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Let's start with the basics...

What is retirement planning?

Retirement planning is the process of identifying your retirement goals and creating a comprehensive financial plan to get there. This includes:

  • having a life plan, assessing your current income, savings, investments and expenditure to work out how much is enough for you,
  • then working out what tools you may or may not need to reach your goals.

You can start your retirement planning at any point in time; the earlier the better.

The key is to identify what you want your future to look like and creating a sound financial plan to help you get and keep the life you want. Retirement Planning is a holistic approach that doesn’t just cover you financially, but helps you make better lifestyle choices to achieve your ideal future.


Retirement planning that helps you live your desired life.

Key factors in retirement planning for international professionals

There is no better time to start your retirement planning than today, but there are some key factors to consider:

1) Objectives -

Having a clear understanding of what you want in life, and what makes you happy, is key to identifying your retirement goals before you begin your retirement planning journey. Whether your objective is to spend more quality time with your family, being able to make your own decisions or moving to a Caribbean island, it's easier to plan your life around what's important to you once you've identified it. This will help you focus on what you need to do to make it happen.

2) Timeline -

It is never too early or too late to start thinking about your retirement, but planning your finances from an early age will give you some advantages. Not only will it help you earn more through compounding, but could even mean retiring earlier. A comprehensive plan should be based on an analysis of your current financial position, income, expenses and future life plans. A financial planner can help you identify your life goals and plan your finances around them.

3) Risk tolerance - 

Not everyone has an appetite for high risk. A financial planner can help you understand what your risk tolerance is and how comfortable you are with investing. Generally, the younger you are when you start your retirement planning, the higher appetite for risk you can have as you have longer to navigate market fluctuations. 

4) Investment choices -

Investment choices are an extremely important part of retirement planning. As an international executive, chances are you’re a high earner, but is it wise to just save when you can make your initial savings work to generate more savings for you? Understanding the types of investments best suited to you and starting to invest earlier on in life will help you reach your retirement goals sooner.  

5) Inflation and outside factors - 

It is extremely important to consider inflation and other external factors that can affect your retirement plan. Inflation can diminish your purchasing power in retirement while increasing the cost of what you need and can seriously hinder your retirement savings. It could also decrease the value of your investments. Working with a financial planner to protect your hard-earned wealth from inflation, taxes and other external factors becomes a very important part of your overall retirement planning.

Why do you need retirement planning?

When your working years come to an end and your employer’s no longer subsidising things like healthcare, phone bills and wellness memberships; how much will you really need to cover everything in retirement? Conventional wisdom says you’ll need roughly 70-80% of what you currently earn/spend. Research shows most of us are unaware of this and consequently unprepared.

According to Forbes, about 10,000 baby boomers in the USA reach retirement age every day. 25% of them have no retirement savings. It’s important to note this problem’s not unique to the USA alone. There’s a projected $400 trillion global retirement savings gap by 2050. 

Retirement planning aims to help you make the most of your earning opportunity as an international professional so you can achieve your ideal future.


Speak to an expert to start your retirement planning today 

Is it too late to start your retirement planning?

To answer the question, it’s never too late to start your retirement planning.

However, the age you begin can have different implications and requirements:

Age 21 - 35

Starting your retirement planning in this age range means that your investments will have plenty of time to mature. Investing sooner will help you reap more benefits from compounding. Compound interest works  best when you have time on your side. It allows for your income to self-generate more income through interest over time, meaning the overall amount you need to invest would be smaller than investing when you’re older.

Age 36 - 50

These mid-life years, if planned correctly, can be the best saving and interest-earning years and can make a considerable impact on your retirement planning.

People at this stage of retirement planning can take advantage of their higher income to start investing higher amounts. Compounding truly starts to gain traction as you add to your savings in this phase. Having the right financial planner to advise you about what to invest in, risks and taxes is vital to protect your wealth whilst you’re accumulating it.

Life insurance cover for you and your family is also very important in this phase as it can protect you from unforeseen life events that could potentially hinder your retirement plan.

Age 50 - 65

By the time you reach this phase of life, you can take advantage of a lot of changes. Previous long-term debts such as mortgages have been paid off and your salary may be at an all time high as a senior international executive or business owner, which allows you to save an even greater proportion of your income.

Finally, making sure that you're covered with long-term care insurance plans helps you protect your wealth from unforeseen medical conditions or loss of employment that can have detrimental consequences on your retirement savings.

How to begin your retirement planning journey

Retirement is an exciting prospect. You need to start thinking about it long before you plan to retire.

The first thing to do in retirement planning is to identify what you want to achieve in life and what makes you happy.

Retirement planning focus

It could be sailing off into the sunset in the Mediterranean or spending more time with your family, either way you need to have a clear picture in your mind before you start ramping up efforts towards it, so that by the time you are ready to move into whatever you call this new period of life, you have a pretty good idea of what the possibilities and opportunities are.

A common mistake that senior professionals make in the run-up to retirement is focusing too much of their attention on ensuring they have enough money. It’s more important to think about what you really want to do with the rest of your life and plan your finances around your desired lifestyle.

Retirement is about focusing on the things that are important to you, by first identifying what those are. It’s about living a life of purpose. Retirement is not a 30-year long weekend or a permanent vacation. It’s just life, but it’s life on your terms (in fact the Japanese call it 'second life'). 

Retirement is an exciting opportunity. There are all sorts of things that you might want to do but it requires serious deliberation and you should start that process sooner rather than later.

Starting your retirement planning

What are the key steps involved in retirement planning?

Retirement planning for international professionals like yourself needs a holistic approach that not only helps you identify where you currently stand, but clearly states how you can reach your comfortable, and financially-secure retirement early.

steps in retirement planning

1) Identifying your retirement goals -

People often associate retirement with money. Of course money is a major part of it, but retirement is mainly about living life on your own terms. It’s extremely important to identify what you want to achieve and what makes you happy before you start working towards it.

Different people have different priorities. Understanding what you truly desire in order to feel satisfaction, is key to a happy retirement.

Retirement planning helps you to take a step back and narrow down your goals, so you can make the right financial decisions that secure that ideal future for you and your family.

2) Analysing your current financial position -

Cash flow modelling can help you answer this question. This means working with a financial planner to understand your current spending patterns and how much is needed to support your current lifestyle and your desired lifestyle for the future. Its about answering the question - 'how much is enough?'. This is known as lifestyle financial planning.

Analysing your current financial position will also help you plan out how you can increase your savings and how much money you can start investing.

3) Understanding your income sources -

Retirement income can come from different sources. The tax implications of each of these income sources needs to be considered and altered accordingly.

Over what time period and by what percent will you use this income is equally important, and determining this in advance will help you protect your retirement income.

4) Investment planning -

Investment done right can help you speed up your financial journey and reach your retirement goals early. But it's important to consider the risks involved in these investments.

High risk investments, market volatility and inflation could have a negative impact on your portfolio and consequently on your retirement savings. Planning your investment portfolio based on your appetite for risk and getting expert guidance from a regulated financial planner is one of the key steps involved in your retirement planning process.

5) Planning for unforeseen life events -

Life is a beautiful journey, but unforeseen health issues can come up at any time and hinder your financial plans. These life events can eat into your retirement savings and throw you back by years financially.

Planning for such life events and making sure that you have the best, long-term insurance plans in place that can get you and your family safely out of these storms is another important step in your retirement planning process.

6) Managing your retirement income -

During your working years, you get used to getting your pay cheque every month. But what happens when you retire?

An investment strategy that was once a good fit for you, may not be the most profitable one for you after a few years. Identifying different retirement income opportunities and managing them with constant monitoring is a vital part of your retirement planning process.

7) Continuous monitoring of retirement assets -

Creating a retirement budget and then constantly monitoring your financial position and making required changes is an on-going part of retirement planning.  This continuous monitoring helps you identify where you are deviating from the plan and rectify it before it’s too late.

A good financial planner will help you stay on track to achieve your ideal future.

12 steps that can have a positive impact on your retirement planning

Financial educator and best-selling author of 'Millionaire Teacher' and 'The Global Expatriate’s Guide to Investing', Andrew Hallam, talks about 12 steps of effective investing to enjoy the best possible retirement, so you never run out of money.

In just 3 questions and 12 steps you’ll discover how to make positive changes today that will have a positive financial impact on your retirement plan for the future. So let's give it a go...


How much money do you need to retire?

Step #1:

In how many years from now would you like to be financially free to retire?

5, 10, 20 years?

Write down your number.

Step #2:

How much money would you like to live on annually, once you’re financially free?

If you plan to live modestly, or in a low-cost country, your number might be relatively small – e.g., £20,000 pa.

If you have lavish tastes, or a desire to live in a high cost country, obviously your number will be bigger – e.g., £100,000 pa.

Write down your number. 

Step #3:

Do you own property other than your main residence? (If not, skip to Step 4)

Rental income from property is an inflation buster – because rent rises in line with inflation.


If you own rental property, how much rental revenue per year could be generated from your property today, if it was mortgage free?

Write down that amount.

Then deduct 10% for periods of potential vacancy, and deduct your estimated annual maintenance costs as well.

What number are you left with?

For example – if you own 2 mortgage-free properties each generating £700 pcm in rent after all costs and vacancy considerations, you have an inflation proofed monthly income of £1,400, and an annual inflation proofed income of £16,800.

Write down your number.

Step #4:

What’s your annual shortfall?

When you answered Step 2 above, you wrote down how much you’d like to live on annually to be financially free. If you have rental income, would it be enough to cover the entire amount you want to live on?

If not, what’s your shortfall?

For example, if you want to live on £50,000 and you earn £16,800 from property, your annual shortfall is £33,200.

Write your number down.

Inflation, inflation, inflation.

Of course, unless income from property holdings covers everything you need to be financially free, your annual shortfall will actually be much higher than the number you’ve just generated.


Because of inflation…

Step #5:

What's your post-inflation income?

Here’s how to calculate your own post-inflation income gap – we can do the numbers for you if you prefer, talk to us and we’ll do all your calculations to get you on track.

What’s your number? 

This is the annual amount of income you want to achieve to enjoy financial freedom when you retire.

Question 2

Are you on track to hit that figure?

As a senior international professional, you’re likely to have a more transient life than your friends and family back home, and this can lead to both financial challenges and opportunities.

Challenges include falling outside your home-country’s social support system, including any state pension provision…

Opportunities include potential tax-saving advantages, and greater income generating prospects…

Make positive financial changes today to benefit yourself tomorrow.

It’s all about working out if you’re on track to hit your magic number. 

Step #6:

How much money will you need in stocks and bonds to generate your number without running out of money?

Have you heard of the 4% rule?

The 4% rule is a guide used to determine the amount of funds to safely withdraw from a retirement account each year.

This rule seeks to balance out providing a steady stream of income, while also keeping a healthy account balance that can grow, thus allowing income to be withdrawn for the whole of your retirement.

The 4% rate is considered a realistic rate, with withdrawals consisting primarily of interest and dividends.

Getting back to step #6…

How much money will you need in stocks and bonds to generate your number without running out of money?

