Exportable Pensions- 400,000 Britons Who Move Abroad

[Rinrada]

Want to move but worried about your pension.......Bit of light reading involving dosh...$

Bit of Info...(with thanks to the Tele-g....)

Expats who are as fed up with Britain's pension regime as they are with the weather can now take their funds with them and never have to buy an annuity thanks to new rules on overseas pensions

Many of the 400,000 Britons who move abroad each year can now pack their pensions too and take their funds as cash within five years. And with research from Scottish Widows showing that two-thirds of higher-rate taxpayers are planning to up sticks to sunnier climes when they retire and this figure is set to grow.

Expats can now say goodbye to compulsory purchase of annuities and high taxes on their pensions by getting on board with what some financial experts are calling the next big thing in retirement savings – offshore pensions

This month the Isle of Man introduced new rules for its pensions that sound like a wish list for anyone choking on UK restrictions: no obligation to buy an annuity, higher tax-free lump-sums, the freedom to invest in residential property and inheritance tax at less than one-tenth of that here.

The new Manx pensions are the latest dish on a mouth-watering menu of offshore pensions. Financial experts point out that jurisdictions such as Singapore, the Republic of Ireland and Hong Kong are even more liberal in what they will let you do with your pension, allowing you to get your hands on all the cash once you have been out of the UK for five years.

"Anyone planning to retire abroad or move overseas for at least five years should look very closely at offshore pensions as this is a serious opportunity to save a large amount of tax," says Steve Travis, a former member of HM Revenue & Customs' overseas division who now works as a cross-border pension adviser for independent financial adviser The Fry Group.

To make the most of the tax advantages of moving your pension abroad you have to move your fund to a Qualifying Registered Overseas Pension Scheme (QROPS), a form of pension introduced two years ago.

Once in a QROPS scheme, your cash is no longer subject to HMRC rules, although the pension provider must report your dealings with it to the Revenue for the next five years.

(none in LOS but there are some in Honkers and Singers..)

After that there is no reporting requirement, and if you are still not living in the UK your entire fund can be taken as cash.

Anyone moving abroad needs to make sure it makes sense to switch into a QROPS scheme for the country that is to be their new home. Professional advice is essential because the evaluation is a triangular process involving tax rules in the UK, the country where the QROPS pension scheme is based and the country where you plan to live.

While the QROPS scheme will free you from UK tax, you may be taxed in the country in which it is based and in your new country of residency.

"There are many people who have already moved abroad who have left their pensions in the UK who should revisit their arrangements to see if they are paying too much tax," says Mike Lightfoot, the former marketing executive of the Isle of Man's pension regulator and now managing director of IOMA Horizons, a pension company.

The new Isle of Man rules make their QROPS pensions significantly more flexible than their UK counterparts. Unlike the UK, there is no requirement to buy an annuity at age 75, tax-free cash is set at 30 per cent rather than 25 per cent and funds can invest in residential property, an idea that was floated over here two years ago and then dropped.

What is more, the IHT position is more attractive on funds held over there too. If you die in income drawdown before 75 in the UK' IHT is charged on the fund at 35 per cent in the Isle of Man it is just 7.5 per cent across the board.

"Many people who are in drawdown at the present are in a position where they simply want to hand their funds over to their family. For them there is no comparison between an IHT rate of 35 and the Isle of Man's 7.5 per cent," says Richard Jacobs, director of Richard Jacobs Pension and Trustee Services, an IFA.

Singapore QROPS pensions can be even more attractive, with no IHT at all, and zero local income tax on drawings, although these plans are more expensive, running up to 6 per cent of fund value in some cases.

Isle of Man pensions charge income tax at 18 per cent, which will be taken account of in your country of residence provided it has a double taxation treaty with the Isle of Man – most EU states do. But you also need to consider what the local tax rates are in the country to which you are moving.

France, for example, is not a great place to be taxed on your pension, because tax-free cash is not an option so you will be taxed on your lump sum as income. Taking tax-free cash before you go makes sense if you are retiring to live there.

Local income taxes in Spain and Italy can leave some people worse off, depending on their situation, although the IHT savings and access to cash after five years could make QROPS plans worthwhile in the long run. Portugal has a generally lower rate of income tax while anyone retiring to Cyprus will save thousands as it charges only 5 per cent income tax on pensions.

"For the super-rich or those with several homes it is possible to become a fiscal nomad and not be taxed anywhere," says Travis. "However, the Revenue is making it harder and harder to manage that. But for those that don't, QROPS transfers can still be very exciting."

THE BENEFITS CAN BE HUGE...more

http://www.telegraph.co.uk/money/main.jhtm.../cmabroad22.xml

Tax breaks spawn a generation of young pension millionaires

www.telegraph.co.uk/pensions

www.telegraph.co.uk/expats

[billd766]

Does it include my company pension, my armed forces pension, both earned in the UK and my state pension due next year?

