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Money matters:
Graham Macdonald
MBMG International Ltd.
Nominated for the Lorenzo Natali Prize
UK Company Defined Benefit Pensions:
Should I stay …or should I go now? Part 2
Advantages and disadvantages
of moving your pension to a QROPS
Taking a holistic approach to pension planning is vitally
important and there are many factors to consider. Transferring a pension to a
Qualifying Recognised Overseas Pension Scheme (QROPS) means that an individual
is able to design a succession plan, ensuring they can secure benefits after
death to their spouse and any children. On top of this, an individual can take
control over his or her pension and, with a QROPS, there is a wider choice of
investments available with no limit to the size of funds which can be
accumulated.
Once the individual decides to draw their pension, income it
is paid out of the pension investment fund, free of UK tax, and on death, the
remainder of the fund value is available to whoever the member nominates,
totally free of Inheritance Tax.
Tax is an important consideration. Even though the member
might be non-UK resident, any pension coming from a UK registered pension scheme
will be subject to UK income tax. It is therefore important to understand if the
member’s new country of residence has a double taxation agreement with the UK,
like Thailand.
QROPS schemes are probably the best opportunity expatriates
have had in a very long time. Not only do they maximise potential benefits but
they also increase flexibility. So even if an individual’s pension is held in a
Defined Benefits Scheme (DBS), as long as the member receives professional
advice and is in a position to be able to weigh up the pros and cons of the
proposed transfer, a QROPS may still be worthy of consideration.
It is important that the company you use has extensive
experience in QROPS and can show they have successfully moved every type of UK
pension offshore, including Final Salary, Group Money Purchase and Money
Purchase plans, plus Protected Rights plans and AVC’s. Included in these pension
transfers should be transfers out of Civil Service pensions and Teachers
Pensions, and also transfers of pensions in drawdown, and transfers of final
salary pensions in payment.
Your advisor should also produce a detailed Pension Transfer
Report including, if applicable, critical yield analyses. These are the amounts
your fund must grow at per annum to match your final salary pension, both pre-
and post-retirement. The Pension Transfer Report will provide you with all the
information you require to make an informed decision on whether to transfer your
pension or not. Below is the ABC of QROPS:
A comparison of UK Pension
Plans to QROPS + A more detailed explanation of the benefits of each of the 12
subjects
1. If you leave your funds in a UK Pension fund, the
subsequent pension income is UK taxable regardless of where you are living in
the world. QROPS is paid offshore tax free. However, if you live elsewhere in
the world outside the UK, you are responsible for declaring your QROPS income
for tax purposes where you reside. Properly structured this could result in you
paying significantly less tax.
Provided your income is kept within Government Actuarial
Department (GAD) limits, you may move your pension back to a UK pension scheme
at any time without penalty, should you ever decide to repatriate.
2. When you purchase an annuity your pension fund goes to the
annuity provider, and when you die nothing is returned to your family or estate.
With a QROPS you control the fund and 100% of the remainder passes to your
family or estate on death, 100% free of Inheritance Tax. Any pension fund
transfer into a QROPS is IHT free from Day One.
3. The Trustees of a QROPS are bound to act within the
“Spirit of Co-operation” as agreed with HMRC when the QROPS was approved, and
provide an “income for life”. Once you have been abroad 5 years, however, there
is no reporting of your income taken from your plan to HMRC, and you are not
bound by GAD limits.
4. There are strict guidelines governing UK pensions. A QROPS
can invest anywhere, all held in Trust and thus avoiding IHT.
5. A typical final salary scheme will pay your spouse 50% of
your pension if you die. With a Personal Pension Plan, if you select this
option, it will reduce how much the plan pays you from inception. With a QROPS
the residual fund can pass 100% to your spouse on death, allowing them to
re-invest maintaining 100% of the income if they wish, or just spend it.
6. If you have the option to take a UK pension early, because
actuarially you will live longer from when you have started drawing your
pension, the UK pension will pay you less initially, thus reducing your pension
by 5% to 6% for every year you have brought forward the drawdown. A QROPS can be
taken from age 55 with no actuarial reduction for taking an early income.
7. A UK pension must purchase an annuity by age 75, depriving
your estate of any residual value. With a QROPS you are never compelled to
purchase an annuity, however, you can if you wish.
