Introduction
For a variety of reasons it is common for an expatriate to have a disjointed and inadequate pension provision and, due to their generally nomadic lifestyles, many are likely to have deferred or frozen pension entitlement from previous employment. In many cases the opportunity exists to have these funds transferred to a personally owned pension scheme. The very nature of international employment means that an individual's pension arrangements must be comprehensive and yet portable & flexible.
All western societies have structured pension arrangements. These will normally be in the form of a government-sponsored old age pension and perhaps a second government earning - related pension or a company scheme with incentives to encourage individuals to contribute.
These incentives take various forms such as a tax free fund for contributions, personal and company tax relief on contributions paid and often, at retirement, a portion of the fund can be taken tax free, while the remainder of the fund must be used to purchase an annuity to give income in retirement. These incentives are given to ensure that individuals are self reliant in retirement and do not fall back on the state.
In view of these well structured pension arrangements it is surprising that many expatriates fail to contribute adequately once they move abroad. By failing to do so they create a pension gap with a resultant shortfall in income at retirement which can mean being unable to receive a satisfactory income.
As an expatriate or international investor you have an excellent opportunity to fill the pensions gap by effecting an offshore pension plan. These plans have similar advantages to onshore approved arrangements.
The onus of retirement provision has shifted from the state to individuals and companies. However both personal and company pension schemes have been hit by the worst stock market conditions for a generation. Many big name companies have closed their lucrative final salary schemes - reducing the amount they pay into their employees pensions. Therefore it is vitally important to make adequate pension contributions while you are an expatriate or an international investor.
Consider the facts and then get planning