When I spoke to HMRC a couple of years ago I was told that as the pensions were earned in the UK they had to stay there and be taxed there as well.

[Rinrada]

Does it include my company pension, my armed forces pension, both earned in the UK and my state pension due next year?

When I spoke to HMRC a couple of years ago I was told that as the pensions were earned in the UK they had to stay there and be taxed there as well.

Yes

[GuestHouse]

This is the third time this subject has come up in a week, perhaps reflecting the eagerness of people to get their hands on the capital in their pension funds.

Anyone thinking of doing so should seek professional advice and the advice of their Pension Trustees.

Certainly if you have a defined benefit occupational pension you should look very carefully at what you will be loosing if you move your pension out of what are regarded as ‘gold plated pensions’.

But the lure of ‘cash’ – and once again we are reminded that many people do not understand what exactly a pension is, and precisely why it should not be put at risk.

[Gary A]

I'm not from the UK so I know absolutely nothing about the pension schemes. I do have a friend from the UK who is now 62 years old. He has been here in Thailand for about 20 years. He is convinced that he will never get any type of pension for the years he worked in the UK. Could this possibly affect him? Any advice would be appreciated.

[billd766]

Does it include my company pension, my armed forces pension, both earned in the UK and my state pension due next year?

When I spoke to HMRC a couple of years ago I was told that as the pensions were earned in the UK they had to stay there and be taxed there as well.

Yes

Thanks Rinrada

I have the feeling that as my pensions are already being paid I may be unable to obtain a cash benefit (which while it is nice) would in the longer term not be a good idea but I will look into it.

[chiang mai]

Does it include my company pension, my armed forces pension, both earned in the UK and my state pension due next year?

When I spoke to HMRC a couple of years ago I was told that as the pensions were earned in the UK they had to stay there and be taxed there as well.

Yes

Thanks Rinrada

I have the feeling that as my pensions are already being paid I may be unable to obtain a cash benefit (which while it is nice) would in the longer term not be a good idea but I will look into it.

Another poster in an earlier thread on this subject (see QROPS) was in a similar situation as your self and found out that he could not take advantage of QROPS because he is already receiving payments.

[AFKAFSinLOS]

This is the third time this subject has come up in a week, perhaps reflecting the eagerness of people to get their hands on the capital in their pension funds.

Anyone thinking of doing so should seek professional advice and the advice of their Pension Trustees.

Certainly if you have a defined benefit occupational pension you should look very carefully at what you will be loosing if you move your pension out of what are regarded as 'gold plated pensions'.

But the lure of 'cash' – and once again we are reminded that many people do not understand what exactly a pension is, and precisely why it should not be put at risk.

Some reasonable points to an extent. However, there are some very opposite points of view to bear in mind:

UK pensions may have been gold plated once upon a time, but for many they now look like tin plated, and in many they cases they have gone rusty.

The propensity for the UK government to change pension law at whim is also annoying as well as a big risk. State Pension these days is a pittance. You couldn't even live securely in Thailand on it let alone UK. Recent years have seen them move retirement age to 65 for women. From 2020 onwards this will start to move towards 68 for all!

For private pensions/ personal pensions the goalposts have also moved. Most people used to be able to take them at 50. For anyone not retiring very soon, they will have to wait til 55. How long before it changes again and you have to wait longer?

Many of us understand exactly what a pension is, and exactly how inflexible it can be. Inflexibility and government rule changes are two of the biggest risks with pensions. So changes such as these and new choices are a very welcome option.

The situation also differs between your average John living in the UK or US, and expats in Thailand. While they have some merit for UK workers, who live all their life in UK, the story is often different for expats. Expats are virtually able to eliminate tax on investment income. They can also have a nice big pot to pass onto family or whoever, unlike UK pensions which often wholly or partly disappear when you die. For Uk pensions, dying sooner than you expect (shortly after retirement - if you live that long ), is also a risk, and in many cases you would have got poor value for money.

Retiring at 40 in the UK is very difficult, and pensions are one reason. Money you have saved cannot be accessed easily due to inflexible rules. On the other hand, an expat could retire in Thailand at 40 if they have saved their money elsewhere tax free. A big plus about being an expat is flexibility on your money options, making early retirement a real option.

Edited April 30, 2008 by AFKAFSinLOS

[GuestHouse]

Well I would agree, if you want to retire at 40 then saving in a pension would not be the correct vehicle to save in - for two reasons:

a) you need to save a huge amount of money in your short working years in order to fund your retirement

as you rightly say, UK pensions are not accessible before age 55

However your other points on pensions need to be read with caution. Fistly, there are three basic forms of Pension saving in the UK:

UK state pension - Payments to which are compulsory if you live in the UK and (and extremely cheap to maintain if you move out of the UK)

Private Pensions - Pension funds that you save for yourself, paying in dividends and paying the management costs - Personal Pensions are Volintary savings

Company Pensions:

i. Defined Benefit - The Contributions and the resulting pension being defined only by the history of the annual salary of the pensioner and years of service.

ii. Defined Contributon - Contribitions being elected by the pensioner during his/her working life and the resulting pension being defined by growth investments.

