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Providing for your retirement is a major consideration in your financial planning. Determining when you can afford to retire and whether you can maintain your lifestyle requires careful planning - let us help. Offshore Pensions
By dint of their name, such pensions are not restricted by tax implications or retirement parameters you typically find in taxable jurisdictions. Contributions can be made into your offshore pension free of tax as long as you remain in a tax efficient jurisdiction. Moreover, the returns are virtually free of tax and hence the opportunity for growth is better offshore. With State and Corporate Pensions in many European countries in tatters, the onus is firmly on the individual to secure their retirement.
As long as you are offshore the pension can be as well so the portability factor is great when maintaining a disciplined and constant approach to your pension contributions. You can select a retirement date that suits you and depending on your tax status at retirement you can elect to take your entire pension fund immediately if required. Most will draw an income at retirement and, unlike onshore pensions, will pass on the remaining funds to their spouse, children or whoever in the event of their demise.
Your offshore pension can include additional protection benefits too if required. If you are planning to save a considerable sum by the time you retire but you die before that date, then your family will be facing a frugal retirement. However, with some carefully placed protection, you can ensure this target is met irrespective of death or being diagnosed critically ill.
It is also worth considering protection your asset against unfriendly taxation authorities by the use of offshore Trusts. Similarly such vehicles can be used to ensure your pension benefits are passed quickly to your beneficiaries in the event of your demise.
Some Companies do employ a Corporate Benefits Package, which may include a Company Pension Scheme. Most companies in the GCC are still opting for the minimum Gratuity entitlement, but this is soon to be relinquished due to the numerous inherent complications. Similarly, if we were to assume that you have been employed in a Company in the United Arab Emirates for 15 years, your first years Gratuity entitlement has made no growth (not even deposit rate!) for the remaining 14 years you have worked.
Just think what that contribution could have yielded over the same period in some Managed Pension Fund. Gratuity serves Companies but no benefit necessarily for employees hence the move to Gratuity Replacement Schemes (Corporate Pension Schemes) to attract and retain key staff members.
So the offshore pension solution offers greater flexibility, tax-free growth and the ability to pass on the asset after your death. Please contact us to review your existing arrangements (if any) and a forecast/proposal in order to secure your retirement.
Onshore Pensions
Onshore Pensions are fine for those who are resident for tax purposes in their home country. You are not allowed to continue contributions to an onshore private pension when resident overseas, so if you are doing so - stop now. This is because tax relief is applied to onshore pensions – if you are not paying it in the first instance, how can you qualify for tax relief!
Onshore Company Pension Schemes on the other hand are allowed some leeway by the Tax Authorities. You can remain part of your Company Scheme and continue contributions whether voluntary or not whilst overseas. You can also take advantage of your Annual Voluntary Contribution allowance too if you wish. Any non-contributory perk your Company provides whether in additional funds, bonuses, protection benefits or share options should be exploited to the fullest.
However, if you are in a final salary scheme you should be aware that many are currently under review since they place too much of a financial burden on the Company as retired ex-employees are living longer nowadays. Most firms nowadays are opting for a defined contribution scheme or sometimes called money purchase, which requires more input from the employee to build up a sizeable retirement fund. Typically an employee would need to save 12% of their salary to enjoy the same benefits of a final salary scheme. Examples of companies who have scrapped their final salary scheme are Astra Zeneca, BT, Barclays, Sainsbury, Lloyds and Boots to name but a few – there are certainly more to come!
The biggest issue with onshore pensions is that you can never get your hands on the money until your pension age. And at pension age you are only allowed 25% as a tax-free lump sum (and this too is under threat! ) with the remainder as your pension for life. You are encouraged to buy an annuity with the remainder (compulsory at age 75) to provide income until you die. When you die so does your pension and all the years of saving are lost eventually back to the pockets of the Inland Revenue.
Some company schemes will provide limited widows benefits but certainly nothing will be passed to the estate for family or similar beneficiaries to enjoy well after your long years of hard work and saving. If you had thought about gifting this asset to grandchildren for school fees or similar – it will not happen.
If you are resident for taxes in the United Kingdom you have very little to cheer about with regards to pension planning, however, if you are overseas the situation is quite different. Many expatriates have left a pension(s) in suspension at home and are unaware of their value or their projected income. We can provide a detailed analysis of your pension and offer solutions to transfer them if required if you contact us.
In case you are not aware, Self-invested personal pension plans were launched by the Inland Revenue in 1989 to give investors freedom to control the assets held in their pension pot. Until that time people had relatively little choice over what went on in their pension scheme, whether they took out a personal pension of their own from an insurer or relied on their employer's scheme.
Sipps represented something of a breakthrough as they separate the setting up of a pension scheme from the management of the assets held in it. In other words individuals are free to manage their portfolios, either on their own, or with advice from a stockbroker or financial adviser. The administrator then deals with the paper work and legal and tax issues involved with the decisions taken on the portfolio.
Sipps can invest in a far wider range of assets than most company or insurance schemes would allow. Stocks and shares, both at home and overseas, authorised investment funds such as unit and investment trusts, and commercial land or property are eligible for Sipps.
Another interesting incentive for a Sipp is the ability to alter the retirement date previously set by your original pension. Everyone wants to retire early nowadays and if your planning and the structure of your Sipp allows this; then why not.
Moreover, in the event of your demise a Sipp passes to your estate IHT (Inheritance Tax) and CGT (Capital Gains Tax) free. Obviously with any kind of financial planning it is important to seek independent advice and the merits of each individual's circumstance should be taken in to consideration. Globaleye provides a holistic financial planning approach and can advise on ascertaining the value and transfer viability of your frozen pension.
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Pensions 
