You don’t’ have to be a premier league footballer, a Formula ONE racing driver or lets face it a British Peer! UK expats can benefit from tax havens for their funds and their pensions too. Have a look at an interesting Daily Telegraph article. http://bit.ly/cBEGDM
You may not want to hear it but the first thing to remember is to remember you may come back! Talk to many expats abroad and they’ve probably moved abroad somewhere else before. Don’t burn bridges; pay owed taxes and parking fines. This isn’t so much as a comprehensive checklist, I’m sure you have one but this is a list of the most essential but overlooked “todo” items.
Over the last couple of years, expat pensioners in Europe have seen their pensions dwindle as the value of the pound plummets against other major currencies. They have also been hit by the increasing bank charges to service their income. David Retikin of Pryce Warner International mentions, “ its astounding just how little planning retired expats do to protect themselves against currency fluctuations. Qualifying Recognised Overseas Pension Scheme, or QROPS to quote its popular name protects expats by reducing real value fluctuations and the scheme attracts lower tax liabilities . . . its’s a simple yet very effective initiative”.
UK Chancellor Alistair Darling’s announced his pre-Budget report this lunchtime. The main points are that VAT is back up to 17.5% from the existing 15% as from 1st January 2010. Basic state pension will rise by 2.5% on April 2010 and national insurance rates to rise by 0.5% from April 2011. Stamp duty break on certain properties will end on 1st January 2010. Child benefit will rise by 1.5% in 2010 and public sector pay increases will be capped at 1% for two years from 2011.
People are individuals with different aspirations and attitudes. Whatever your future plans are, the salient point for the majority of us is to enjoy financial security and have a regular income later on in life. Overseas pensions such as QROPS and prudent offshore investments can make a great difference to the overall value of your nest egg. With the number of financial products available the most important decisions is deciding whom to entrust and guide you in the right direction. Pryce Warner has many years of experience and matches products to individual requirements and circumstances affording you security, flexibility and peace of mind for the future.
Free QROPS guide;-
The annual appraisal of the state pension is traditionally based on September’s inflation results. The retail prices index was – 1.3% the previous month and was expected to be in parity or less for this month.
The resulting figures will see the state pension increase a mere £2.40 from next April, half the rise brought about the previous year.
The paltry increase will see pension payments increase from £95.25 to £97.65 per week, which prompted furious outbursts from politicians and Age Concern, whom are lobbying for reform in the UK pensions system.
It is thought that thousands of men and women already over the state retirement age have put off full retirement to earn an extra income for their domestic or QROPS overseas pension.
With the excitement of a new life as an expat, a new country and possibly a new culture, and the distinct possibility that the departure date arrives sooner than expected, it’s incredibly easy to forget some small but vitally important jobs. Expats, you need to get sorted! And sorting your jobs into categories will make the whole process much easier.
Organise your finances before departing! You may leave your UK bank accounts open for a while. This helps to preserve your recognition by UK financial institutions and safeguard your credit rating. Cancel standing orders so they are not coming out of your account once you leave. Direct debits are best cancelled around 6 weeks prior to your departure. The main ones are; telephone, satellite television, internet connection, electricity and gas, but there may well be others – check your statements! If the arrival of statements at your old address is your worry then now is the time to switch to online banking and online statements. It will be easier to keep track of transactions from your new home. Sort out any outstanding debts, as no matter where you go you can be found. Should you choose to cancel your credit cards, be sure you obtain a full closing statement.
Inform Official Organisations. You are obliged to let official bodies know that you’re moving. Start with the following: the tax office, the National Insurance Contributions Service and your pension companies. You may be pleasantly surprised to learn that you may be eligible for a sizeable tax rebate. Additionally informing the DVLA of your move keeps their records will be up to date with your position and means you may receive part of the Road Fund Licence money should you sell your car and return the tax disks to them. Inform your doctor and dentist so they can arrange hand over files for you to take with you.
Keeping in Touch. Clearly, when you’re saying your farewells you need to collect all contact details of those closest to you. Try to put them all in one address book and keep it safe! Additionally you could put all the information on your laptop, a CD or a memory stick or in a file with the rest of your important paperwork.
The MPs expenses scandal resulted in decreased popularity and the press scrutinizing their spending and entitlements. MPs are now permitted to an annual retirement income of around £40,000, calculated on this being two thirds of their final salary. So, what about the rest of us, who has the best deal?
Well, let’s look at the public sector first. It’s a widespread belief that the public sector are paid less than the private sector, but make up for this in better working hours, job security and boosted pension funds. On balance, even in today’s uncertain times, what could be safer than a final salary pension fund backed by UK plc? And add to this the fact that they are index linked – the monies paid out will be a fairer reflection of the member’s true, rather than their estimated, cost of living. Unfortunately it’s not as straightforward as it would seem as not all public sector pensions are created equal.
Armed Forces personnel, on the whole, make no financial contributions to their pensions, however the rest of the public sector workforce contribute six to eleven percent of their salary, the rest being made up by the British taxpayer. It has been estimated, by The Pensions Policy Institute, that the total annual bill is £16 billion. The Government have taken steps to lessen this amount; by raising the retirement age of civil servants, teachers and NHS workers’ to 65, but this does not affect those already qualifying for a public sector pension as they are bound by whatever age the scheme was originally set.
For private sector workers, 80% of final salary schemes are not available to new entrants. More worryingly even those in active schemes are not secure, with defined benefits schemes being changed on the grounds of lack of affordability, and being transferred into defined contributions schemes. So it seems that public sector employees may get a better arrangement after all despite the lower wage than their private sector counterparts.
Therefore if you are not willing or able to change career to safeguard a better pension, what can you do to make yours as fruitful as possible? Number 1. Take professional advice about the correct pension for your circumstances 2. Arrange it as soon as possible and finally 3. Contribute the maximum you can.
Free QROPS guide;-
A SIPP or to give it its full title a “self invested personal pension” is in itself a pension plan. It is a “wrapper” that encompasses all your investments until you retire and start to draw a pension. In essence a SIPP allows you to make your own investment decisions from a barrel of pre-approved investment options. A good self managed or third party managed SIPP can be extremely beneficial in terms of tax relief and pension income when you retire compared to standard pension plans.
Typical approved investments include government securities, insurance company funds, investment and unit trusts, traded endowment policies, National Savings products and commercial property; the list is by no means comprehensive and different providers will offer and specialise in different investments depending on your personal circumstances and aspirations.
Free QROPS guide;-
Is there any point in opening an offshore savings account? This seems to be a big question for many people leaving the UK. Post emigration many expats continue to use the British banking system, in part due to familiarity and recourse for any discrepancies or queries that may occur with their bank account. However, this decision has to offset with the substantial benefits that can be realised once you lose your tax residency status in the UK from even the simplest form of offshore savings account.
You can also save offshore for your pension – and you can do so through a more conventional offshore pension plan such as QROPS. The offshore savings and investment paradigm has dramatically changed in recent years. Its no longer seen as slightly dodgy to have offshore accounts in fact expats who don’t are seen as behind the times.