8. If the UK employer or ex-employer that holds your company
pension scheme goes into liquidation then your pension can go with it. Hundreds
of thousands of UK pensioners have lost their entire pension plans, and the
levels of compensation that the PPF will pay out could be as low as 30% of the
original benefit.
With QROPS the funds are held in a Personal Portfolio Bond in
the Isle of Man which has the oldest Parliament in the world in continuous
existence. Also, the island has been awarded the highest Sovereign Credit Rating
“AAA” from Standard and Poor’s as well as Moody’s.
Furthermore, to ensure the protection of the policyholder’s
interests, a statutory offshore policyholder protection scheme is operated on
the Isle of Man. The Life Assurance (Compensation of Policyholders) Regulations
1991 protects investors with Isle of Man-based insurance companies to levels at
least equal to that available in other financial jurisdictions worldwide. The
scheme protects investors in the unlikely event of an Isle of Man-based
insurance company being unable to satisfy its claims. The scheme pays up to 90%
of the liability of the insurer.
9. Traditional UK pensions hold all assets in GBP. In a QROPS
you can hold assets relevant to where you are resident and avoid the risk of
currency fluctuation.
10. Both UK pension schemes and QROPS allow a 25% tax free
lump sum to be taken at retirement. However, a UK scheme may insist you wait for
the scheme retirement age before you receive it. With a QROPS it is your choice,
and you may also defer the income after taking the 25% tax free lump sum.
11. QROPS give a much higher level of life assurance cover
giving your loved ones greater financial protection in the event of your
untimely death before retirement.
12. A final salary pension or a purchased annuity is deemed
“secured” and cannot be commuted. A QROPS fund is deemed “unsecured” and if your
doctor tells you that you only have 1 year to live you may encash the entire
fund, 50% of the fund if married.
The disadvantages of
transferring your pension to a QROPS
There are 2 main disadvantages of moving your pension to a
QROPS:
1/ Trust Fees – You will have to pay the QROPS Trustees a
management fee - this should be no more than GBP 1,250 per annum. However, the
larger the pension transfer amount, the smaller this fee becomes percentage
wise.
2/ If you transfer a final salary scheme you lose the
“guarantee” of the income increasing every year
Just to cover my backside, I must add that not all of the
advantages or disadvantages will apply to everybody.
Pensions are, understandably, an emotive subject. It is what
you are going to live off for the rest of your life so you must get it right. It
will cost you nothing to get advice. It might cost you everything if you do not.
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The above data and research was compiled from sources
believed to be reliable. However, neither MBMG International Ltd nor its
officers can accept any liability for any errors or omissions in the above
article nor bear any responsibility for any losses achieved as a result of any
actions taken or not taken as a consequence of reading the above article. For
more information please contact Graham Macdonald on [email protected]
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Snap Shots: by Harry Flashman
A treasure trove
in the junk department
All photographers start to get a collection of old photo gear. Some of
it has become surplus to requirements, some of it is broken and not
worth repairing or too difficult to get repaired in this country, and
much has become redundant because you have changed camera systems, or
even changed complete formats (6x6 to 35 mm for example).
Nikon FM2N
I found myself in that situation after purchasing my
Panasonic Lumix Digital DMC-FZ50 (which is even still delighting me). It
took a year of deliberation (some might call it ‘hesitation’ or just
plain ‘dithering’) before I made the fateful decision to a) go digital
and b) go Lumix, after more than 20 years of using Nikon exclusively.
Of course, some of you will ask why didn’t I stay
with Nikon, with its full range of digital SLRs? Good question, but
easily answered. The upper level Nikons are now very expensive, and
whilst I had some excellent Nikon manual focus prime lenses, they were
not going to be all that compatible with the new Nikon digital
auto-focus systems.
That also brings in one of the salient reasons in the
purchase of the Lumix – the fantastic 35-420 Leica zoom lens that comes
with the Panasonic Lumix, coupled with the electronic anti-shake
technology so you can hand hold, even at 420 mm. With digitals these
days, I believe that you are best served with electronics from an
electronic company, with lenses from an optical company. The Lumix
definitely fits that.
Having made the irrevocable decision, I looked at my
now defunct Nikon 35 mm film system. I had two cameras, a much loved
FM2N, and an FA. The FM2N was the typical journalist’s workhorse with
more rolls of film through it than you’ve had hot dinners, whilst the FA
was the back up. Only thing was the FA was no longer working, having
some kind of internal problem, by which the mirror was locked in the
“up” mode.
