I had a conversation on international pensions with a financial adviser last week; his name was Joe Cairo. He had some good ideas, however none that I could put a value on. You could say that I am in the risk business, but some things even scare me……
There is no ‘magic wand’ that transforms small savings today into a substantial retirement fund tomorrow; that idea was always a pipe dream. Governments, companies and advisers have always underestimated the real costs and risks of pension funds. One of the problems with regards the failure of modern finance is the lack of understanding by the industry of how the models actually work. The situation is often compounded by a ‘groupthink’ approach in the financial sector, which puts pressure on getting business completed at whatever cost. Most of us who live abroad have had someone try to sell us an international pension at one time or another. It is not simply a matter of having a pension plan; the money has to be invested in funds that match your risk profile and also deliver returns over the period.
At times over the last two years it seemed as if the long-term pension models no longer functioned. Thankfully a recovery in the stock-markets has left investors in a more positive frame of mind, as highlighted by Randy Diamond: http://www.pionline.com/apps/pbcs.dll/article?AID=/20100531/PRINTSUB/305319982&crit=private%20pensions
However there are still many lessons to be learned and a need for greater governance in order to prevent pension funds being structured as a giant bet on the stock market.
International pensions for expats
AXIS Strategy Consultants offer pension planning services to expatriates with a view to helping them understand their retirement options. If you would like to find out more, please download our free guide on offshore pensions.