Like personal pensions, company pensions are voluntary - but they may and often do benefit from a mixture of 'Employer contribtions' (adding to pension fund), 'Employer Funding of Management Costs' and possibly 'Employer paying all costs and contributions' (a free pension to the Employee.

Company pensions also invariably provide extremely good benefits of dependents of the employee/retuiree.

ALSO - Changes in legislation protect company pensions in two ways - They remove company control over and access to the Pension Fund AND they provide extremely good protection of Funds against company closure.

For this reason company pensions are regarded as gold plated - Contrary to the suggestion that Company Pensions are less than exactly that, most remain a very solid investment for retirement and hence the widely given advice - "Join your Company Pension and Don't leave it".

The point here being, that in a thread in which we are discussing moving pensions (ie pensions that are already in place) careful consideration should be given before moving those savings.

Cash is enticing - But Pension Security is something that should not be disgarded for a quick Sing$.

I guarantee that if you ask a financial advisor in the UK about moving your pension out of the UK he/she will give a severe caution against moving a company pension - despite the fact that your financial advisor stands to make money by you moving your pension.

Edited April 30, 2008 by GuestHouse

[AFKAFSinLOS]

Well I would agree, if you want to retire at 40 then saving in a pension would not be the correct vehicle to save in - for two reasons:

a) you need to save a huge amount of money in your short working years in order to fund your retirement

as you rightly say, UK pensions are not accessible before age 55

However your other points on pensions need to be read with caution. Fistly, there are three basic forms of Pension saving in the UK:

UK state pension - Payments to which are compulsory if you live in the UK and (and extremely cheap to maintain if you move out of the UK)

Private Pensions - Pension funds that you save for yourself, paying in dividends and paying the management costs - Personal Pensions are Volintary savings

Company Pensions:

i. Defined Benefit - The Contributions and the resulting pension being defined only by the history of the annual salary of the pensioner and years of service.

ii. Defined Contributon - Contribitions being elected by the pensioner during his/her working life and the resulting pension being defined by growth investments.

Like personal pensions, company pensions are voluntary - but they may and often do benefit from a mixture of 'Employer contribtions' (adding to pension fund), 'Employer Funding of Management Costs' and possibly 'Employer paying all costs and contributions' (a free pension to the Employee.

Company pensions also invariably provide extremely good benefits of dependents of the employee/retuiree.

ALSO - Changes in legislation protect company pensions in two ways - They remove company control over and access to the Pension Fund AND they provide extremely good protection of Funds against company closure.

For this reason company pensions are regarded as gold plated - Contrary to the suggestion that Company Pensions are less than exactly that, most remain a very solid investment for retirement and hence the widely given advice - "Join your Company Pension and Don't leave it".

The point here being, that in a thread in which we are discussing moving pensions (ie pensions that are already in place) careful consideration should be given before moving those savings.

Cash is enticing - But Pension Security is something that should not be disgarded for a quick Sing$.

I guarantee that if you ask a financial advisor in the UK about moving your pension out of the UK he/she will give a severe caution against moving a company pension - despite the fact that your financial advisor stands to make money by you moving your pension.

I guess this is one of your pet subjects. I'm also very well aware of the rules. Do you also teach your grandma to suck eggs

I think you've been away from the UK too long. Things ain't what they used to be.

Vfm in state pensions has been drastically cut. Who wants to voluntarily contribute to something you "might" get at aged 68! worth THB "maybe" 20k a month?. For an expat married to a Thai in Thailand, UK state pensions are even less vfm than your average Brit in the UK. It gets frozen in amount if you live in Thailand, and there are extra difficulties with a Thai spouse's entitlements being more difficult than a Brit spouse.

Vfm on private pensions detioriated enormously when they raided tax credit reclaims on dividends. Age increases from 50-55 made them even more inflexible. Plenty of scandals and rip-off providers over the years too. Equitable Life, Reliance Mutual, "with profits" fiascos.

Vfm in company pensions has also been deteriorating over the years. eg much fewer defined benefit schemes, and much more defined contribution schemes. Even if you find defined benefits these days, its unlikely to be 1/45ths schemes and mainly 1/60ths or 1/80ths. If you leave the company and scheme and become an expat, rises in benefits are often limited at the lower of 2.5% or inflation per year!. A big reason why a young guy might want to move it. That many have also moved the minimum age from 50 to 55 in line with Govt regulations is not good.

BTW Company schemes various enormously, from very good 1/45th defined benefit to small private company set up with minimum benefits, and are not "invariably gold plated."

For older expat guys who've been in schemes for years and are close to retirement, then probably stay put as a general rule. Tho' again the article above shows some interesting options. For a young expat there are better opportunities out there than a UK pension. With a decent employer as an expat you can also often get your employer to provide cash or other alternatives to inflexible pension schemes, which you can then invest with much more flexibility.