Take your post-inflation income gap number from step 5 – for our example it’s £66,060.99 – and work out what that is 4% of …

£66,060.99 is 4% of a pension pot worth £1,651,524.70.

To get your portfolio goal size, simply multiply your post-inflation income gap number by 25.

Are you still with me?  If not, talk to us…

We can help you through the numbers, that’s what we’re here for.


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Step #7

How much do you need to be saving and investing to hit your portfolio goal size?

Visit this compound interest calculator.

Enter the amount of money you have already saved or invested towards retirement in the Initial Balance field.

Enter 7% in the Annual Interest Rate field (annual average stock market return).

Enter the number of years into the Calculation Period field.

Enter the amount of money you are saving or could save in the Regular Monthly field and ensure you set it to deposit.

Assuming you wish to increase deposits in line with inflation, tick Increase Deposits Yearly With Inflation, and set the rate to 3.5% and the Compound Interval to Yearly.


Are you on track?

For our example, if we had a base amount of £100,000 already saved towards retirement, invested £2,000 a month for 20 years, assuming a rate of growth of 7% and increasing annual deposits by a 3.5% inflation rate, we’d be on track!

Step #8

You can play around with some of the numbers – but not all of the numbers…

You can’t change your age today, meaning if you’re set on retiring in a specific number of years, that limits how long you have to save, and how long your wealth has to grow.

And you can’t change the amount you’ve already saved and invested.

But there’s plenty of good news…

Firstly, evidence shows that in the early years of retirement, retirees are more inclined to travel and enjoy financial freedom than later in life.  Therefore, your requirement for such a large annual sum could alter downwards, meaning you may need less to retire comfortably than you thought.

Question 3

How can you get on track if you’re not already?

Step #9

Set and share your goals.

With a clear idea of the life you want to get and keep in mind, and an idea of what you need to save to achieve that goal, it’s time to share your goals.

Statistically speaking, we’re more likely to achieve the goals we set when we share them.

Step #10

Track your spending.

It may sound depressing, but it’s unbelievably effective, here’s why:

Tracking your spending will probably be the most painful part of your journey.

Likewise, it’s the most important. Because when you see your own spending on paper — in black and white — you can no longer blame the kids or your busy schedule. You can’t complain that you “just need a raise,” or point to high taxes, the government, or anything else as the source of your woes.

We often create our own prison cells, either out of habit or laziness or because we fail to plan. And when we do, it’s easy to blame everyone else and think that escape is impossible. And that’s why tracking your spending is a crucial piece of the puzzle - it forces you to come face-to-face with the biggest threat to your financial future.


Step #11

Pay off existing high-interest debt before investing

Obviously, paying 15%+ in interest on credit card debt, whilst investing to hopefully earn the average stock market return of 7%, makes no sense.

Clear high-interest debt first…

Step #12

Invest on payday, every payday, and invest right…


Invest on payday so you’re not tempted to touch the money you’re committing to your future.

Invest every payday to benefit from dollar cost averaging – this helps your money compound over time, without the worry of market uncertainty.

Invest right, in exit-penalty-free, low cost, index funds for the long-term – for the highest possible returns, and the best life in retirement.

That’s it!  You’ve now worked your way through the 12 steps to achieving financial freedom and never running out of money in retirement.

But wait…most expats with a QROPS are paying 6.5% in annual charges – if you have a £500,000 pension pot that’s £32,500 of your money being wasted every single year.


That money needs to be in your pension, growing for your future.

Whether you have savings, investments or pensions including QROPS, get a diagnostic second opinion of your portfolio now

See exactly how much you’re losing in fees but much more importantly, discover exactly what you need to do to keep that money in your account.

Request your free portfolio review now – you have nothing to lose, and potentially thousands of pounds to gain.

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Creating a retirement spending strategy based on your desired lifestyle

One of the most important responsibilities of a financial planner is to help you with a retirement spending strategy.

In financial terms, retirement is known as the decumulation, or drawdown, phase.

The decumulation phase is extremely important. If you think about all of the questions to answer: “How much can I spend? When do I take it? How do I take it? Which buckets do I take it out of? How do I manage my tax impact?” All of this makes this phase much more complicated than the accumulation phase.

There's been a great deal of research into retirement strategy in recent years, and Vanguard is one of the companies at the forefront of what is sometimes referred to as the 'science of retirement'.

For a long time we didn’t really much thought to what retirement spending looked like, because we didn’t really have to. Most people were covered by a DB plan, state pension, or private pension.

People weren’t expected to provide for their own retirement to the extent that they are expected to now.

How retirement planning can help you with an expense strategy

Garrett Harbron, an expert on retirement strategy at Vanguard Asset Management, says this is being compounded by the fact that the baby boomers are retiring, so we have more people retiring each year and people are living longer. The concept of a 40-year retirement 30 years ago was completely foreign. Today it’s very much a reality.

Traditionally, when planning a client’s retirement spending, many planners have relied on the so-called 4% rule. That means the amount the client takes out of their portfolio each year is fixed at 4% of its value on retirement, with adjustments for annual inflation.

There’s been a lot of debate around whether the 4% rule is still valid. Based on Vanguard's research, at least in the UK, we feel like it is. When Vanguard run numbers and simulations for the 4% rule and measures it against an 85% portfolio success rate, that’s over 10,000 simulations, the portfolio has money left after 30 years. 85% of the time they found that the maximum sustainable spending rate is actually 4.17%, so a little bit over the 4% mark.

So, the 4% rule is still valid. But there are alternatives which may suit you better. But bear in mind, this is a highly specialised field, and it pays to ask a professional financial planner to explain the options to you.


Need for savings in retirement planning

How to generate enough income that supports your desired lifestyle

We all want different things from life. Some of us enjoy the simple things while others enjoy more luxury. There’s no right or wrong – but common sense applies. You need to make sure you can afford your lifestyle. Otherwise the luxuries you enjoy today could be at the expense of the opportunities you may have in the future.

You also need to consider that, as an expat, you live a more transient life. This presents its own unique set of financial challenges and opportunities. 

Challenges include falling outside your home country’s social support system, including any state pension provision.

Opportunities include potential tax-saving advantages, and greater income generating prospects.

A general rule of thumb for income in retirement is the 4% rule. It is a guide used to determine the amount of funds to safely withdraw from a retirement account each year.

The 4% rule used in retirement planning

As mentioned earlier, the 4% rule is used to determine how much a retiree should withdraw from a retirement account each year.

The idea is the retiree receives a steady income stream, while maintaining a healthy account balance.

It’s considered safe by experts.

This rule seeks to balance out providing a steady stream of income, while also keeping a healthy account balance that can grow, thus allowing income to be withdrawn for the whole of your retirement. The 4% rule is considered a realistic rate, with withdrawals consisting primarily of interest and dividends. The table below shows the success rates based upon the timescale and the underlying investment split. 

retirement income planning over 30 years

For example, if you are 100% invested in stocks, you are able to withdraw 3%, 4% or 5% for 15 years, without running out of money. Sticking with 100% stocks, over 30 years, a 3% withdrawal (after inflation) works 100% of the time, 4% works 98% of the time and 5%, 80% of the time. Your success rates are wholly dependent on the combination of your underlying investments. 

There are two main ways you can generate income in retirement

1) The traditional method is to invest in an income paying equity fund, or portfolio of funds. These funds will invest into dividend-paying companies. These dividends are either paid into the fund, which is then able to produce an income, or paid out as cash to your pension.

2) Another method of generating income in retirement is through investing in a bond fund or portfolio of bond funds. These operate in a similar manner as an equity fund, except rather than owning company shares, the fund owns debt issued by governments, nations and companies. The issuer pays the fund a set rate for lending it money, which generates an income. 

Why retirement saving is an important part of your overall retirement planning

Having the correct retirement plan in place helps you make the right financial decisions that get you closer to your ideal future. Putting money aside monthly can help you reach your retirement goals a lot faster and can act as buffers in case of emergencies. 

Here are some of the ways retirement savings can be beneficial:

1) Retirement savings act as a safety net in case of financial crisis.

2) Compound interest works its best magic with time and the earlier you start saving the better.

3) Retirement savings can act as an emergency fund in unforeseen situations.

4) These savings, overtime, can also help you clear out debts and outstanding loans that overall help you reduce monthly expenditure and interest payments.

5) Segregating monthly income is the method used to decide on an amount you can save on a regular basis. This can help you identify your spending habits and rectify them, enabling you to save even more to reach your ideal future faster.


Why inflation is an important factor in your retirement planning

What if we told you, that for people with 40 years until retirement, £10 million is the amount they should be aiming to save?

That’s a lot of money, by anyone’s standards.

But inflation means £10 million may just about cover a comfortable retirement. £1 million will have the same spending power as £306,000 today. £10 million will equal £3,060,000.

Over the course of that retirement – it will shrink again.

Often, retirees don’t consider the impact of inflation on their income. Over the course of your 10, 15 or even 30-40-year retirement planning, the value of each pound in real terms will fall.

This is because the price of most goods and services will rise.

For example, an average inflation rate of 3%, would mean a £500,000 portfolio, after just 10 years, would be worth £375,000 – 25% less than at retirement. 

Factoring in inflation is therefore crucial. 

Growth ensures your portfolio remains of sufficient size to produce the yield you require, as you will also likely be taking an income from this portfolio. 

Inflation and retirement planning


An example of the effect of inflation in practice

Mr Jones is a self-made businessman who’s always been sensible and saved hard into his pension, which has grown to £500,000. He sold his business at the age of 55. 

He is afraid of investing his money and losing it, so he leaves his £500,000 pension in cash. As he wants to use his pension pot as an income, he decides not to take a 25% tax free lump sum, leaving the entire £500,000 available for an income. 

He decides then to take an annual income of £17,500. However, assuming a 3% rate of inflation, after just five years he will have eaten away £100,000 worth of his pension. 

At this rate, he will have used up his entire pension pot before his 80th birthday and will certainly leave nothing for his family after he dies. If he had taken his 25% tax free lump sum, as most people do, he would use up his pension well before his 75th birthday.

How can you stop losing money?

There are three main things you can do to stop haemorrhaging cash:

1) Work out how much cash you actually need

Planning for how much cash you will need to support your current lifestyle is a very important part of your retirement planning. Start by working out how much you would need to fund your lifestyle for six months or a year and put that money aside. Also, pay off debts where possible, particularly short term debts such as credit cards as these are expensive.

Be realistic – think about what would happen if you were unable to work or lost your job due to unforeseen circumstances or health issues. Don’t leave yourself short.

2) Keep it safe

At AES, we strongly believe that senior international executives like yourself should have their cash in a secure offshore private bank, which provides all the banking facilities you will need, plus a good rate of interest. Money left languishing in low interest local high street banks, is at threat from political or economic turmoil (think Greece, Cyprus or Argentina) and can even be withheld in the event of death or following an accident or emergency.

Opening an offshore private bank account is step one for any expat who is serious about taking control of their future.