The lenses were a 24 mm wide angle, old and growing
its second crop of fungus (the first was cleaned off about five years
ago), a 50 mm ‘standard’ lens and a 135 mm ‘portrait’ lens. I also had a
spacer for macro work, which was also very old, but was the good one
that still allowed the auto exposure function to work.
These items were now surplus and it was going to be
very unlikely that I would use any of it again (although I would still
take the FM2N out of its bag and lovingly stroke it every so often).
It was at that stage that a good friend of mine
suggested I sell the surplus items, and said that he had excellent
results selling items on eBay in the UK. He was returning to the UK
himself and offered to sell them, and I thought, “Why not? I’m getting
nothing for them sitting in the old camera bag.”
He had been back a couple of weeks when I got the
following email:
That little lot came to 325 pounds sterling, which at
the current exchange rates was over 20,000 baht, which certainly made
purchase of the Lumix a breeze (duty-free price).
What made the exercise even more astounding, was the
number of ‘watchers’ who had been looking as the bids went in on eBay.
14 looking at a broken FA and someone who paid almost 2,000 baht for it.
The lenses all went for very good money, though I would have thought the
135 mm would have been more desirable than the 50 mm, but the 24 mm did
attract the highest bid, as I thought it would.
The moral to this tale, is to look at the old camera
gear, broken or otherwise and clear out the cupboard and sell it on
eBay. You will get more than you ever imagined, but it certainly helped
having a friend who was a regular eBay user and stationed in the UK.
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Watchers Bids £
FA 14 7 28
FM2N 39 13 65
Spacers 16 5 22
24 mm 40 23 108
50 mm 55 13 68
135 mm 17 5 34 |
Modern Medicine:
by Dr. Iain Corness, Consultant
Give yourself another 10 years!
The secret of living a long and healthy life is learning to
drive your own diseases. This goes in particular for such conditions as
hypertension and diabetes. Both of these are amenable to treatment, and both
of them can be monitored by yourself. Whilst it is necessary for a doctor to
oversee your treatment, your doctor can do this much more efficiently with a
little help from you.
Taking blood pressure monitoring first, there are many
automatic, self-inflating cuff instruments that will give you a digital
read-out of your systolic (the high reading) and diastolic (the low
reading). For these home readings to have even more significance, you need
to have a small notebook recording time and date. After many days you will
be able to show a strong pattern so that your doctor can really tailor the
medication to keep your BP in ‘safe’ limits, and avoid side effects from the
medication.
By doing this, you can give yourself upwards of another
10 years of healthy living. That has to be worth it, surely!
The other condition that lends itself to home monitoring
is diabetes. We know that uncontrolled diabetes is life threatening. We also
know that poorly controlled diabetes will shorten your life and lower the
quality of life. However, well controlled diabetes need not be a bar to a
good and happy long life.
However, how do you know if your diabetes is well
controlled? The blood test you have once a month, both blood sugar and
glycated hemoglobin (HbA1C), can give your doctor a ‘snapshot’ of what is
going on, but at best, it is only a rough indicator. Something more exact is
much better, and that something is under your control! This is home blood
sugar monitoring.
If you wish to lead an independent and active life,
learning to test blood sugar levels by yourself is essential. The results
from the home monitoring provide information about how meal intake and
timing, medication, exercise and stress affect your blood sugar levels. All
important factors both your doctor and you need to know to be able to
correctly balance your blood sugar levels with diet and medication.
There are many different monitors for checking blood
sugar and your doctor or diabetes team can advise you on makes and models
suitable for your condition.
Just like blood pressure monitoring, keeping a log book
is a very important part of the monitoring. Random blood sugars are very
inaccurate methods trying to get in control.
However, unlike blood pressure monitoring there are
certain precautions you have to take to get the required accuracy. Note that
you need to ensure that :
The meter is clean;
The meter has the correct code that matches the strip you
are using;
Wash your hands with warm water and air-dry before
incising,
Squeeze or milk your finger a few times gently. Excessive
milking is discouraged as results obtained may be inaccurate, but do make
sure you have a good-sized drop of blood.
Now you need to know how often you should test. This is
where you must follow the recommendations from your doctor, as your doctor
will want levels at different times of the day to get an idea of how well
your treatment program is working for you.