I'll take your word on what a financial advisor in the UK might say. Personally I've no need for one.

Edited April 30, 2008 by AFKAFSinLOS

[JohnC]

I'm not from the UK so I know absolutely nothing about the pension schemes. I do have a friend from the UK who is now 62 years old. He has been here in Thailand for about 20 years. He is convinced that he will never get any type of pension for the years he worked in the UK. Could this possibly affect him? Any advice would be appreciated.

The Pension reform Act which was enacted in 2007 will possibly change his situation in that from 2010 the qualifying years for a state pension will be reduced to 30, in addition any completed years of payments of NI will also count pro rata. Later this year the Pension Service say their computers will have been upodated, at that point he can fill in a form online giving his details and they will give him a pension forecast.

Edited April 30, 2008 by JohnC

[AFKAFSinLOS]

I'm not from the UK so I know absolutely nothing about the pension schemes. I do have a friend from the UK who is now 62 years old. He has been here in Thailand for about 20 years. He is convinced that he will never get any type of pension for the years he worked in the UK. Could this possibly affect him? Any advice would be appreciated.

The Pension reform Act which was enacted in 2007 will possibly change his situation in that from 2010 the qualifying years for a state pension will be reduced to 30, in addition any completed years of payments of NI will also count pro rata. Later this year the Pension Service say their computers will have been upodated, at that point he can fill in a form online giving his details and they will give him a pension forecast.

He's entitled to a pension based on number of years of national insurance contributions. They have indeed brought down the minimum number years needed for "at least some pension" as well as number of years for "maximum" pension. This increases everyone's likelihood of getting "something".

This will have to be paid for/funded somehow by the government. Likelihoods include:

- delaying the age at which you can take it, which they've done a couple of times already for ladies: from 60 to 65 to 68 in future and gents 65 to 68; or

- reducing future amounts of pension; or

- increasing taxes; or

- reducing tax benefits;

As JohnC says there's a good chance he would get something, assuming he worked up til the age of early forties. The recent changes could be to his benefit in short term, and to the deriment of others' benefits in long term.

These sort of changes make financial planning and certainty difficult. For those living permanently in the UK they've not much choice. For expats abroad there can be alternatives that give more certainty.

[AFKAFSinLOS]

...

UK state pension - Payments to which are compulsory if you live in the UK and (and extremely cheap to maintain if you move out of the UK)

...

BTW Just curious. How much per annum do you consider to be "extremely cheap" to continue paying NI to get pension?

[GuestHouse]

I guess this is one of your pet subjects. I'm also very well aware of the rules

Yes it is something of a pet subject of mine - I take a very active part in my company pension scheme, my pensions are important to me.

And while I agree you may be aware of the rules, you seem to be confusing the UK pension rules of today with rumor and conspiracy theories of UK pension rules for the future.

BTW Just curious. How much per annum do you consider to be "extremely cheap" to continue paying NI to get pension?

I would say that Class 3 Contributions are cheap £7.35 a week and if you can get away with Class 2 contributions of £2.10 a week then I say you are building your UK state pension at bargain rates.

And about that pension.... The very basic pension is £90.70 per week - something a little over Bh23K per month.... Every month!

So let's do a calculation:

Joe Blogs is 42, he started work at 18 and he has moved to Thailand - He has 24 years of state pension credit - if he pays another six years of Class 3 contributions (£2293.20 - Circa Bht140K) he guarantees a UK state Pension of Circa Bht23K per month - for life.

In the first 7 months of retirement he will have recouped his additional contributions there after he is in profit.

If his wife has a UK national insurance number of her own, she too receives a pension based on her husband's contributions, during his life and after his death.

Now I know you've said you don't need a financial advisor, and perhaps you do not need Bht23K per month from the UK state pension -if so would you really miss £7.35 in contributions?

I'm a little less reluctant to turn down such a good deal.

As for being out of the UK - My pensions are not outside of the UK - as an expat working for a UK based company I enjoy the benefits of an occupational pension (in truth I have 3 - and they have all managed to dodge the perils, real and imagined, of which you warn).

[billd766]

Does it include my company pension, my armed forces pension, both earned in the UK and my state pension due next year?

When I spoke to HMRC a couple of years ago I was told that as the pensions were earned in the UK they had to stay there and be taxed there as well.

Yes

Thanks Rinrada

I have the feeling that as my pensions are already being paid I may be unable to obtain a cash benefit (which while it is nice) would in the longer term not be a good idea but I will look into it.

Another poster in an earlier thread on this subject (see QROPS) was in a similar situation as your self and found out that he could not take advantage of QROPS because he is already receiving payments.

Thank you kindly for that information as it ties in with what I was told several years ago.