3) Invest the rest 

Investment for your retirement planning will help you save more

The best way to combat inflation is to invest your money.

To help you get started, we offer a no-obligation consultation where you can find out how you can best put your money to work and stop pouring your hard earned cash down the drain. 


Can a company pension plan fund your retirement?

Your company’s pension plan will not be sufficient to fund your retirement.

One of our clients had a rude wake-up call. He was a senior executive at an oil and gas company (earning a lucrative salary with benefits) who expected a large pay-out from his company’s pension plan. 45% of his final salary to be exact.

However, on his last working day, the company broke the news – they had shifted pensions based on final salaries at retirement age to cheaper ones based on a ‘career average’ salary. 

The pay-out he looked forward to was slashed by 25%. He needed to make urgent decisions as he didn’t have the benefit of time on his side. So, he downsized his villa to a humble 2-bedroom apartment and sold his luxury car, placing the earnings from both into a low-cost index fund.

The tropical holiday he planned for himself and his wife was temporarily put on hold.

Now, slowly able to rebuild his wealth, he makes sure others learn from his mistakes – especially his adult children.

He says:

“Don’t rely on your company’s pension scheme. Always have a separate investment that can bridge any possible savings gap.”


Company pensions and their effect on your retirement planning

Retirement planning and investment for senior international professionals

A life of ease is everyone’s ultimate goal, but with all the talk of longevity and retirement shortfalls, you need to plan your life a little differently, especially if you are a successful international professional and plan to retire early, maybe to go back home.

Everyone wants to know how long they’ll live, but of course, that's impossible. All you can do is prepare for possibly living longer than you ever imagined. After all, 1 in 3 people born today will live to over 100. Clearly, if your investment strategy is unsuitable, you’re badly diversified or exposed to too much risk, your money may run out.

This is why an evidence-based investment philosophy is ideal for those entering retirement (and in fact, for all investors at all life stages). It ensures your wealth is appropriately invested to match your tolerance for risk, and that you are globally diversified via low-cost investments.

Beyond other considerations, such as whether to transfer into a QROPS or not, extra care must be taken when planning how to invest your retirement wealth.

Beware of structured products. They are often sold as ideal investments for pensions because they have capital guarantees and income-producing features. However, when these products fail, and they so often do, they can be catastrophic for your finances.

How investing can help you maintain your current standard of living in retirement

Beyond determining how much money to save, it’s useful to think about retirement in terms of how much income you'll need after you stop working in order to get and keep the life you want.

Having clarity on this can lead to better retirement planning and change how you invest.




Below are the most commonly asked questions about investing for retirement that we come across, so you can have a better understanding of what could be the best way forward for you based on your individual needs...


If I want to invest in funds as part of my retirement planning, what are my options?

You can choose to invest for growth or income – and you can choose to invest passively or actively. 

1) Passive –

An example of a fund with a passive investment approach is a simple tracker. The money invested tracks the performance of an index like the FTSE100 for example. Passively invested funds come with some benefits such as lower costs, and some disadvantages such as inflexibility. 

2) Active –

An example of a fund with an active investment approach is one that has a dedicated fund manager or team of fund managers moving money around, hoping to catch the best opportunities and avoid the worst risks. Actively invested funds come with some benefits such as the flexibility to change according to market conditions, and some disadvantages such as higher costs. 


Active vs passive investing


What do I need to know as an international professional before I choose a fund?

There’s quite a lot to understand before you start looking around for the best funds for your money:

1) Risk –

When it comes to investing it’s broadly correct to say that the more risk you’re willing to expose your money to, the higher the return you could potentially enjoy. Likewise, the lower the risk you’re willing to tolerate, the less significant the gains you may potentially enjoy.

It’s really important to understand your own personal appetite for risk.

At the most extreme end of the scale there are investments where your money is not guaranteed, but where you could enjoy unlimited gains.

At the safest end of the scale your investment and returns are guaranteed, but the returns are going to be small.

Your unique appetite for risk is one of the most important things for a professional financial planner to know. This can be done by a comprehensive analysis of your current financial position.

If you’re unsure about your own tolerance for risk get in touch with us and one of our professional financial planners will help you turn your lifestyle into numbers and understand what you need to get and keep the life you want.

2) Asset classes –

There are all sorts of different asset classes such as cash, bonds, property, shares and commodities. It’s important to know about the choice available and the pros and cons associated with each.

We have a guide to help you better understand these different asset classes

3) Sectors –

Just as there are different asset classes so there are different sectors to choose from. In investing terms a sector is an industrial area of the economy in which companies provide a similar product or service.

An example of a sector is the defensive sector, which would include companies that are thought to be safer in a falling market such as utilities and healthcare firms. Another example is the growth sector, which tends to do well in a rising market. Companies in this sector could include technology or manufacturing firms. 

4) Markets –

Should you invest in an established market or an emerging market? It’s important to understand the pros and cons of each choice and which nations are considered to fall into each market. 

5) How your money is actually spent –

Some of your money will be spent on the actual investment, but some will be allocated to cover fees and charges. Generally, the more complex the fund and the more actively it is managed the higher the costs. Understanding the fee structure of any investment path you choose is critical – you don’t want to be overcharged compared to the potential gains you could enjoy. 

Fees and costs are necessary but if they are too high they can erode the value of your overall investment. Regulated advisers and fund managers are always transparent about their costs. You need to ensure that what you’re going to be charged is reasonable for what you’re gaining. 

6) Exit strategy –

Before you even commit to investing your money you need to have an exit strategy! The best laid plans sometimes change. Can you access your money if you need to? What are the consequences of accessing your money? Some funds lock you in for a specific term and you cannot access your funds until the end of the term without significant financial penalty.

Understand what you’re committing to – and never ever forget you should ideally have enough in cash deposits to cover about 3 months’ worth of essential outgoings.

question - 3

Is it safe to invest offshore?

Yes, regulated financial planners only ever recommend reputable offshore jurisdictions that have, for example, investor protection schemes in place, robust legal environments, and whose reputations are internationally respected.

It will be important to discuss jurisdiction choice with your planner, and for them to demonstrate to you the safety of a given location for your money. 

In addition, it is recommended that you do your own due diligence on any recommended jurisdiction to ensure it is appropriate for you. It will be critical to examine investor protection policies and whether you will be eligible for protection considering you’re investing as a non-resident, and taking into account the amount of money you will be investing.

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Question - 4

What does an ideal retirement investment strategy look like?

Investing should be boring.

Ideally, you should set up the right portfolio for you and your goals together with your financial planner – and then leave it alone.

You should spend less time worrying about your financial future and more time doing things you actually love. 

Successful investing comes down to six principles: 

  1. Accept the price 
  2. Beware of market gurus 
  3. Control your costs 
  4. Spread your risk 
  5. Be disciplined 
  6. Stay balanced 

For even better investment results, a systematic investment approach backed by years of Nobel prize-winning research is the best thing you can do for your retirement planning.

Our science-based approach is grounded in economic theory and backed by decades of leading academic research. While other investment managers have access to the same research, it’s the interpretation and application that sets our funds apart. It’s about identifying what works for investors and what can bring them far greater success by capturing the key ‘dimensions’ that exist in the marketplace. 

Systematic investing encourages investors to stay disciplined, maintain a long-term investment horizon and diversify globally – three things everyone can control. These behaviours/actions will allow investors to take full advantage of time in the markets and is the ideal investment strategy in retirement planning. 

Retirement planning allows you to focus on the things you enjoy

Early retirement planning

Early retirement is one of the hottest topics in the world of personal finance. Some call it the holy grail and people are making hefty sacrifices for it…

Most of us will be lucky to retire at 60. Yet there are many self-made millionaires who are calling themselves retirees before reaching 30.

For many early retirees, it took years of diligence, planning and hard work, with a few lifestyle changes too. Besides saving a large portion of their incomes, some gave up their cars, downsized their homes and relocated to cheaper areas.

Being financially independent is a life philosophy. It begs the question “What would I do with my life if I didn’t work for money?”

Travel the world?

Start a hobby or two?

Dedicate your time to charity?

The options are endless as long as your money can support you.

But how can you retire early?

How to retire early


The obvious start is saving a large portion of your income. (Ideally, more than 50%)

This is in stark contrast to the typical household savings rates.

  • 4% in the USA
  • 9% in the UK

Boosting your savings can happen in two ways:

  1. Either increase your income.
  2. Or, reduce your spending.

A longer retirement also means more chance of running out of money.

If inflation averages 3% a year for the next 40 years, the million dollars you save today will have the same spending power as $306,000.

If early retirement is something you are working towards, you need to weigh all sides. It’s not just about financial independence at the end of the day. But about fulfilment and happiness too and whether your decisions will sustain that happiness over the long-term.

If you need a second opinion or perhaps a chat on what an early retirement would mean for you, book a Discovery Call with us.

We’ll assess your needs, review your current portfolio and schedule a cash-flow plan to make sure you can achieve that goal.

So, at the very least, you’ll know what things may look like.


Overseas retirement planning and its key considerations

While some people aim to retire early, there are others who want to retire overseas. It’s an understatement to say that there’s a lot to think about when planning to retire abroad, it's easy to get confused and bogged down by it.

We wanted to give you some clarity by covering the 5 main categories you need to consider while planning to retire abroad. These include lifestyle, health, money, pensions and property because we know from our own experience that these are the core areas of concern to the majority of us who are planning our new lives overseas. 

1) Lifestyle -

Getting and keeping the life you desire is the most important goal to bear in mind while planning for your retirement. Understanding whether this lifestyle you have built for you and your family can be enjoyed in the country you're planning to retire in, and the financial implications of the same is vital to your future financial well-being. 

Consider whether you want to fully integrate into this new life. Most importantly, you need a professional financial planner to turn your life into numbers to ensure that the cost of living there does not exceed your retirement savings so you can achieve your ideal future.

2) Health - 

Your overall health and well-being and that of your loved one's should always be a primary consideration in your retirement planning process, no matter which country you plan to retire in. Consider how you can protect yourself through a comprehensive insurance plan. 

Looking into access to carers or at-home medical or welfare support in your new nation, in the event you need it in the future, could also help you plan better for unforeseen future life events.

3) Money - 

When you move abroad, at least semi-permanently, you become known as an expat. And for the majority of expats you also become non-resident for tax purposes in your old home nation – it’s at this point in time that the expat advantage exists for you to embrace.

Understanding how to make the most of this advantage can help you protect your wealth. 

Having a professional financial planner by your side will not only help you retire early, but can help you make moves like this more swiftly. All while protecting your wealth and the life you have worked so hard to build. 

4) Pensions - 

If you have a British pension pot and you’re retiring abroad you have the potential to enjoy even greater investment freedom. You may also be able to transfer your pension into an HMRC-recognised overseas pension scheme. Consider whether your move to retire abroad has any tax implications on your withdrawals or benefits. The key is in understanding where there are double taxation agreements in place, and where retirement income specifically, or foreign sourced income, is taxed at a favourable rate.

