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Investing for growth needs care overseas
| Published: | 29 Oct at 6 PM |
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As soon as expats move overseas and are no longer tax-resident in their countries of origin, the usual rules as regards investing for growth change radically.
For Britons, any UK pension is no longer tax-efficient, UK bank accounts are no longer the best way to transfer money internationally or withdraw money from an overseas ATM, and the familiar UK financial advisor can’t advise. In addition, three lesser known factors about which most expats are unclear can also have serious effects on savings.
The first factor affects UK private or occupational pensions once investors are overseas, with HM Revenue and Customs’ introduction of the Qualifying Overseas Pension Schemes, commonly known as QROPS, intended as a solution which keeps people saving. As with many investment schemes, confusion has mounted over the past several years, with HMRC disallowing many products and unethical overseas-based FAs cashing in on commission payments raised by misinformation or even deliberate mis-selling.
Basically, QROPS can be massively beneficial and obviate the need to purchase annuities as well as ensuring beneficiaries get the unspent balance at your death, but they’re decidedly not for every retiree. Although pensions can be safer when moved abroad, reliable, qualified professional advice must be sought.
Another disaster waiting to happen can be triggered by the use of offshore financial centres combined with bogus expat financial advisors targeting new arrivals in favourite expat destinations. The rule here is that, if it sounds too good to be true, it isn’t, and the security of the retirement nest egg is more important than the latest in great deals.
Avoiding those peddling amazing deals in the property, football club and other shady sectors of the financial world is best done by asking to see proof of all qualifications, plus a work permit where applicable. Remember that local institutional investments don’t hit you with excessive charges and can give better interest rates than your home country’s banks.
For Britons, any UK pension is no longer tax-efficient, UK bank accounts are no longer the best way to transfer money internationally or withdraw money from an overseas ATM, and the familiar UK financial advisor can’t advise. In addition, three lesser known factors about which most expats are unclear can also have serious effects on savings.
The first factor affects UK private or occupational pensions once investors are overseas, with HM Revenue and Customs’ introduction of the Qualifying Overseas Pension Schemes, commonly known as QROPS, intended as a solution which keeps people saving. As with many investment schemes, confusion has mounted over the past several years, with HMRC disallowing many products and unethical overseas-based FAs cashing in on commission payments raised by misinformation or even deliberate mis-selling.
Basically, QROPS can be massively beneficial and obviate the need to purchase annuities as well as ensuring beneficiaries get the unspent balance at your death, but they’re decidedly not for every retiree. Although pensions can be safer when moved abroad, reliable, qualified professional advice must be sought.
Another disaster waiting to happen can be triggered by the use of offshore financial centres combined with bogus expat financial advisors targeting new arrivals in favourite expat destinations. The rule here is that, if it sounds too good to be true, it isn’t, and the security of the retirement nest egg is more important than the latest in great deals.
Avoiding those peddling amazing deals in the property, football club and other shady sectors of the financial world is best done by asking to see proof of all qualifications, plus a work permit where applicable. Remember that local institutional investments don’t hit you with excessive charges and can give better interest rates than your home country’s banks.
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