Offshore
Savings Plans

It used to be this way in the UK too...

If you have a long memory, you might recall the Maximum Investment Plan (MIP) from the UK in the 1980s.

The MIP was seen as an exciting new product. But was quickly tarnished by excessively high commission rates, complex charging structures and allegations of mis-selling. 

It was associated with high pressure sales techniques and opaque charging - all of which wreaked huge losses onto clients, and reaped big profits for the insurance companies that sold them.

So what exactly is a MIP - and why should you care?

Basically, a MIP is a unit-linked endowment policy. You agree to contribute for a contractually agreed term: part of each premium goes towards life cover, and the balance goes into investments. Being unit-linked, there’s a wide range of funds to choose from.

At the end of the term, the MIP will pay out a tax-free amount, the exact sum a function of the underlying fund performance, the charges and the commission payable.

They were banned in the early 90’s in the UK...

Then the MIP moved offshore and became known as a ‘contractual savings plan’, ‘offshore pension’, ‘offshore savings plan’ and ‘regular savings account’ - that's why you should care!

The question is: how attractive are these plans really?

The answer is:

It largely depends on its point of sale representation, the charges, the asset allocation and the fund performance. 

In our view - the world has changed so much there are now far better options for you to consider.

Blackberrys have been replaced by iPhones.

Black cabs have been replaced by Uber.

And MIPs or offshore contractual / offshore savings plans should now be replaced by the more transparent, cheaper, more flexible and better performing options available to the discerning expat who knows where to look.