With very careful planning you may be able to retire abroad and enjoy your British pension at a significantly reduced rate of tax. You have to select the right country and abide by all qualification rules however – and you should take expert advice before making any decisions.

5) Property - 

If you want to avoid common risks, take your time to get to know a place by renting a property there first. Learn the local language and then take your time to ask, enquire, explore and observe everything you need to regarding the property market. Chances are, if you finally do buy a property, you will pay less for more, and get an overall better and safer deal. 

No other country has a property market as fickle as Britain. While the British market is protected by laws and regulations, it is also a market that booms and busts regularly. Elsewhere in the world there can be regulations and blocks in place, in the form of taxation for example, to deliberately take heat out of a market and prevent this damaging cycle. This can also prevent you making any profit on property bought there however, making it all the more essential to think it through thoroughly so it does not have a negative impact on your retirement plan.

A regulated life financial planner can help plan your finances around your goal to retire abroad and handle the drudgery so you can focus on the things you love.

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Investing overseas & its benefits

There are many reasons why it may or may not make sense for you personally to invest offshore: these can only be properly understood on an individual and personalised basis with the help of a financial planner. 

But in general terms, here are the main reasons some people choose to invest offshore:

1) Tax efficiency –

Depending on your nation of tax residence and personal tax status, it can be possible to structure investments in a tax-efficient manner by utilising offshore jurisdictions and products. This benefit is certainly not guaranteed for all, but it is a legitimate benefit that many international professionals can legally leverage. An international financial planner will understand any opportunities available for the tax efficient investment of your money and make recommendations accordingly. 

2) Diversification –

By choosing to take an international approach you have a significant opportunity to diversify your portfolio. You can diversify across nations, markets, sectors, assets, currencies. When you think internationally the opportunities for diversification are vast. 

Additionally, it may be the case that it is safer for you personally to keep your money out of your current country of tax residence. 

3) Confidentiality –

You might not think you need confidentiality when it comes to your invested assets, but as an additional advantage often achievable through offshore products and jurisdictions it can prove to be of benefit to many. In these increasingly litigious times it certainly can’t hurt to put a legitimate layer of confidentiality between your investments and your personal details. 

4) Accessibility –

Offshore services and solutions offered by international providers and companies are expat-centric. I.e., they are structured with an international client base in mind in terms of both accessibility and communication.

These facts can make life a lot easier when it comes to managing and accessing your wealth while you’re living overseas or planning to retire overseas.

What is pension planning?

A pension plan is a retirement plan that requires the employer to make contributions to a pool of funds set aside for an employees future benefit. The pool of funds is invested on the employee's behalf, and the earnings on the investments generate income to the worker upon retirement. Pension plans can differ and the contributions made by each party can vary.

Understanding pensions and the differences between QROPS, QNUPS and SIPPs

If you think pensions are confusing, you are not alone.

Even the Chief Economist at the Bank of England, Andy Haldane has admitted: 

"I consider myself moderately financially literate. Yet I confess to not being able to make the remotest sense of pensions.”

Adding to the complexity are frequent rule changes and various schemes. Where do you begin to simplify it all?

This is a good place to start.

A pension is arguably your most important financial obligation.

It can bring your financial dreams to life and holds the key to you and your family’s future happiness. Yet 80% feel they’re not saving enough, 38% find it too confusing and 20% are not planning to pay into a pension at all.

In an attempt to demystify pensions, you can search online, but your findings are likely to be insufficient and overwhelming at the same time. 

We aim to simplify everything you need to know about retirement planning and pensions, starting with the differences between QROPS, QNUPS and SIPPs.

1. QROPS: Qualifying recognised overseas pension scheme


What is QROPS?

A QROPS is a pension scheme outside the UK that has informed HMRC that it meets certain UK requirements, and so can take transfers form UK registered pension schemes.

Potentially suitable for

People with existing UK pension rights, who are planning to retire outside of the UK on a permanent basis, or expats already living outside of the UK.

In addition, those close to the Lifetime Allowance (the “LTA” – £1.073m in 2020) may also benefit from a QROPS, to mitigate future tax liabilities for exceeding the allowance when drawing their benefits.

Residency considerations

Those taking out a QROPS should be living outside of the UK for tax purposes, or planning to leave (it is to benefit those intending to move permanently from the UK that UK government policy permits transfers to overseas pension schemes without a tax penalty).

QROPS are open to anyone with a UK pension, including UK residents, expats, and non-UK nationals working in the UK but who are now residing in another country.

New considerations following 2017 Spring Budget

As announced in the Spring Budget 2017, a 25% tax charge will now apply to pension transfers made to QROPS. Exceptions will be made if both the individual and pension scheme are within the EEA.

Reporting considerations

QROPS have very specific reporting requirements.  HMRC says:

"all payments are reportable for ten years after the transfer-out of the UK registered pension scheme." 

The responsibility for reporting lies with a QROPS’ trustees.

Note: If you’ve heard of QROPS and ROPS (recognised overseas pension schemes), and wondered what the difference was, a QROPS is a ROPS which has given undertakings to HMRC to provide information about member payments etc., and certifies to HMRC that they meet the qualifying criteria.


To be a ROPS, the ROPS’s rules relating to how you take your income have to be very similar to those governing UK pensions.

The maximum tax-free lump sum available (called a Pension Commencement Lump Sum (PCLS)) will typically be either 25% or 30% of the fund, depending on the jurisdiction of the QROPS and how long you have been a non-UK resident.

Some jurisdictions are not restricted to using UK Government Actuaries Department (GAD) rate limits for calculating how much income you can get. This means you can potentially get a higher income level from a QROPS compared to a UK defined benefit scheme.

Funding restrictions

QROPS cater to transfers from UK pension schemes. Typically, assets will have to be liquidated before they can be transferred to a QROPS.

Age limit

The maximum age to commence taking benefits is normally 75.

Double taxation agreement considerations

Ideally, the jurisdiction chosen for the QROPS should have an appropriate double taxation agreement with the QROPS member’s chosen country of residence in retirement – or satisfy certain other specific conditions.

Overseas Transfer Charge

Tax charges can arise on a transfer to a QROPS, but not if the member is resident (and stays resident for five UK tax years) in the same jurisdiction as the QROPS – treating the whole of the EU as one single jurisdiction for this purpose.

Inheritance tax and death considerations

QROPS funds, like UK pension funds, are normally exempt from UK inheritance tax.  But, the country where the investor is resident at death may impose some form of inheritance or death tax.

Positive aspects of QROPS

  1. You can consolidate several smaller pension funds into one to create greater buying power, and potentially better investment opportunities.
  2. A 25-30% tax-free lump sum at age 55+.
  3. 100% is transferable to beneficiaries.
  4. UK and non-UK tax residents can use QROPS for LTA planning.  A transfer to a QROPS is a Benefit Crystallisation Event (BCE), and under current rules, once pension funds have been transferred to a QROPS, they are able to grow without further assessment of LTA limits.
  5. Depending on whether there’s a double taxation agreement (DTA) between your country of residence and the country in which the QROPS is set up, there may be potential tax advantages.

Negative aspects of QROPS

  1. QROPS trustees must report to HMRC.
  2. There can be high transfer charges. They are sometimes mis-sold, not UK regulated (although they are regulated locally), and can incur additional tax charges if not used correctly.

2. QNUPS - Qualifying non-UK pension schemes

QNUPS can be thought of as QROPS but with some differences...

Potentially suitable for

Anyone who wants or needs an international pension scheme.

They are occasionally marketed to high net-worth individuals who have already utilised their maximum income tax relievable pension contributions in the UK.

Residency considerations

No restrictions on residence – you can live where you want and have a QNUPS. But the tax treatment of the scheme will depend on your country of residence, and needs to be ascertained.

Reporting considerations

There are no HMRC reporting requirements currently. But unlike a QROPS, QNUPS are not permitted to receive transfers from UK tax-relieved (registered) pension schemes.


Income can be taken at the age 55 or deferred until the age of 75 or later.

Note: Since 2017, 100% of the income taken from a QNUPS or a QROPS by a UK resident is subject to UK taxation.  

QNUPS follow local rules in terms of determining income, depending on the jurisdiction where the scheme is established. Income drawn from a QNUPS may be liable to tax in the country of residence at the time the income is taken.

QNUPS are generally sold as shelters from IHT, rather than access for income by the member (which defeats the object of setting up a QNUPS).

The fact you can get up to a 30% tax-free lump sum at age 55+ is generally of no relevance. 

Funding restrictions

Assets may not have to be liquidated before transferring them to a QNUPS (this is more an advantage than a restriction).

In theory, almost any asset class can be transferred to a QNUPS – including ‘alternative investments’, such as antiques, residential property and fine wine. 

However, in practice this is almost impossible. And where it is possible, it is very expensive, and depends entirely on the receiving QNUPS’ rules.

Funding has to look like pension funding - as a rule of thumb, consider 20% of annual income to be acceptable.

Age limit

Any maximum age for establishing or drawing down from a QNUPS depends on the jurisdiction of the QNUPS. 

Inheritance tax and death considerations

A QNUPS is exempt from UK taxes on death, unless the QNUPS member is deemed to have deliberately reduced the value of their estate immediately before death by transferring a significant part of their estate to the QNUPS.

Obviously, the fact that this is a matter where HMRC has some discretion makes the matter subjective, and so HMRC could mount a challenge if a transfer occurred shortly before death, and taxes would then be applied.

Positive aspects of QNUPS

  1. There is immediate protection from IHT (subject to the above).
  2. There is currently no limit on contributions. However, HMRC is increasingly looking at offshore structures, so it’s best to restrict overall contributions to a proportion of an your net worth – for example, 50%.
  3. Potentially there is no maximum age limit for when you can invest into a QNUPS – but it depends on the jurisdiction of the QNUPS.  
  4. There are no lifetime limits on fund size.
  5. 100% of the QNUPS fund is transferable to beneficiaries.

Negative aspects of QNUPS

  1. There are a large number of grey areas relating to QNUPS, and a lack of any defined precedents around tax treatment.
  2. There is no UK tax relief on the amount invested.    
  3. As these are often sold as inheritance tax protection vehicles, they have to be used carefully, and advised on properly and technically.

QNUPS are occasionally mis-sold as being exempt from pension sharing rules on divorce – which is untrue.

3. SIPP – Self-invested personal pension

A SIPP is a form of a personal (defined contribution) pension scheme, set up in the UK and registered with HMRC.

Potentially suitable for

Anyone with existing UK pension assets who wants to benefit from the flexibility of a defined contribution scheme with unrestricted investment options.

Residency considerations

Most SIPPs are only available to UK residents, but some SIPPs are available to non-UK residents and those looking to move to the UK.

Reporting considerations

The SIPP member must report taxable events to HMRC via a ‘self-assessment’ tax return (which is true of any income that may be UK taxable).

The trustees of a SIPP will also report certain member payments, e.g. when taking a PCLS or drawing an income.


Income can be taken from age 55 or later.

Income can be drawn from a SIPP fund right up to death.    

Funding restrictions

Other personal pension schemes and many occupational schemes can be transferred into a SIPP.