Generally, the best times to check are before breakfast,
before lunch, before dinner and before bedtime snack. Sometimes it is also
useful to check blood sugar two hours after a meal to see the effect of the
food on your blood sugar levels. You should also test your levels more
frequently during periods of stress, illness, or surgery, when you are
pregnant, or when low blood sugar is suspected or when there are changes
made in your treatment program, such as a change in medication dose, meal
plan or activity
You should also know your own target range. This depends
on your age, which type of diabetes you have and the duration of the
diabetes. Your doctor will help you with targets, and an ‘action plan’ for
when your home monitoring shows levels above or below the targets.
Learn to drive your own diseases and live happily ever
after (or until you are 100)!
Heart to Heart with Hillary
Dear Hillary,
It’s Delboy again, still alive but not kicking, as I have
just completed a 2,770 kilometer ride on my little 125cc Honda Dream motorcycle
which left me, to put it crudely a sore backside! What a fantastic machine the
bike is, it never missed a beat the whole trip and handled the mountain passes
with ease.
While I was riding between cities I got to thinking how times
have changed. Nowadays so many Farang get carried away with Thai ladies, or
should I say their money gets carried away by Thai Ladies? You know Hilary
twenty years ago it was a different story, it was the Farang that got paid to
become engaged or married to a beautiful Thai lady! The good old days I guess
foreign males would call them. Of course there was no guarantee that they would
stay married once the lady got citizenship of the country she went to.
But that didn’t matter, the Farang would just get the next
flight back to Thailand and repeat the process! He could even give up work and
make it a full time profession. Of course I don’t know anyone who did that, but
I did hear that went on in the good old days.
It was a win-win situation for all concerned, sadly a bit
different now for I guess the majority of Farang males. Anyway just my thoughts.
Happy Songkran to you Hillary and all the staff at “The
Mail”. I’m off for a rear end massage, all the very best.
Delboy
Dear Delboy,
What on earth possessed you? 2,770 km on a step-though!
Are you mad, or was it just temporary insanity? Next you’ll tell me you are
going to ride up and down the main streets in a T-shirt and shorts during
Songkran. I enjoyed my Songkran, locked in my attic above the newspaper office
and getting pizzas pushed under the door – I wouldn’t open it for anybody.
Your story of the reverse dowry does have an element of
truth in it, but the time scale is wrong, Petal. It wasn’t 20 years ago, it was
more like 120 years ago, and even I wasn’t around then. This was also the case
in India, where intermarrying was one way of lightening the skin color. In
Thailand we just use whitening cream these days.
Dear Hillary,
A poem for you, from Dave Toussaint:
‘Classic man’
I met a girl in old Thailand
She told me of the classic man
Classic man what lady like
Have BM car not motorbike
Have Lolex watch and it not fake
Classic man not make mistake
He may drink and he may smoke
But not laugh much and never joke
He never smile and never sing
He have control on everything
He wear glasses he serious
He aeroplane he never bus
Have designer shoes, designer shirt
He always clean he not have dirt
Wear Levi jeans and have long legs
Classic man he can good sex
He go to gym he exercise
Everyday until he dies
Classic man have master plan
He buy house and he buy land
Classic man have business life
And number 1??
.......he want Thai wife!
Dear Dave,
Thank you, Petal, all very true, but, where do I find my
“Classic Man” before someone else grabs him? I think I will recognize him –
wears glasses, Levi jeans, Rolex and keys to a BeeEmm – but where should I start
looking?
Dear Hillary,
Another success story for your column. Remember the very
famous song “I got you babe” (Sunny and Cher) about two people who fall in love
and think love will pay the bills. Well it does not work in the UK or America so
why should it here?
Two years ago I met a bar girl from Isaan. She was
intelligent and very proud of her family - did not like her work - but as many
do, did it for survival reasons. She went back to her village two months after I
met her and has now her pride back and works in a simple family business and
earns less than 150 baht a day. I send her money every month and visit her
village three times a year - and when I visit I am treated like a family member
by all her family. We intend to get married next year and yes you have got to
provide for the one you love no matter where you live in the world, but the
rewards in Thailand are well worth it.
Another success Story
Dear Another success Story,
Hillary always prints success stories, but the successful
ones are people who are happy in their relationship and do not need advice from
an ‘agony aunt’, so this is why you do not read them so often. Your point is
well taken and should be understood by everyone who is contemplating entering a
relationship anywhere in the world. Love (alone) does not pay the bills. There
is an obligation to provide and I am very pleased to see that you have accepted
that, and that it is working out for you, but remember too that one couple is
not every couple. Interesting that you picked on a Sunny and Cher song –
remember what happened to them?