I will just have to live on what I get now until next year, 2009 and scrape in ahead of the 2010 nasties coming along. At least I will get an allowance for my wife, the sun still shines here in Thailand (except it is raining today), the food is goodthe people friendly, and life whilst not as comfortable as I had planned is certainly good enough to live here for the rest of my life.

:D

[AFKAFSinLOS]

I guess this is one of your pet subjects. I'm also very well aware of the rules

Yes it is something of a pet subject of mine - I take a very active part in my company pension scheme, my pensions are important to me.

And while I agree you may be aware of the rules, you seem to be confusing the UK pension rules of today with rumor and conspiracy theories of UK pension rules for the future.

BTW Just curious. How much per annum do you consider to be "extremely cheap" to continue paying NI to get pension?

I would say that Class 3 Contributions are cheap £7.35 a week and if you can get away with Class 2 contributions of £2.10 a week then I say you are building your UK state pension at bargain rates.

And about that pension.... The very basic pension is £90.70 per week - something a little over Bh23K per month.... Every month!

So let's do a calculation:

Joe Blogs is 42, he started work at 18 and he has moved to Thailand - He has 24 years of state pension credit - if he pays another six years of Class 3 contributions (£2293.20 - Circa Bht140K) he guarantees a UK state Pension of Circa Bht23K per month - for life.

In the first 7 months of retirement he will have recouped his additional contributions there after he is in profit.

If his wife has a UK national insurance number of her own, she too receives a pension based on her husband's contributions, during his life and after his death.

Now I know you've said you don't need a financial advisor, and perhaps you do not need Bht23K per month from the UK state pension -if so would you really miss £7.35 in contributions?

I'm a little less reluctant to turn down such a good deal.

As for being out of the UK - My pensions are not outside of the UK - as an expat working for a UK based company I enjoy the benefits of an occupational pension (in truth I have 3 - and they have all managed to dodge the perils, real and imagined, of which you warn).

I guess the main difference is my experience is frst hand personal experience, as well as working in related industry firms and having been also involved in setting up pension schemes. On the other hand yours seems second hand based on what your advisor informs you. Some of those firms you are referring to, I have probably worked for or at least their top competitors. Their advice is often not as great as the unititiated think.

Don't get me wrong, UK pensions are not bad options. They are just not the "golden investments" you make them out to be. Particularly for expats who have alternatives, which is what the OP is all about.

You said some of the risks I mentioned were imaginary. I can happily substantiate each part posted and believe me all are real risks. Providing you understand what a risk is. There is also some elements of thinking for oneself in there and projecting forward developments. Particulalrly when you understand how the UK and companies fund their pension systems.

I asked on NI what you consider cheap. That is another area the revenue got it wrong. Advising people all expats who wanted to voluntarily pay NIC, had to pay Class3. Many could have actually paid class 2. If you check out the official government website they now talk of refunding the excess people have paid!!! Another mess...

Your calculations on the state pension are a little naive.

Joe Blogs is 42, he started work at 18 and he has moved to Thailand - He has 24 years of state pension credit - if he pays another six years of Class 3 contributions (£2293.20 - Circa Bht140K) he guarantees a UK state Pension of Circa Bht23K per month - for life.

In the first 7 months of retirement he will have recouped his additional contributions there after he is in profit.

If his wife has a UK national insurance number of her own, she too receives a pension based on her husband's contributions, during his life and after his death.

Firstly you overlook the inflexibility. For a guy now starting at 18, he will have to wait 50 years to get at that money, asssuming he lives that long.

Second you have not took into account the time value of money. He does not recoup his investment in 7 months after retirement, as the value of the pension is altered by time value of money. In your example he also has to wait over 20 years to get it. That's like saying giveme 100 pounds now and I'll double it for you. You really need to ask over what time frame.

Third you have not stated assumptions about inflation and earnings. Have you checked out the extent to which the state pensio keeps pace with inflation, and more importantly earnings. Not really a good record at all. It falls well behind earnings

Fourth: Who's to say that wait doesn't get extended. There are plenty of women out there who once thought they would get a pension at 60. Then it was raised to 65. Then to 68. Do you see a trend here?

Fifth: UK statepensions are funded largely from current work force earnings. People are living longer, the workforce is actually declining as a % of total population. Extrapolating those implications is not good. Something needs to give, eg lower pensions in real terms, getting them later....

Sixth: For an expat intending to live in Thailand, the UK state pension has currency risk.

Seventh: the Uk state pension is correlated to UK inflation, earnings, economy etc. even if it doesn't keep pace with them. Thailand's inflation, economy, earnings will grow faster than the UK in the next 30 years. No point keeping up with the Jones' - you need to keep up with the Somchais. Again not a risk for the UK homebird, but a risk for the expat.