Cash contributions can be made too. However, tax relief is limited for the first 5 years of non-UK residence if the SIPP member is an expat, and the lifetime allowance limit also applies.

The lifetime allowance is currently £1.055 million.

The lifetime allowance is the maximum value of benefits that can be taken from a UK registered pension scheme such as a SIPP without being subject to the lifetime allowance charge (potentially up to 55%).     

Age limit

You have to be under 75 and usually a UK resident to start a SIPP.

Double taxation agreement considerations

If you live somewhere with no double taxation agreement with the UK, income is subject to UK tax.

You may be able to reclaim an element of this, but it could mean that you are also taxed in your country of residence.    

Inheritance tax and death considerations

On death before age 75, the fund can normally be distributed, inheritance tax free, to a spouse and/or dependants. This is subject to a test against the lifetime allowance.

If death occurs after 75, any tax that’s applicable will be based on the tax status of the beneficiary. This would not be subject to a test against the lifetime allowance.

Positive aspects of SIPPs

  1. It is possible to invest in a wide range of underlying assets.
  2. SIPP members can transfer assets in from other pension schemes.
  3. The set-up costs are lower compared to some QROPS.    
  4. There is no IHT on death.
  5. A SIPP provides full access to UK pension flexibility, allowing the whole amount of a pension to be drawn on if required (although this is not advisable, as a pension is designed to provide an income in retirement).

Negative aspects of SIPPs

  1. SIPPs can leave the member open to UK taxation if there is no double taxation agreement in place between the UK and their country of residence.   
  2. There are no tax planning opportunities based around lifetime allowance or benefit crystallisation events.

Are pensions worth the hassle?


Pensions can be tax efficient, flexible and highly beneficial.

They should be a major part of lifetime financial planning.

But, you must choose the right type and the right jurisdiction.

You should also be extremely cautious to make sure that you are professionally advised to maximise the advantages, and avoid any disadvantages – such as high upfront and ongoing costs, and tax charges on unauthorised payments.

Get started with your international professional pension planning

Should you transfer your expat pension?

You may have friends or colleagues who’ve transferred their pension into a SIPP or a QROPS - and perhaps you’re wondering whether you should do the same.

Here are the differences and various pros and cons to help you decide.

Pensions get quite technical, and the personal circumstances around your pension and retirement needs are unique.

So, do seek expert help from a qualified professional adviser before taking any action.

Self-invested personal pension (SIPP)

SIPPs are UK-registered personal pension schemes. They are defined contribution schemes (meaning only the contribution you make is defined - there is no guaranteed level of income at retirement).

They are generally funded by an individual, and abide by UK legislation with regards to tax, and when and how they can be accessed. SIPPs have become very popular in recent years, driven by their relatively low cost - and the wide investment choice they offer. 

It’s important to remember though, that SIPPs are UK-based, so if you are living abroad the advantages of using them can be limited. For example, pension contributions in the UK to a UK-registered scheme receive tax relief of at least 20% per year...  

However, if you live abroad and are paying into a UK-based scheme, tax relief will only be available for the first five tax years of your non-UK residence and you will also be subject to a cap of £3,600 per annum.

Like all UK pensions, SIPPs received a boost a few years back when new rules came into effect providing people with fully flexible access to their defined contribution pensions (including SIPPs). This flexibility simply means people can decide for themselves when and how they take their pension income, after the age of 55.

Qualifying recognised overseas pension scheme (QROPS)

First, a quick piece of myth busting, and a little warning to make sure you don’t fall foul of UK pension rules. A myth wrongly and often perpetuated by people who promote qualifying recognised overseas pension schemes (QROPS) is that a scheme has received approval from HM Revenue & Customs.

They may refer to it as being an “authorised” or “approved” QROPS. This is completely untrue. The reason people choose to refer to them like this is for one of two reasons – ignorance or intentional deception.

If someone uses these words to describe a QROPS, while trying to convince you to transfer, be extremely cautious. QROPS are also sometimes sold as a way to simply empty a UK pension, “tax free”.

If HMRC believes UK tax-relieved pension assets have been accessed improperly or invested in ways it doesn’t permit, you could face a substantial tax charge.

QROPS are actually very similar to SIPPs, as they are defined contribution schemes, but they are based outside the UK. They can be based in any country around the world, and qualify as a QROPS as long as the scheme meets specific requirements set by HMRC.

As mentioned, HMRC does not vet individual schemes – the scheme trustees notify HMRC of their existence and self-certify that the scheme meets the criteria. After this, the scheme will normally become “recognised” by HMRC, and will often (but not necessarily) be included on a list published on its website

QROPS are intended for people who are planning to, or have already left, the UK. The main difference between a SIPPs and a QROPS is the additional tax benefit a QROPS may bring to those living outside the UK.

QROPS and the lifetime allowance

One of the biggest benefits of QROPS is around something called the lifetime allowance (LTA). Under current UK legislation, you can only accumulate a tax privileged pension fund of up to £1.073 million, unless you apply for certain types of protection which can boost this to higher levels in some circumstances.

This means pension savings above the LTA may be taxed at up to 55%. However, if you transfer your pension into a QROPS, it is tested against the LTA at the point of transfer, and not again thereafter.  

This means, if the value of your UK pension fund is close to the LTA, it may be worth considering a transfer into a QROPS to avoid being taxed on your pension savings above the LTA in the future.

"Should I transfer my UK pension?"

As well as understanding what SIPPs and QROPS are, it is vital that you understand the benefits of the type of scheme you currently have.

There are two types of UK pension scheme – defined contribution and defined benefit. Defined benefit schemes are colloquially known as “gold-plated pensions.” They provide scheme members with a pension that is intended to be guaranteed.

These schemes are becoming rare due to their cost - and if you have one, you should think very carefully before transferring from it. It is also now required - by law - that anyone considering a transfer from a defined benefit scheme worth more than £30,000, including into an overseas scheme such as a QROPS, must have taken financial advice from an adviser qualified to provide UK pension advice.

Such an adviser has to be authorised by the Financial Conduct Authority.

7 things to consider if you’re contemplating a pensions transfer


1) Spring Budget 2017: QROPS changes

On the 9th March 2017, some significant overnight changes occurred to pensions legislation, the most dramatic of which relates directly to those who wish to transfer their UK pension benefits to an overseas scheme, such as a QROPS.

In summary, there is now a 25% tax upon transfer, levied at source by the UK trustee, unless one of the following conditions is satisfied:

  1. Both the individual making the transfer and the QROPS are in the same jurisdiction treating the EEA as a single jurisdiction for this purpose.
  2. The QROPS is a scheme in which the individual’s employer participates, and the employer is a multi-national.

This means that in some circumstances a QROPS is no longer a realistic option.

It can also mean that additional specialist tax advice is required to determine whether a transfer is feasible.

We’ve produced a detailed technical note describing how these changes affect QROPS: you can download it here.


2) What will my spouse and children get when I die?

With a defined benefit scheme, the death benefits provided to your spouse and children can be relatively poor. In some cases, especially if your children are older, you may find they receive nothing.

By transferring into a defined contribution scheme – either a SIPP or a QROPS, you may be able to leave much more to your family when you die. In addition, it may be possible for the fund to “cascade” from one generation to the next.


3) Is my pension fund near the LTA?

As mentioned above, breaching the lifetime allowance could see your pension subject to high taxes. It may be worth considering moving your scheme overseas to avoid this happening. A QROPS may be suitable in this case.

4) How much tax will I pay on my income?

UK pensions are taxed, and in some cases, it may make sense to move your pension to a QROPS in the country you are living in, or to a “third party” QROPS jurisdiction. This depends on the terms of any double taxation agreement (DTA) between the country where your pension income comes from, and the country in which you are living.  

Claiming double taxation relief can be complicated, and if your pension income is paid from the UK, it may result in a procedure to reclaim tax deducted at source. The purpose of a DTA is to prevent pension (and other) income being taxed twice.

But if there is no DTA in place, you could end up being taxed twice – in the country in which you are living, and where your pension is based. It is therefore of paramount importance that you take specialist tax advice on this point.

5) How will currency impact my pension income?

Currency is something that must be carefully considered. You may be able to exchange pension income into another currency, but the timing of an exchange could have a material impact on the size of your pension.

Also remember that if your pension is paid from the UK, and you are living abroad, you will need to factor in an exchange to a local currency when working out your income.

6)  I have a defined benefit scheme and would like to begin drawing my pension early, is this possible?

It’s generally possible to move the retirement date if you have a defined benefit scheme – this is set by the rules of the scheme, but subject to the minimum pension age set by the UK government, now 55…

But, taking your pension earlier than the scheme pension age will normally bring with it quite a substantial reduction in pension.

However, if you transfer the pension into a defined contribution scheme, such as a SIPP or a QROPS, you will be able to begin withdrawing income from age 55.

7)  Will my pension savings perform better if I consolidate into a QROPS or SIPP?

It’s very common for people to have multiple pensions from time spent working at different companies, all with different schemes. It may make sense for you to consolidate your pensions to reduce costs and make your pension portfolio work more efficiently.

Knowing whether to transfer your pension is arguably one of the biggest financial decisions of your life, and so it must only be done after taking advice from a fully qualified adviser.

If you want to learn more, you can download our free guide.

Or, if you would like to chat about your options or concerns, get in touch.



Case study of an international executive's pension transfer

Your pension is one of your most important financial assets and any decision to transfer it, should not be taken lightly.

As an international executive who’s worked hard for your money…

The most devastating thing would be to see your ideal future up in smoke because of one poor decision.

Particularly if you can get an overseas enhancement to the lifetime allowance.

Here’s a real-life story of a global citizen, just like you, who managed to turn his finances around in the nick of time.

Most high-earning executives in Dubai have been called by an army of financial salespeople.

You’ve probably been given unsolicited advice around the “best thing” to do with your pension (or the best products to invest in).

The salespeople sound friendly, well practised and drop in buzzwords around alleged tax savings.

It's why so many people are falling for their tactics.

Our client, John, an engineer based in Dubai, was one of them.

He came to us for a free second opinion about his anxiety around keeping the future lifestyle he wanted.

This included a QROPS valued at £800,000.

At the time, his previous ‘adviser/salesperson’ recommended he and his wife transfer into two individual QROPS schemes.

His pensions had been structured as a QROPS, with an underlying bond as the platform.

(A bond is a tax wrapper, so is a QROPS or SIPP).

Having a tax wrapper within a tax wrapper can complicate financial plans.

In this case, it made him liable to unnecessary charges.

These opaque charges funded the commissions of the salesperson.

Moreover, the QROPS was expensive and ineffective.

John now lives in the UK, so it would potentially make sense to move his pension back to a UK-based, low-cost SIPP.

