Retirement Savings Options For Expats In Asia
Saving for retirement is vital for all of us due to increasing life expectancy, shrinking state pension provision and the responsibility for having enough to live out our golden years in comfort now being placed squarely on our shoulders. In addition, retirement planning can help an expat save for the future while living out their lives abroad or in their home country.
The retirement savings options for expatriates are naturally different from those who live in their home countries. For example, suppose you are an expat and tax resident in your home country (sometimes referred to as onshore). In that case, you can usually benefit from tax relief on contributions into approved pension and retirement funds. However, this option is not available to many expats, particularly those living in China.
If you live offshore, you have expatriated to a foreign country and are currently a tax resident there, so it is crucial to start saving for retirement while working abroad. This is particularly important as many expats living in Asia find themselves with increased disposable income. This desirable situation provides the perfect opportunity to boost their money or financial assets.
Fortunately, there are some great options for retirement planning available to expats in Asia. I hesitate to use the term ‘offshore‘ as this can have negative connotations and is off-putting for some people. But offshore investing means that the investment is held in an international jurisdiction other than your country of residence for tax planning purposes. Therefore, these vehicles are perfectly legal and cater specifically to an international expatriate clientèle.
The good news is that they also offer many advantages. Let’s take a look at the main ones.
Nine Advantages of International Investment Vehicles Available to an Asian Expat
The investments that an expat makes within these kinds of funds are more accessible than those in typical pension plans around the world, which usually tie in your money until you reach the age of 55 at least. Instead, your retirement savings will grow in tax-free funds, which you can access at any time up to your chosen retirement date (subject to policy/fund conditions).
International investment vehicles are usually somewhat less flexible in terms of access. However, it is worth noting that expats have the option to begin building their pension plan at a much earlier age than you would be able to in most parts of the world.
You maintain control
In consultation with your financial adviser, you take control and decide where every penny of your cash is invested. As an expat living in China, you have low-cost access to an enormous range of investment funds designed for expatriates and the flexibility to adjust your portfolio to meet your changing requirements at any time.
International investment vehicles are becoming increasingly popular among expats in Asia, especially with people who have homes or other investments in their home country. They are designed to offer expatriates the opportunity to invest in their retirement and their family’s future financial security.
International investment is another way in which you can diversify your sources of income. In addition, these vehicles offer you a degree of flexibility when managing your money that is rare even in traditional pension plans in most countries worldwide.
These retirement saving vehicles offer the opportunity to save in different currencies and have significant tax advantages. This can be especially useful if you live in a jurisdiction where the money is volatile or if you are planning on retiring to a different country.
For expat citizens, particularly those living in Asia, international investment routes are an opportunity to invest in a tax-effective way. A global investment fund is usually domiciled offshore, which means that you can avoid many taxes, including taxes on income and capital gains compared to your country of residence. Many of these funds will also allow you to pay minimal taxes when selling units because they trade frequently.
Perfect for expats who move around
These funds are significant for nomadic expats who may move from country to country several times throughout their time abroad. Investors can both contribute and withdraw wherever in the world they are based despite being a citizen in their home country.
International investment vehicles offer you the flexibility and liquidity essential for the modern expat in other countries. As a result, they are becoming increasingly popular among people who have homes or other investments in their home country.
Freedom of choice
With proper financial planning, you can build and create the retirement you would like by setting your own monthly savings amount and your retirement date rather than being dictated to by a government. In addition, international investment vehicles allow you to choose your investments and even your financial adviser, which means you take more control over your savings and investment plans without worrying too much about taxes.
Another example of retirement plans is international investment vehicles which are another way to diversify your sources of income. They also provide greater currency flexibility than other saving methods, making them an attractive option for expats who live abroad and regularly move between different countries. International investments offer tax efficiency; they usually have flexible access rules; they enable the investor to develop assets that match an individual’s circumstances. They keep management costs down while giving investors complete control over them.
Continuity of your financial planning
An offshore retirement fund offers the ability to invest and stay invested in the markets even if your tenure overseas is short. This will help you remove any gaps in saving for your retirement. Eliminating these gaps is reasonably necessary because, as many expats discover, an initial overseas posting of three years often turns into ten, and none of us can afford to miss ten years of saving towards retirement; in fact, to do so can be catastrophic.
No drawdown restrictions
You can take any amount of your retirement plan as you wish and even opt to take your entire retirement package in cash instead of being restricted to 25% of the fund. International investment vehicles offer you a degree of flexibility when managing your money that is rare even in traditional pension plans in most countries around the world.
Income without restrictions is usually flexible about what payment they will accept from investors. For example, most international investment funds will take an unlimited amount of guaranteed income and a large portion of capital withdrawals, giving you more choice over how you spend your retirement fund upon reaching your set retirement date.
It’s important to remember that international investment vehicles may not be suitable for everyone. International investments can be complicated and riskier than traditional savings methods such as pension plans or mutual funds. They should not be seen as a substitute for a pension plan because they do not guarantee you will get the total value.
Annuity not required
Once you reach retirement age, you will have several options with a fund of this kind. You could leave the money invested, cash it in or take out an annuity, but the important thing is that the choice is yours. You will not be forced to purchase an annuity, as is the case with certain pension providers regarding an expat’s contributions.
It is good to have pension planning so that when you eventually die, the residual fund can pass to your wife or family according to your wishes with no problem. Furthermore, international investment vehicle funds are transferable from one jurisdiction to another, and some offer the option of monthly income. In addition, international investments can give expats greater freedom and flexibility when choosing where they live and where they invest their money.
Saving for retirement can be a challenging and frightening prospect for many, but as a professional financial adviser, I’m here to help. If you’d like to discuss the possibilities available to you as an expat living in Asia, I’d love to hear from you at email@example.com.
I work as a Financial Planner with expat clients to meet their financial planning needs and goals, with a focus on adequately protecting expats & their families, and helping people to grow their savings over the long term. I strongly believe in building meaningful and lasting relationships with clients to ensure the best client outcomes are achieved.