Offshore Pension Plan

Published / Last Updated on 15/01/2015

Video looks at what an offshore pension plan really is and what you should watch out for when saving for retirement as an expat.


“Hello there, I'm wearing a T-shirt from the Cayman Islands so the subject is ‘expatriates’ and quite specifically expatriate pensions or offshore pensions. Offshore pensions explained.

I get a lot of people who are planning to leave the UK or they have already expatriated and they are living outside the UK: might be working in the United Arab Emirates or wherever it might be and they make contact, or Australia or Spain or France or wherever or the States and they want to talk about offshore pensions.

There is no such thing as an offshore pension scheme, there is no such thing as an international pension scheme. What they really are is offshore savings plans, so you may be saving regularly, just in the same way that you might save regularly into an onshore UK pension scheme, but when it's offshore is just the savings plan.

So you don't have to wait until you're 55 or 60 or 65 or anything like that to access your funds. An offshore pension scheme is fundamentally an offshore savings plan that you can access any time, save on a regular basis, you can save into low-risk funds, medium risk funds, higher risk funds, cash funds et cetera and because they’re in an offshore environment then they grow they that basically tax-free.

Until you decide to start withdrawing money from your offshore plan or you may live in a country where they decide to tax them anyway even if you haven't taken any money out.

So that's what an offshore pension scheme is, fundamentally just a simple offshore savings plan, regular savings plan or indeed a lump sum savings plan it can be and the one thing that I will raise with this is to be very, very careful about commissions.

Commissions are these little ‘hidden nasties’ that are hidden in the charges of your offshore pension scheme or your offshore savings plan and are paid out your financial adviser. Now, in the UK we are required when we give Financial Advice to agree a fee with you as a client but that's not necessarily the case when you leave the UK depending upon where you live. [And] I've seen some absolute horror stories of some of these offshore savings plans paying huge amounts of commissions to the financial adviser or the offshore expat financial adviser that sold them and what that means is the charges inside your savings plan, your offshore plan, they can be huge and it may mean that you’ve got to get significant growth on your offshore savings just for it to standstill.

So no such thing as an offshore pension scheme, there are only offshore savings schemes both regular premiums and lump sum savings schemes.

Beware of the expatriate commission hungry salesperson.

Always, always ask your financial advisor to quote you a fee to do the work and if in doubt contact me we arrange offshore savings and ‘offshore pension schemes' on a regular basis.

Usually, they are available in US dollar, sterling or euros denominations or indeed a mixture of the three. So just be careful, no such thing as an offshore pension plan even though the brochure might say it is, it's really just an offshore savings plan and be very, very careful about those hidden charges and those hidden commissions.

Talk to us or talk to your financial adviser about fee only schemes where you pay a fee for the research and advice of your offshore pension plan. Thanks very much for watching.”

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