However, we recommended a different solution – for him to retain the QROPS wrapper for the following reasons:

  • Since John planned to retire abroad, it was more beneficial to retain his QROPS status, as it allowed him to pay out a pension income or capital in different currencies. 
  • He could draw his pension income free from UK income tax when he retired outside of the UK.
  • If he lived outside the UK long enough, he could draw a higher tax-free initial sum of 30% in retirement, as opposed to 25% (SIPP).
  • He was in his early 50s and by the time he reached his expected retirement age of 65, he would've grown to exceed the lifetime allowance of £1.073 million. 
  • If he transferred his pension back to a UK SIPP, he would be taxed 55% on amounts that exceed £1.073 million.
  • Finally, he had limited capacity to make future contributions to his pension and obtain tax relief, as he was no longer working. 

We advised him to retain his QROPS status and transferred him to a lower cost, far higher quality provider.

After which, we introduced a low-cost platform and removed the unnecessary bond tax wrapper.

We rebalanced his portfolio through a low-cost, evidence-based strategy.

Reducing his ongoing charges by 3.48% per annum (or saving £27,840 based on a value of £800,000), whilst substantially improving his long-term investment performance.

Perhaps far more importantly, our review allowed for the crafting of a tangible financial plan and investment policy to address John's anxiety and focus on his most cherished goals.

Backing this robust lifetime investment plan with cashflow projections and a highly supportive, professional service.

This was of inestimable value as it prevented the plan from blowing up at some fleeting moment of market or emotional stress.

Remember, there could be many potential solutions for you depending on your circumstances in pension planning.

Transferring your overseas pension is a huge decision.

So, make sure you understand exactly what pension you have and its unique implications.

Its safe to assume that at least 90% of your personal lifetime investment returns will be driven by:

(a) The primacy of a documented financial plan.

(b) How much of your investments are sensibly allocated to equities as opposed to bonds.

(c) Whether or not, in response to an extreme market fad (BitCoin), or fear (COVID-19 crash), you break faith with your plan.

Salespeople don’t discuss planning because they are paid by focusing your attention on the product. A professional financial planner can help give you gain clarity, confidence and control over your pension planning. 

retirement planning and pension transfer case study

5 of the biggest pension planning mistakes you can make

You are very likely to run out of money in retirement...

Worldwide research from HSBC last year found that the average person will run out of pension savings just half way into their retirement.

While we all like to believe we are different and that we will be OK when it comes to our retirement, the reality is most of us do not spend enough time thinking about it and making proper provision. 

It may be helpful then to think of it in a different way. When you reach retirement – do you assume you will be spending less and so will therefore have enough? When you think rationally about this does it make sense and tally with what you envisage for your retirement?

HSBC’s research actually found more than half of people experience no change in their financial outgoings in retirement, and that 17% in fact found their expenses increased. Does this sound more realistic?

The good news is that there are some relatively simple things you can do to help keep you on track with your retirement planning. Here are five things people often get wrong when saving for retirement:

1) Not taking enough risk

“I don’t want to take risks with my pension.”

We often hear this.

This makes some sense if you are 10 years into your retirement, but if you are 20 or 30 years away from retirement then you definitely want to have risky assets in your pension portfolio. Risky doesn't mean bought from a less than reputable offshore salesperson and investing in some obscure corner of the world in some obscure industry. Risky means funds which buy carefully analysed equities in some of the fastest growing areas of the world – Asia, say, or Latin America.

By taking risk early on in your pension portfolio, you are likely to boost your returns significantly. Being too cautious could see your money barely rise above inflation.

2) Substituting your home for proper pension planning

“I will just release equity from my home when I retire.”

Our home is often the biggest financial asset any of us will ever own and we are rightly proud of it. But we shouldn’t rely on it to support us in old age.

Housing markets, as with all financial markets, move in cycles and you may find, at the point you want to downsize in order to release equity, that the value of your home is much less than you hoped – differences of tens of thousands of pounds can have a huge impact on retirement income.

This is also the investment equivalent of putting all your eggs into one basket.

3) Not saving enough

“I’ll start saving more next year, there’s too much I need to pay for right now.”

Assuming that we will have more cash available in the future is one of the biggest sins of saving (or not saving) for retirement.

The assumption that in future years it will be easier to save is nearly always wrong – each stage in life requires big purchases. Once you have bought a first home, paid for your wedding and paid for thousands of nappies, you are likely to then need cash for university or school fees, your children’s wedding or help with a first home for your children. It’s never the perfect time to save more – you have to be disciplined.

4) Underestimating your life expectancy

“I wish I had started saving earlier or retired later.”

Many people still hold quite an old-fashioned view of retirement – one of planning to reach a set retirement date and not working a day longer.

However, the majority of people underestimate how long they will live and really people should be thinking about being more flexible as the typical 10 or 15 years of retirement is now more like 20 or 25, or more, and particularly so for women. While this is obviously very happy news for everyone and, as medicines and healthcare improve, we can only expect to live longer and longer, it puts a big strain on our finances.

For example, if you planned to have an income of $50,000 per year for 20 years – you may have to make do with an income of $33,000 for 30 years. Make sure when you plan your retirement saving you won’t be stretched to the limit in the future – save more while you can and allow for some contingency.

5) Paying too much in fees

“My pension doesn’t seem to grow from one year to the next.”

Investing costs money – but the fees you pay should not be detrimental to the overall performance of your portfolio. Make sure you are not being overcharged for your pension wrapper or the underlying investments.

All you need to know about pension planning as a British international professional

Your retirement years can be some of the happiest of your life. You have saved and worked hard to reach the point when you can relax and put all of life’s little worries behind you.

However, there are many pitfalls and dangers which can hamper your retirement dreams and unfortunately many people are more than happy to relieve you of your hard earned cash.

Here are some of the facts and information you need to help you avoid some of the common, costly mistakes which people reaching retirement are all too often victim of.

The information here is specifically aimed at those who are British expatriates with a pension in the UK and are reaching retirement or are considering moving outside the UK either in the near future or in their retirement years. It is also for UK “non-doms” who have permanently and definitely left the UK but still have pension benefits there.

Pensions can be very complex and it is important that you seek independent advice from a qualified financial planner before making any decisions.

For ease of understanding, let’s split this into three parts:

Part 1

Is for those with a “money purchase” pension scheme such as a personal pension, stakeholder pension, self invested personal pension (SIPP) or an additional voluntary contribution plan. These pensions are of the type known as defined contribution (DC) schemes and this is how we will largely refer to them throughout for ease.

Part 2

Is for those who have a “defined benefit” (DB) – also known as a “final salary” pension scheme. If you aren’t sure what type of pension you have, ask your pension provider or contact us using the form at the back of the guide and we can help you.

Part 3

Offers some guidance on how you may want to structure your pension investment portfolio so you can make your money last as long as possible. Specifically, we will look at decreasing your investment risks and how you can position your investments to provide income and protect against inflation.

Part 1

For those with defined contribution (DC) schemes

Let's begin by setting out what options are available to you, if you have a defined contribution pension scheme.

There are three main options:

Option 1

Leave your pension pot in the UK and purchase a lifetime annuity

Option 2

Leave your pension pot in the UK and enter “pension drawdown”

Option 3

Move your pension pot outside the UK into a scheme known as a QROPS

Let's get a better understanding of what each of these options mean...

Option 1: Buying a lifetime annuity

An annuity purchase is a transaction where an individual’s DC pension savings, less any pension commencement lump sum which has been taken (sometimes called a tax free lump sum), is exchanged for a guaranteed income for life.

Before you purchase an annuity, you can shop around to see how much annuity income is available from different annuity providers. It is quite likely that by doing so, you will get a better deal than any which may be on offer by your existing DC pension provider.

If you do decide to take this route, make sure you thoroughly research your options, as the difference between the available rates of pension income can be considerable.

The indicative rates shown below are based on a notional fund value of £100,000 after taking tax free cash with payments made monthly in advance. The ‘rates’ shown represent the annual income you would receive, in exchange for your capital lump sum.

Lifetime annuity in retirement planning

Higher pension income is available for a wide range of health conditions and, for example, for being a smoker – so make sure you fully understand your options before you buy a pension annuity.

Generally speaking, the annuity dies with the annuitant, although there are some exceptions:

  1. A “joint life” annuity will provide a continuing annuity on to a surviving spouse, dependent or other nominated person following your death;
  2. Where you have chosen to include a “guaranteed period” where your income is payable for a set number of years, and your lifetime thereafter. If you die within the guarantee period, the pension income would be paid to your beneficiaries for the rest of the guaranteed term;
  3. Where you have chosen to include an annuity protection lump sum. If you die before you have received income totalling at least the cost of the pension annuity then the balance can be paid as a lump sum to your beneficiaries. 

If you decide to buy a pension annuity, do not forget that the income will generally be taxed. This is normally based on the tax rules and tax rates in your country of residence, not the country in which your pension originates.

However, those living in some countries will pay UK tax on their pension income, and it is not possible to offset tax due in the country where they live.

Option 2: Pension drawdown 

In pension drawdown, your pension fund (after taking any lump sum) remains invested and you can take an income from it. Because your pension pot remains invested it may continue to grow in value even after you have begun taking withdrawals from the fund.

This depends on investment growth and the amount of any income you choose to take. Drawdown is more flexible than an annuity. With drawdown, you can take as much or as little as you like, whenever you like. You can even switch off income withdrawals altogether for as long as you wish. This is known as “flexi access” drawdown.

You can also pass on any remaining fund after your death. This can be passed on without UK tax if you die before age 75. Flexi access gives you control over your pension pot. However, you will still have to pay any tax due on income withdrawals. This is normally based on the tax rules and tax rates in your country of residence. 

 You can pass on any remaining fund free from IHT after your death. In addition, where you die before the age of 75, your beneficiary will not pay UK income tax on inherited pension funds. Flexi access gives you control over your pension pot. However, you will still have to pay any tax due on income withdrawals. This is normally based on the tax rules and tax rates in your country of residence. 

The most important thing to remember is that the new pension flexibility rules mean that you can decide how much and how often you would like to withdraw from your pension pot, but that tax rules will apply as relevant in your country of residence.

It's worth noting that although Pension Drawdown allows for full income and capital flexibility, unlike your annuity, you can run out of money.

Consider this before entering flexi access drawdown: Before entering flexi access drawdown, you may wish to transfer your existing pension pots into a Self-Invested Personal Pension (SIPP). 

There are four main reasons why this may be beneficial to you:

  1. To consolidate your pension pots into one scheme to make it easier to manage
  2. The ability to invest your pension more freely than many other pension schemes will normally allow
  3. To make it easier to work with an adviser/advisory firm who can help you plan your retirement income or your inheritance
  4. To maximise flexibility in how you can take an income from your pension, and the ability for it to “cascade” to others following your death.

Option 3: A Qualifying Recognised Overseas Pension Scheme (QROPS)

Why use a QROPS?

There are a number of reasons why moving your pension into a QROPS could make financial sense. One of the biggest reasons is because you may pay less tax. This depends on how the tax rules work in the country where your pension pot is and in your country of residence.

Double taxation agreements are designed to prevent your pension income being taxed both in the country where your pension pot is held and in your country of residence. However, not all countries have or rely on double taxation agreements and you will need specialist advice on this point.