Eighth you need to consider opportunity cost. Where could that money have been invested? The 18 year old is lucky for the state pension to keep pace with inflation. He also has to wait 50 years. An alternative tax free investment should outperform inflation (whether Thai or UK) on average by a decent margin. The money can be accessed any time if needed in 50 years

eg do the maths on investing 380 pounds a year at 24 years with a return of 3% above inflation, as a simple comparison. This could comfortably yield an income of say 7% and well in excess of inflation. If you leave it a further 26 years to compare with the state pension which sits (at best lnked to inflation), every year it falls behind by a compounding 3%

Ninth : When you retire in Thailand the income from your state pension is frozen at that amount. Income from a wise alternative would continue to keep pace and probably exceed inflation. i.e growth alternative vs state pension eroded and declining by inflation each year.

Tenth: Question on dependents is difficult for Thai spouses. You can read on here hassles people have with it. Take a lok at some TV threads on thhis

Eleventh: The sposue pension is lower. Contrast that with an alternative and you pass on 100% hassle free as an asset, which yields income. That can also be passed down generation to generation, compared to the UK state pension, which dies with you and if you arereally lucky with your spouse.

The list goes on. But hopefully that gives you an indication of additional thoughts/considerations in your calcs. Particularly for expats.

My personal take would be to wait until I am much closer to 68 before making decisions on changing rules and moving goalposts.

It is not always that UK pensions are bad. Just there are often better alternatives for expats in Thailand. eg 3% real rate above inflation is easily attainable, compared to frozen compny pensions, or pensions that will "grow by" inflation or less, i.e decrease in real terms until you reach the age you can take them which also increases. As mentioned when you leave a company scheme it is very common to see your benefits grow by the lesser of inflation or 2.5%. Compare that to say 20%+ p.a even on a Thai mutual fund since 2000.

In honesty it sounds like you belong to an era where UK pensions were better vfm than they are today. BTW I have no personal interest in selling any investment products. I have simply learnt to apply what I know though, and develop as my approach to the investment world and life changes. I'd class the OP as an interesting development and having some potential.

For me as an expat in retirement the only tax I'll have is on UK pensions. They are also the only assets I would not be able to pass down the generations, and waiting for 55 (private/company) or 68 (state) is not in my retirement plans...

Last point would be that retiring for you at 40 was not an option. Was that because you haven't maximisd alternatives? UK pension system is not bad. For expats there are often better alternaives. Those that spot them soon, can have earlier retirement...Keep an open mind. The investment world moves on

Edited May 1, 2008 by AFKAFSinLOS

[chiang mai]

I guess this is one of your pet subjects. I'm also very well aware of the rules

Yes it is something of a pet subject of mine - I take a very active part in my company pension scheme, my pensions are important to me.

And while I agree you may be aware of the rules, you seem to be confusing the UK pension rules of today with rumor and conspiracy theories of UK pension rules for the future.

BTW Just curious. How much per annum do you consider to be "extremely cheap" to continue paying NI to get pension?

I would say that Class 3 Contributions are cheap £7.35 a week and if you can get away with Class 2 contributions of £2.10 a week then I say you are building your UK state pension at bargain rates.

And about that pension.... The very basic pension is £90.70 per week - something a little over Bh23K per month.... Every month!

So let's do a calculation:

Joe Blogs is 42, he started work at 18 and he has moved to Thailand - He has 24 years of state pension credit - if he pays another six years of Class 3 contributions (£2293.20 - Circa Bht140K) he guarantees a UK state Pension of Circa Bht23K per month - for life.

In the first 7 months of retirement he will have recouped his additional contributions there after he is in profit.

If his wife has a UK national insurance number of her own, she too receives a pension based on her husband's contributions, during his life and after his death.

Now I know you've said you don't need a financial advisor, and perhaps you do not need Bht23K per month from the UK state pension -if so would you really miss £7.35 in contributions?

I'm a little less reluctant to turn down such a good deal.

As for being out of the UK - My pensions are not outside of the UK - as an expat working for a UK based company I enjoy the benefits of an occupational pension (in truth I have 3 - and they have all managed to dodge the perils, real and imagined, of which you warn).

Excellent post GH.

[GuestHouse]

Firstly you overlook the inflexibility. For a guy now starting at 18, he will have to wait 50 years to get at that money, asssuming he lives that long.

The Opening Post is - I remind you - about moving existing pensions out of the UK.

A guy starting off at 18 doesn't have a pension - So totally irrelevant.

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You are correct Class 2 is an option - Hence I say if you can get away with Class 2 contribtions you are building a UK state pension at bargain prices.

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You asked me to explain 'cheap contributions' I have shown you exactly how cheap - Settled?!

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Yes wrong advice was given about Class 2/3 options - Now corrected and you can now claim back the differnce of GBP5.25p - You may be bothered to do this if a UK state pension of Bht23K per month is such a triffle.

Now for something a little more important.

My experience of UK pensions is FIRST HAND (not second hand as you insist) - I hold rights to five UK pensions - Three Occupational Pensions, One Private Pension (AVC) and my State Pension rights. - These are FIRST HAND.

