Off-Shore Pensions The Truth

Author: Geoff B is an independent financial advisor with strong views on Off-shore pension products. His opinions do not necessarily represent the views of Expat Arrivals.

One of the most important if not the very most important financial decision for any of us is “what to do about saving for pension purposes?” and here I would like to share an industry insider secret with you.

The secret is that the products you will most commonly be offered offshore as a “pension plan” are no such thing.

They are instead just a vehicle in which to accumulate money which may one day be used for income either by drawing down on it, or if you really wanted to you could buy an annuity with it. They will not automatically provide you with future income payments.
 

These savings vehicles are really nothing more than a regular premium life assurance policy with a specified premium payment term, and life cover of 1% more than its investment value in order to qualify it as such. When signing for one of these you are agreeing to make every payment due from the date of inception until the specified maturity date. If you do not meet this requirement the terms are full of penalties and conditions which can really hurt you financially.
 

It is my experience that most people just want to build up their savings in a cost-efficient and flexible method and I can think of no one I know or have met who wants to be chained to an inflexible scheme which penalises them if they can no longer afford to save what they used to.
 

There are several variations on a theme depending on the life assurer involved but in my own humble opinion anyone who bought one would have to be either naïve or insane, and yet thousands are sold around the world each and every month to people who either didn’t fully understand them or didn’t do their homework in full.
 

A golden rule of my own worth remembering is “insure with an insurer but invest only and directly with a specialist investment company”. In my 30 years of experience I have learned that the two do not usually mix well.
 

Read the full article on The Truth About Off-Shore Pensions here.