Retirement planning: QROPs vs SIPP

In addition to the potential for lower tax bills, a QROPS will usually permit a wider range of investments than those available within a SIPP. As with a SIPP, you may also be able to take a lump sum – the amount of which depends on the scheme you use and the country in which it is located. 

At this time, only EU-based QROPS are able to offer clients access to 100% of their pension as in the UK. Outside the EU, QROPS must require at least 70% of the fund to be used to provide an income for life.

Here are three tax advantages a QROPS may offer: You may benefit from little or no taxation depending on the country where your pension fund is and your country of residence; For those with larger pension pots, a QROPS transfer can ring-fence the fund from any lifetime allowance issues; No tax on passing on benefits on death after age 75, if you are a long-term non UK resident.

An example – transferring from a DC pension into a Maltese QROPS

Mr Shepherd had three pension pots with a combined value of £950,000. At age 50 he emigrated to Spain, took pension transfer advice and transferred to a Maltese QROPS.

One of his objectives was to have more control over how he invested the fund, given there were a limited range of options available through his current schemes.

By working with a financial adviser, he was able to place his pension pot into a wide range of funds which allowed the pension to grow.

When the funds were transferred, it was a “benefit crystallisation event”, meaning that the fund was tested against, and did not exceed, the then lifetime allowance of £1.25m. This allowance will reduce to £1m from April 2016. As his pension pot grew beyond this limit by age 55, the decision to transfer into a QROPS may have saved him tens of thousands of pounds in tax.

At age 55 he decided to use his entire pension pot for income and as he had other cash savings he was able to limit the amount withdrawn. He died at age 77 with around £500,000 left in his pension pot.

Take note: Because he was in a QROPS, he was able to leave this money to his children, completely tax-free.

Part 2

For those with defined benefit (DB) schemes

Let's set out what options are available to you if you have a defined benefit (DB) pension and are considering moving abroad.

There are three main options:

Option 1

Leave your pension in the UK in the existing DB arrangement

Option 2

Move your pension into a UK-based Self-Invested Personal Pension (SIPP)

Option 3

Move your pension outside the UK into a QROPS 

Option 1: Leave the DB scheme where it is

Defined benefit schemes can be generous and intend to offer a guaranteed income for life. If you are very close to your retirement date or are not keen on investing your money, it may be best to leave well alone. 

In order to understand whether this is the best option, you need to make sure you fully understand how your DB pension works. Here are some questions you can ask your DB scheme to help you decide:

  • How much will my pension be?
  • At what age do benefits start? 
  • What are the spouse or civil partner benefits? 
  • Are there any other dependents benefits?
  • Can I take a lump sum? 
  • How is my pension indexed (i.e. by how much is it likely to increase each year)? 
  • What is the current funding level of the scheme? 
  • How much is the transfer value? Once you know the answers to these questions, you will be in a much better position to speak with a qualified financial adviser who can help you decide which option is right for you.

Consider this...

If you transfer out of a DB scheme, you will be giving up what is intended as a promise of income. You will instead have access to a fund and therefore investment risk, and no guarantee of the level of income, unless you eventually use the fund to buy a pension annuity.

Option 2: Transfer to a Self-Invested Personal Pension (SIPP) 

By transferring your DB scheme into a SIPP, you will have much more freedom in terms of what you can do with your pension savings. 

One of the main benefits of using a SIPP is the investment freedom you will have over your pension pot. Because you are free to choose from a wide range of investments, such as shares and investment funds, you can aim to protect your eventual pension income from inflation and even continue to build your pension pot once in retirement. 

Another possible attraction of transferring to a SIPP is to have greater control over your pension benefit date. With a SIPP, you can begin taking benefits from age 55. If you do decide to transfer into a SIPP, you will be able to use flexi access drawdown to take your pension benefits. 

If you select this option, you can take an income from your pension, while leaving it invested. Another benefit of transferring into a SIPP may be the death benefits available. On death before age 75 the pension pot can be passed on without UK tax to anybody. On death after age 75, the pension pot can still be passed on, but will be subject to the new beneficiary’s marginal rate of UK tax, assuming they are UK resident. 

Most DB schemes will offer a continuing pension following the member’s death for a surviving spouse or other dependents. This is usually 50% of the member’s own pension.

Pension flexibility 

By transferring into a SIPP, you will also be able to take advantage of the pension flexibility rules in the UK. This means you can access your entire pension from age 55. Flexi access gives you control over your pension pot. 

However, you will still have to pay any tax due on income withdrawals. This is normally based on the tax rules and tax rates in your country of residence. However, those living in some countries will pay UK tax on their pension income, and it is not possible to offset against tax due in the country where they live. 

You could even decide to take your entire pension pot as a single lump sum, but if you do this, only the first 25% will be free from any UK tax. And tax may apply in your country of residence. The remainder will be taxed based on the tax rules and tax rates in your country of residence. 

The most important thing to remember is that the new pension flexibility rules mean that you can decide how much and how often you would like to withdraw from your pension pot, but that tax rules will apply as relevant in your country of residence.

Option 3: A Qualifying Recognised Overseas Pension Scheme (QROPS) 

In addition to the potential for lower tax, a QROPS will usually allow a wider range of investments than those available within a SIPP. As with a SIPP, you may also be able to take a lump sum – the amount of which depends on the scheme you use and the country in which it is located. 

Only EU-based QROPS are able to offer clients access to 100% of their pension as in the UK. Outside the EU, QROPS must require at least 70% of the fund to be used to provide an income for life. 

Here are three tax advantages a QROPS may offer: 

  • You may benefit from little or no taxation depending on the country where your pension fund is and your country of residence; 
  • For those with larger pension pots, a QROPS transfer can ring-fence the fund from any lifetime allowance; 
  • No tax on passing on benefits on death after age 75, if you are a long-term non UK resident.


An example – transferring from a DB pension into a Maltese QROPS

United Arab Emirates resident Mrs Fletcher decided to transfer out of her UK defined benefit scheme into a Malta-based QROPS. She was 54 at the time of the transfer and was able to begin taking benefits the following year at age 55. 

When she began retirement, Mrs Fletcher took a pension commencement lump sum of 30%, 5% more than is allowed in the UK. Mrs Fletcher was able to take this amount because she had lived outside the UK for more than five years and because the QROPS rules require 70% of the transfer value to be retained to be used as a retirement income. 

Over the next 10 years, Mrs Fletcher took an income worth 5% from her portfolio each year and, with her investments growing at around 5% per year too, her pension remained in good shape. Unfortunately, Mrs Fletcher passed away shortly after her 65th birthday. 

Take note: Because she had transferred out of the DB scheme into a QROPS, she was able to leave the remainder of her pension to her husband, completely free of tax.

QROPS vs SIPP vs DB scheme

Part 3

Investing for retirement

Your retirement savings have taken you a lifetime to build and, while you may still want to invest, you cannot afford to lose significant sums of money.

You will not get another chance to build your pension savings. There are unscrupulous salespeople out there who are more than happy to take your cash and to invest it into high risk, high commission funds, which often fail.

The only winners in these cases are the salespeople who are paid vast commissions and will then disappear as soon as there is trouble. Before you begin planning your pension investment portfolio, make sure you discuss your attitude to risk with your financial adviser.

There are three big considerations you must take into account when setting up your portfolio for retirement:

Option 1

Income – generating enough income for your desired lifestyle

Option 2

Longevity – making sure your money lasts through your retirement

Option 3

Inflation – stopping your capital from losing real value

Consideration 1: Generating enough income for your desired retirement lifestyle

There are two main ways that you can generate income in retirement. One traditional method is to invest in an income paying equity fund. These funds will invest into dividend paying companies. These dividends are paid into the fund which is then able to produce an income. 

Another method of generating income in retirement is through investing in a bond fund. These operate in a similar manner as an equity fund, except rather than owning company shares, the fund owns debt issued by a company. The issuing company pays the fund a set rate for lending it money, which generates an income.

Consideration 2: Longevity – planning to make sure your money lasts through your retirement

Clearly, if your investment strategy is no good, your money is going to run out. It will be particularly damaging if you lose a substantial sum of money through a stock market crash or other unexpected events, as there is no way to get your money back quickly. 

This is why the asset mix within your portfolio is important. As well as generating the required amount of income, you also want to ensure you do not have too much risk.

Consider allocating some of your portfolio to very highly rated government bonds – UK and German government bonds are currently two of the best – or very strong blue chip companies.

By purchasing bonds from these companies, or investing in funds which do, you will offer your portfolio some stock market protection, while also growing your capital.

case study

How a bad investment can negatively impact your retirement planning

Mr and Mrs Smith moved to Spain around six years ago with £152,858 in savings to see them through to retirement. They bought a property and set up a small B&B business. In addition to their savings, Mr Smith had a UK pension worth around £425,000, with which he planned to fund their income in retirement.

While in Spain, they were contacted by a financial adviser and took his advice to transfer Mr Smith’s pension into a QROPS to allow “more investment freedom”. So far, so good.

They were in a strong position, with enough to comfortably retire on. Their pension commencement lump sum would have been enough to clear the business mortgage on the property. 

With minimal ongoing costs, they would only need an income of around £15,000 per year to live a comfortable retirement, which the remaining pension pot would have easily provided.

However, their financial adviser had his own retirement in mind. He found it easy to persuade them that a series of structured products was the right way to invest their money. Headline features like ‘capital protection’ and ‘quarterly income paying’ on these products make them sound low risk, as does the fact that they’re underwritten by large well-known banks.

The structured products performed badly. Some of them were linked to individual stocks which plummeted in value, while others were linked to assets such as gold which also fell significantly in value.

Despite the adviser’s promise of capital protection and income payments, the Smiths lost 60% of the value of their pension savings. As a result, their dreams are in tatters and they have had to push their retirement plans back several years as they return to work in the UK to replenish their savings. 

While the decision to transfer into a QROPS is sound enough, extra care needs to be taken as to what your ‘adviser’ invests your cash into.

Consideration 3: Inflation – preventing your capital from losing real value

One factor often not considered by retirees is the impact of inflation on their income. Over the course of your 10, 15 or even 30-40 year retirement, the value of each pound in real terms will fall. This is because the price of most goods and services will rise.

For example, factoring in an average rate of inflation of 3%, after just 10 years, a £500,000 portfolio would be worth £375,000 – 25% less than at retirement. 

Factoring in inflation is therefore crucial when looking at pension portfolio investing. Growth is going to be critical to ensure your portfolio remains of sufficient size to produce the yield you require, as you will also likely be taking an income from this portfolio.

We would suggest therefore that a pension portfolio focuses on strategies with low, smooth volatility (stock market ups and downs) to soften the impact of capital reduction. This would typically include a wide mix of investments, some more risky than others, which should hopefully provide income, preservation, and growth.

Case Study

The effect inflation can have on your retirement planning

Mr Jones is a self-made businessman with an independent retail store and has always been sensible and saved hard into his pension, which has grown to £500,000. 

