Offshore pension plans and retirement


Offshore pension plan - Tax Free Zone

Offshore pension plan

Wouldn’t it be great if you could keep contributing to an offshore pension plan as you move from one job to the next, thus reducing the risk of any setbacks in your plan for retirement?

This part of the website examines the process of pension planning for expatriates in terms of their retirement strategies. This particular page acts as a reference to a number of other pages in the section that address the issues associated with expat pensions. These include the following:

  1. The difference between a UK private pension plan and an international retirement plan
  2. The main attributes of Offshore retirement plans
  3. The benefits of overseas pension transfers for expatriates

What are Offshore Pension Plans?

Labour mobility is an essential element for the successful integration of business across the globe. Expatriates, with their finely honed skills, are important factors in this equation. The unhindered movement of labour contributes towards growth and economic prosperity; it also helps to make the world economy more dynamic and competitive.  Due to the mobile nature of international employee contracts, expatriates are in prime position to take full advantage of offshore pension opportunities.

View our explanatory video about Pension plans for expats below:

Saving for retirement as an expatriate can be a challenging exercise. Employees can be posted to several different countries throughout the course of their careers. More often than not, each country has different pension fund legislation, coupled with diverse tax regimes that act as barriers to the portability of pension funds. If you are considering retirement abroad, you may well be in a position to take advantage of offshore pension plans, and in so doing improve both the investment return and tax efficiency of your savings.

Welcome to the world of offshore pensions, where it is possible to access a wide range of funds whilst enjoying the benefits of tax free growth on investment.

The offshore pension fund industry was developed in the 1970′s when UK-based financial institutions established non-domestic fund management subsidiaries, targeting expatriated investors. Offshore funds are domiciled outside of the UK. They are therefore regulated by the authorities in the country where they are located. Established offshore investment centres such as the Isle of Man with their independent legal, political and regulatory framework, offer both tax efficiency and security to clients. 

       1.   International Retirement Plans and Domestic Pensions have a number of differences

The rules, regulations, tax benefits and investment options available to international retirement plans can differ significantly from domestic schemes. The features and benefits can take many forms. One of the most significant features is that plans can be structured to take advantage of the favourable tax treatment offered to investors in certain tax jurisdictions; as such any savings in taxation can result in a higher return on your investment.

       2.   Offshore Retirement Plans 

The terms ‘offshore retirement plan’, international retirement plan’ and ‘offshore pension plan’ are inter-related in that they ultimately fulfill the the same needs for individuals. There is no major distinction between them other than that British people tend to refer to pension planning whereas US citizens prefer to use the terminology of retirement planning. International retirement plans or offshore pension plans are an attractive option for executives of international companies and internationally mobile employees or contractors working outside their country of origin. Common characteristics of an  offshore retirement plan include both flexibility in terms of premium contributions and portability.

       3.   Benefits of Overseas Pension Transfers

For those seeking to retire outside of Britain, UK pension schemes are not very portable. Pension plans can be problematic for workers who change countries while employed, or for expats who want to retire outside of the UK and take their funds with them. Many expats have opted for an overseas pension transfer to a Qualifying Retirement Overseas Pension Scheme (QROPS) in part to avoid these complications.

How much do I need to retire

It is possible to make a brief calculation to find out just how much you would need to retire; Below are a a couple of  ‘rules of thumb’ that should help’:

  1. Retirement plan – 50% rule: Take the age you start your retirement plan and halve it. Put this percentage of your salary aside each year until you retire.Retirement plan example: An individual starting his / her retirement plan at age 32 needs to invest 16% of their salary for the rest of their working life.
  1. Annuity – 13 times rule: To secure a consistent level of income payments on the purchase of an annuity,you will need to accumulate an amount approximately equal to 13 times the annual income you would like to have upon retirement.Annuity example: In order to receive €50,000 per year in lifetime income payments from an annuity, you will need a pension fund of €650,000…. to create a pension fund of €650,000 it is necessary to save circa €750 per month at 8% interest for 25 years.

Alternatively, you may prefer to click on our pension calculator to determine the size of your future retirement fund.

Offshore pension plans and retirement planning 

AXIS Strategy Consultants act as an agent for a number of international banks and insurance companies that specialize in offshore retirement plans.

Take the first step in providing for the future by contacting us. Our financial advisors can offer you assistance in all areas of offshore pension planning and retirement. If you would like us to help you plan for retirement, please go to Financial health-check Once you have submitted the form to us, a financial advisor will contact you to discuss your specific retirement needs.

Download our .Pdf file about “Golden retirement DYI: Offshore pension plans in 10 steps”

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