your luck but trying to get from UK may be better

- Someone earlier mentioned about your biggest assets. My view is it's not your house or yor land it's you and your earning potential! I've left Thailand on a couple of occasions to ensure I keep my career ticking over. Your peak earning years are often 35-45 years old. (Must admit I knw nothing about physio's career paths tho') You haven't even hit those yet. Your ability to increase your salary/earning potential in salaried employement in Thailand will grow slower than in say UK/Singapore etc. You become an expert in Thailand, but that's your main advantage. Not a massive one either when there are many bright Thais who can do the same thing.

- Running a business is definitely something to consider, as getting good jobs is difficult

Lifestyle:

-There's some massive lifestyle decisions to take. eg we've thought about moving elsewhere for our daughter's education/future

-Not sure how long you've spent in Thailand, but it's very different to a few weeks or months holiday

Husband:

- You didnt mention much about him. If he cannot support you and your family by himself, you're taking a massive risk

- His contribution in this seems a little conspicuous by its absence. Hopefully you are not putting up everything, e.g buying land, condos etc

- I didn't see any mention of what he's bringing to the table financially.You know the answer to that. But think three times if it's nothing or he' not investing

What's your back-up plan if your own business doesn' work out? On one hand at 28 you can afford to take a few risks - I did . However, on the other hand you've got a 2 year old daughter. I've seen quite a few lives go pear shaped in Thailand.

Just realised that's a very long submission. I don't blog regularly at all - only signed up today. It just caught my eye thru a search. Ironically I was actually looking to keep myself updated, and do some more retirement planning for myself as I now have a lovely 10 month old daughter and we will all be returing to Thailand soon. As you've a 2 year I guess you hit a soft spot in me.

Good luck whatever you do.