He sold his business at the age of 55, after repaying his mortgage and other outstanding debts. He is afraid of investing his money and losing it, so he leaves his £500,000 pension in cash.

As he wants to use his pension pot as an income, he decides not to take a 25% tax free lump sum, leaving the entire £500,000 available for an income. He decides then to take an annual income of £17,500. 

However, assuming a 3% rate of inflation, after just five years he will have eaten away £100,000 worth of his pension. At this rate, he will have used up his entire pension pot before his 80th birthday and will certainly leave nothing for his family after he dies. 

If he had taken his 25% tax free lump sum, as most people do, he would use up his pension well before his 75th birthday.

Take note: If he invested his money, even cautiously, it would mean he could have helped to protect his pension from the effects of inflation, as a 4% return would have seen him comfortably past his 85th birthday.

So, now what?

If you have reached this far, it is likely that you are ready to start making some serious decisions about your retirement.

If you can relate to many of the points we mentioned above, you are likely to have slightly more complicated circumstances than someone who has just started saving for retirement, or who has just moved abroad. 


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Need for life cover as a part of your retirement planning

No one likes to think about mortality. But the reality is harsh and unavoidable. It can be even harsher for those you leave behind.

Life is a wonderful contradiction. On the one hand, everyone is living longer than ever. On the other hand, more people are dying from accidental deaths, heart diseases and strokes (and from a younger age too).

Most of us have car insurance for the likelihood of an accident, theft or breakdown taking place; home insurance to cover the material goods held dear; and medical insurance that protects us during illness.

But if you die prematurely without adequate life cover in place, what would happen to your loved ones? Life cover protects your loved ones so your children can finish college if you’re not around to pay for it and your family can maintain their standard of living without your regular income.

It’s vital to plan for any, and all, eventualities. It’s also important to know that different countries have different laws pertaining to deaths and dues. Loans, fines and credit cards usually need to be paid by surviving family members.

Investments, estates and trusts have long approval processes, meaning it could be months or years before your loved ones are able to access what’s inevitably theirs.

These financial burdens can be avoided. Or, in the very least, alleviated. Today, your premiums are the cheapest they’ll ever be because, right now, you’re at your youngest. 

As you get older, the expected premiums increase every year. So, the earlier you start a protection plan, the less it will cost you on a monthly or annual basis.

Simply by taking action today, you can secure your loved ones’ financial well-being.

In the event of your death, they’ll receive a lump sum to help pay for expenses and maintain their standard of living.

lifetime retirement planning and cover

Planning for all eventualities

Without having a plan in place, overtime, the medical expenses and health costs for you and your family can harm your retirement savings. Unforeseen medical conditions can come up at any time. Science and medicine has evolved to be able to treat things better but the costs for treatment and health insurance when you have a serious condition will be a lot higher than if you started planning for it now.

As an international senior executive, you may have the best insurance coverage for you and your family during your employment term, but planning for the future involves thinking about health emergencies and long-term costs that can come up after you retire and how you can prevent these unforeseen expenses from eating into your retirement savings. 

What’s the likelihood of needing long-term care?

As per a study conducted by NHS in the UK:

  • 10 million have two or more long-term health conditions, 1 million with frailty, 0.5 million at end of life.
  • There’s a three-fold increase in cost of healthcare for those with frailty.
  • People living with a long-term condition are more likely to use health and care services.

It is easy to rationalise that you and your family have a healthy lifestyle and may not need long-term care for anything, but on the greater chance that you will, you should have a plan.

Keeping a separate savings fund for these unforeseen expenses is an option but the ideal option would be to get a comprehensive life insurance that covers you and your family, the payments for which can be made monthly. The earlier you get the policy, the lesser you would pay per month (based on pre-existing conditions of course) but having this in place will not only give you peace of mind but will protect your wealth in retirement. 

Life may not always go as planned and these bumps along the way can throw you off track.

Long-term care could also be needed to sponsor old age homes in case the need arises and getting the right insurance cover, not just for you but for your spouse and children, is extremely important to manage long-term costs. Additionally, you can take a couples policy if one of you has pre-existing health conditions rather than paying higher individual premiums. 

Overall, long-term care and medical costs coverage is a vital part of your retirement planning process.

Get help from a regulated financial planner to navigate through this process with ease.

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How procrastination can ruin your retirement planning

Many of us procrastinate sometimes – even the most productive people, apparently! 

But when it comes to saving for retirement, procrastinating is not advised. Early birds don’t just get the worm - they get five star buffets for almost no effort.

The real cost of procrastination calculated

Let’s illustrate the cost of procrastination with a story of three fictional couples.

In each case, these couples have always earned the same as the typical UK household.

For example, based on data from the Office for National Statistics they had £6,444 of disposable income per head in 1977.  In 1982, they had £7,435 of disposable income per head.  By 1987, they had £8,565…

These couples are all the same age…

The key difference between them is, they didn’t all begin to save for their retirements at exactly the same time.

In 1977, Sam and Kate were 25 years old.  They decided to save £175 per month (£2,100 per year).  It would have represented 16.29 percent of their annual income.

They bought low-cost mutual funds, putting 70 percent of their money in stocks, 30 percent in bonds.

The couple’s funds matched the returns of each respective market.  In other words, and for the sake of this illustration only, their stock market mutual funds matched the S&P 500. Their bond market funds matched the performance of a broad US government bond index.

But Sam and Kate were lazy!

As their income increased, they didn’t increase what they invested. They just continued to add the same £175 per month.

By 1982, their income had increased to £14,870 per year.  As a result, their investment of £175 per month no longer represented 16.29 percent of their income.  It was now just 14.12 percent.

By 2007, that same £175 per month represented a paltry 7.47 percent of what they earned.

By 2007, the other 2 couples were investing a lot more money than Sam and Kate.  

But that didn’t matter.  These 2 early birds still soared higher.

According to portfoliovisualizer.com, they would have had about £1 million by the time they were 65 years old without ever increasing the monthly amount they invested.

Stuart and Lisa live next door to Sam and Kate.  They didn’t start to invest until they were 35 years old. They invested £600 a month (£7,200 per year) in 1987.

It represented 42.03 percent of their disposable income – ouch.

But, by scrimping so hard, by the time they were 65 years old, they also had about a million pounds. 

Stuart and Lisa had to save much more than Sam and Kate.  As a result, they weren’t able to spend as much of their income on the finer things in life.

When Sam and Kate asked Stuart and Lisa to join them for a South African safari, they couldn’t afford it.  Their monthly retirement savings ate up far too much of their income.

However, at least they were doing much better than David and Sarah!

This couple only began their retirement planning when they were 45 years old.

At age 65, they also had a £1 million portfolio - but to reach that goal, they had become slaves to their savings. The couple saved a whopping £1,800 a month (£21,600 a year).  

Such savings represented 92.79 percent of their disposable annual income. That’s why, to reach their retirement goal, they had to rent out their home and live in their car!

Of course, these are just fictional examples. But the numbers are real! We used actual investment returns between January 1977 and July 2017.

The lesson here is massive – yet simple!

If you procrastinate about your retirement planning and start to invest later, you’ll have to save a lot more money to reach your ideal future.


How retirement planning needs to start today

For example, Sam and Kate began to invest in 1977.  They would have saved a total of about £84,000 to amass £1 million.

Stuart and Lisa started to invest 10 years later.  They would have invested about £216,000 to reach a £1 million portfolio.

David and Sarah didn’t invest until they were 45 years old.  As a result, they had to save about £432,000 to reach their million-pound milestone by age sixty-five.  

If they had started to invest ten years later (at age 55) they wouldn’t have reached that goal – even if they had invested every single penny they earned!

We are not saying you need £1 million to retire. But just to show you the power of investing early and the pain of procrastination.

If you haven’t started to invest for your retirement, it’s best to start today. 

Retirement planning FAQs

1. Have I left it too late to start saving for retirement?


No matter how old you are, how soon you want to retire, whether you've started saving yet or not, there is work that can and should be done to get you on track.

We've written a series of articles you may find inspiring: -

Don’t think you can invest in your 40s? Think again!

How to invest in your 50s: 5 steps for financial success

In your 60s and planning for retirement? Is it too late to invest?

And the only thing left to say is, whilst it's never too late, you'll never be younger than you are today, so today is the right day to begin planning, start saving and to get best advice.

2. Should I consolidate my pensions?

There may be a very good reason to consolidate pensions, particularly if fees and charges are running away with a pension you've perhaps left behind onshore in your old country of residence.

There may be an argument for you transferring your pension/s abroad as well.

The best advice...is to seek the best advice.

What is right for you and your pensions and personal retirement goals may not be right for the next person.

Seek advice, and ensure your pensions are working hard for your retirement, and not being impacted by high fees.

3. How much should I save for retirement?

A good financial planner will help you convert your life into numbers so you can understand how much you would need to save for your retirement, and how you can get there. You can find more information about this here.

4. Is a company-provided pension sufficient for retirement?

A company-provided pension can be far from sufficient for your retirement, even as a senior international professional. It is always advisable to have a plan and put your retirement savings to work to generate more income. Identifying your retirement goals and how much you would need to get there can better help you make this decision.

5. Should I invest if I am planning for my retirement?

Investing your retirement savings can help you retire early and get and keep the life you want. Essentially you are putting your savings to work to generate more income for you. You can learn more about DIY investing here, but ideally a regulated financial planner will best be able to guide you through this journey.

6. How much do I need to invest to fund my retirement?

This is a common, yet difficult to answer question.

A great deal will depend on what you hope to achieve in terms of lifestyle in retirement.  Additional considerations include where you want to retire, how long you've got before you want to access your pension savings, and how much you can afford to invest today, without impacting on your current lifestyle.

It's important to discuss these factors and more with a qualified retirement planning specialist.

7. How much investment risk should I take in retirement planning?

The amount of risk you should take on at any point of time should always be based on your appetite for it. Ideally, higher investment risks can be taken on early in your planning stages when you have age on your side. You can learn more investment risk in retirement here

8. What is a QROPS?

A QROPS is a pension scheme outside the UK that has informed HMRC that it meets certain UK requirements, and so can take transfers from UK registered pension schemes. You can learn more about QROPS and the differences between QROPS, QNUPS and SIPPs here.

9. I am a UK expat living in the UAE. Will my heirs be taxed when they inherit my retirement assets?

UK inheritance tax for expats is chargeable, on worldwide assets, at a rate of 40% of the amount by which the total value of an expat's worldwide estate exceeds their nil rate band, which is £325,000 in the current tax year for individuals, or £650,000 per married couple. You can learn more about this and how a regulated financial planner can help you protect your wealth from the taxman here.

10. What is the difference between retirement planning and long-term care planning?

Long-term care planning refers to any unforeseen health emergency planning for you and your family, which should be covered by insurance or elderly care plans based on your individual needs. 

Retirement planning on the other hand is much more than just about being financially secure in your retirement. It’s about identifying your life goals and what makes you truly happy and then crunching the numbers with a professional financial planner to strategise on how you can get there so you can achieve your desired future.

Independent financial advice for senior international professionals

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