I accept that you may have some past experience working in the UK pension industry - But what about now?

I am not working in the Finance / Pension industry - I have no financial interest in my comments and advice - I don't sell pensions or work for an organization that does - I trust you do not either - but since you have in the past it might be a good idea to clear that point.

Last point would be that retiring for you at 40 was not an option. Was that because you haven't maximisd alternatives? UK pension system is not bad. For expats there are often better alternaives. Those that spot them soon, can have earlier retirement...Keep an open mind. The investment world moves on

The reason I did not retire at 40 is, and sorry if this is a shock, I actually thoroughly enjoy my job - And I mean really really enjoy what I do and the oportunities it brings me and my family.

This perhaps because I invested in my education, career and the well being of my family, while my employers return an investment in me and my family and my family are an investment that returns endless and priceless dividends.

Edited May 1, 2008 by GuestHouse

[AFKAFSinLOS]

Guest House

Fair enough, you're obviously happy with your life that's the main thing. Some people would look to improve even further, and the OP offers an idea to help do that

For info I used to be a big fan of UK pensions when in the UK, and they are still a reasonable starting point for some. Since a couple of years after leaving the UK, and starting expat lives, I just think there are better alternatives. The quality of UK pensions has also dropped IMO. I still have some UK pensions, but am always on the look out for better alternatives such as possibly above.

UK pensions have become a sort of minimum benchmark for me. Also would love the opportunity to remove the last taxable elements of my investments which just happen to be UK pensions. They also dictate when you can retire, whereas I like to take charge and make my own choices...

All the elements you mention in your last para, providing for family, retrn on investment, education, etc are also fair enough, but it's always worth raising the bar a little and giving yourself even more choices. Work or not work. Retire or not retire...

Edited May 1, 2008 by AFKAFSinLOS

[AFKAFSinLOS]

More annoying tinkering with the UK tax and UK investment system...

Aberdeen Asset Management is considering abandoning the UK as its headquarters for tax purposes as speculation mounts that a wave of British fund managers could head for the exit in frustration at Treasury tax changes, reports the Times.

http://www.digitallook.com/news/2085688/We...AE_Systems.html

This reminded me of the interesting comparison of Aberdeen Thailand's Long Term Equity Fund to a Uk defined contribution pension.

Tax relief on Aberdeen LTF at your top rate, i.e up to 37%. In th UK you'd get basic rate tax relief of just over 20% or claim back 40% as a higher rate tax payer. So highly comparable at start up.

Like a UK pension the fund is capital gain and income tax exempt as it grows.

Unlike a Uk pension, when you cash it in, you are not taxed on it provided you wait 5 years. i.e no tax at the start for you, none in the middle and none at the end. Compared to the Uk that let's you take only 25% at the end tax free, with the other 75% taxable.

Another big plus though is that you can take your money out in full after only 5 years, or just let it run! Compared to a UK pension you can't access until 55!!!?? at the earliest (providing goalposts don't move further again)

The fund was launched in Oct 2004. Since then it is up over 70% after charges in 3 and 1/2 years, compared to over 30% on the SET. If you factor in the free tax that's over 100%/double in 3 and half years

Summary:

Thailand LTF: Tax relief at start, middle and end. 100% taken after 5 years if you want. 100% of proceeds passes to your spouse or whoever you choose on death. Can pass on the proceeds to your children

UK pension. Tax relief at start, middle. TAXABLE at end. Can only tale 25% lump sum at end! Must wait until at least 55, and then often end up buying an annuity. Likely reduced pension for spouse on death. Taxable annuity dies with you and your spouse.

These are the type of options a Thai expat should be considering as alternatives or supplements to UK pensions. And let's not forget Thailand is supposed to be a developing 3rd world country... There are better tax havens and offshore locations out there than Thailand. But with this type of arrangement even Thailand is putting a UK ISA or UK defined contribution pension to shame.

These are the type of things that can help (although obviously just a part) you choose to retire early at 40 in Thailand, instead of 55 in UK. All those extra years to spend with your family, no matter how much you like your job.

Edited May 7, 2008 by AFKAFSinLOS

[GuestHouse]

Just a reminder, I have already stated:

I am not working in the Finance / Pension industry - I have no financial interest in my comments and advice - I don't sell pensions or work for an organization that does - I trust you do not either - but since you have in the past it might be a good idea to clear that point.

How about you AFKAFSinLOS, are you working in the Finance/Pension industry? Selling insurance, investments or any other 'finance' type employment?

[AFKAFSinLOS]

Just a reminder, I have already stated:

I am not working in the Finance / Pension industry - I have no financial interest in my comments and advice - I don't sell pensions or work for an organization that does - I trust you do not either - but since you have in the past it might be a good idea to clear that point.

How about you AFKAFSinLOS, are you working in the Finance/Pension industry? Selling insurance, investments or any other 'finance' type employment?

You seem a little obsessed with this phrase and my own personal circumstances. Is that a case of lost ion the facts so make it personal... Furthermore the answer is already stated above.

In honesty it sounds like you belong to an era where UK pensions were better vfm than they are today. BTW I have no personal interest in selling any investment products. I have simply learnt to apply what I know though, and develop as my approach to the investment world and life changes.

I guess you stick your head in the sand and refuse to read/hear posts on TV, that don't fit your views, in the same way you refuse to see how the UK pension industry and investment landscape has changed.

Or perhaps you're just annoyed, there are people out there who sharper in spotting alternatives, and that you're boring rhetoric on UK investments is somewhat outdated.

Let's get back to the facts, instead of making it personal. The Thai LTF is quite superior to a Uk defined contribution sceme from a tax perspective. Thai RMF's are also more favourable for some, and particularly those towards their 50's.

Now a clever chappy like yourself may put 2 + 2 together here, if you take your head out of the sand for a moment. Consider moving some of the UK pension as per the opening article. After 5 years you can take the cash. Then reinvest in a Thai LTF or RMF (or possibly a pension in any other country you are working in) and get additional tax relief from the Thai (other) Govt. Or did you miss that one as well, while repeating your own mantras again and again

[GuestHouse]

You seem a little obsessed with this phrase and my own personal circumstances. Is that a case of lost ion the facts so make it personal... Furthermore the answer is already stated above.

Forgive any 'intrusion' I certainly do not want to make anything in this discussion 'personal' I simply ask if you are working in the financial services industry because I would like to understand if the advice you give is 'independent' of business interests you may have.

Certainly having read above, and all that you have said after I asked the question I can't see that you have given an answer.

So can I please ask you to indulge my curiosity and tell us do you work in the financial services industry?

I think this is a pretty important question as the answer will illuminate the advice you are giving.

[AFKAFSinLOS]

You seem a little obsessed with this phrase and my own personal circumstances. Is that a case of lost ion the facts so make it personal... Furthermore the answer is already stated above.

Forgive any 'intrusion' I certainly do not want to make anything in this discussion 'personal' I simply ask if you are working in the financial services industry because I would like to understand if the advice you give is 'independent' of business interests you may have.

Certainly having read above, and all that you have said after I asked the question I can't see that you have given an answer.

So can I please ask you to indulge my curiosity and tell us do you work in the financial services industry?

I think this is a pretty important question as the answer will illuminate the advice you are giving.

Let me try and make this clear one last time:

1) As I have stated twice already:

"I have no personal interest in selling any investment products. I have simply learnt to apply what I know though, and develop as my approach to the investment world and life changes."

2) My posts are my own opinions, views and suggestions. They are not advice to individuals, more things people generally might want to consider or not.

3) I have pointed out some flaws in your advice though. eg you advise a 42 year old man who has paid 24 years NI, and then becomes an expat, to continue paying NI. You have pointed out that 30 years contribution is the max. Besides your numbers and presentation of the risks being unsound, your calculations are flawed and don't consider the time value of money.

On the other hand I've said, why continue paying now when you only need a further 6 years for maximum. You then have to wait over 20 years (if you live that long) before getting anything back. Why not wait until closer to retirment age, when you know what the rules are. Meanwhile you can invest your money elsewhere. Your advice here is outdated, and while perhaps made some sense with a retirement age of 65 (instead of 68 now) and contributions of 44 years needed (only 30 now), the advice is outdated! You're simply repeating rhetoric learnt over the years without taking into account changes or anticipating changes that might happen.

4) There is no conflict of interest in what I write. I have enough relevant qualifications to hold myself to ethical standards on money, which far exceed those on this board. eg you are not qualified to offer financial advice but you do so, and seem to pride yourself on it. I'm offering views, opinions, ideas to consider. Additionally with the exception of Aberdeen I didn't mention any specific products. I mentioned Aberdeen because it was relevant. You can read from other posts I also refer to ING, TMB, Ayudhya (BAY). They also do LTFs. I've even posted direct links to them. Surely you are not claiming I work for all these companies at the same time.

5) This is an unregulated internet forum, particularly when it comes to financial aspects. It's pointless you pretending otherwise. You need to bear this in mind when you give out your own personal info, as well as reading posts of others or taking their "advice". I would have thought that was obvious though.

Back on topic:

Old mutual (another investment/insurance house in the UK) is also considering moving domicile due to proposed adverse tax changes by UK Government...Again highlighting the risks and instability relying on UK tax system.

Edited May 8, 2008 by AFKAFSinLOS

[GuestHouse]

Back on topic:

That would be a welcome change.

[AFKAFSinLOS]

Back on topic:

That would be a welcome change.

You mean from your anal repetitive questions

Personally I welcome the sort of options highlighted by OP, which open up the investment game, and give more choices/flexibility to us expats who no longer live in UK.

Edited May 8, 2008 by AFKAFSinLOS