Let’s go to the movies:
by Mark Gernpy
Now playing in Pattaya
Kick-Ass: US/ UK, Action/
Comedy/ Drama – An unnoticed high school student and comic-book fan one
day decides to become a super-hero, even though he has no powers,
training, or meaningful reason to do so. On this film, the consensus
seems to be: 1) It’s not for the faint of heart, and 2) It takes the
comic-adaptation genre to new levels of visual style, bloody violence,
and gleeful profanity. With Nicolas Cage. Rated R in the US for strong
brutal violence throughout, pervasive language, sexual content, nudity,
and some drug use - some involving children. 18+ in Thailand. Generally
favorable reviews.
Remember Me: US, Drama/ Romance – Twilight’s
Robert Pattinson plays a rebellious young man in New York City who has a
strained relationship with his father (Pierce Brosnan) ever since
tragedy separated their family. He didn’t think anyone could possibly
understand what he was going through until the day he met Ally (Emilie
de Ravin) – but she has hidden secrets as well. Mixed or average
reviews. At Major Cineplex only.
9 Wat / Secret Sunday / Number 9: Thai, Suspense/
Horror – At his mother’s request, a young architect unwillingly takes a
journey to visit nine different temples in seven days in order to clean
up his bad karma. He is accompanied by his beauty-columnist girlfriend,
and a young monk to do the chanting. But horrifying acts done in their
previous lives reveal themselves as the journey goes on, and the more
they try to clean up the bad karma by making merit, the closer they get
to “THEM.” 18+ in Thailand.
Legion: US, Action/ Fantasy/ Horror/ Thriller – In
the first minute, the angel Michael falls to earth and then cuts off his
wings. It’s because God gave him a command that he didn’t want to do.
God, you see, has given up on mankind, while Michael thinks there’s
still hope. The first 40 minutes are terrific – evocative and stylish.
Then I suggest you leave. Here’s how they describe it: “After a
terrifying biblical apocalypse descends upon the world, a group of
strangers stranded in a remote truck stop diner in the US Southwest
unwittingly become humanity’s last line of defense when they discover
the diner’s young waitress is pregnant with the messiah.” With a quite
impressive Paul Bettany. Rated R in the US for strong bloody violence,
and language. 18+ in Thailand. Generally unfavorable reviews.
Big Boy: Thai, Comedy/ Drama – A young man
from the country moves to Bangkok, under the premise of taking care of
his ailing grandfather, to pursue his dream of becoming a popular B-Boy
dancer (breakdancer). It turns out his grandfather at one time pursued
dancing himself, but failed to achieve his dreams. The young man and his
grandfather always had a love-hate relationship, but it turns out his
grandfather manages in the end to push the young man to finally attain
his dreams.
The Princess and the Frog: US, Animation/ Family/
Fantasy/ Musical/ Romance – A fairy tale set in Jazz Age-era New Orleans
and centered on a young girl named Tiana and her fateful kiss with a
frog prince who desperately wants to be human again. I think Walt Disney
has much to atone for in its presentation of blacks over the years,
right from the very beginning in the silent era, and this film pretty
much does the trick. After a few squeamish moments at the start, the old
Disney magic takes over, and you’re treated to classic 2D animation in
the venerable Disney style. A brilliant animated film in the tradition
of the great Disney fairy-tale films. Generally favorable reviews. At
Pattaya Beach only.
Up in the Air: US, Comedy/ Drama/ Romance – Led by
charismatic performances by its three leads, director/ writer Jason
Reitman delivers a smart blend of humor and emotion with just enough
edge to get a nomination for best picture of the year. George Clooney
flies around the US firing people that their bosses are too timid to do
themselves. Rated R in the US for language and some sexual content. 13+
in Thailand. Reviews: Universal acclaim.
Dorian Gray: UK, Drama – Despite a lavish and
polished production, this stylish adaptation is tame and uninspired with
a lifeless performance by Ben Barnes in the title role. With Colin
Firth. In Thailand, 18+. Early reviews: Mixed or average. At Pattaya
Beach only.
Clash of the Titans: UK/ US, Action/ Adventure/
Fantasy – I didn’t find this film any sillier for our time than
the 1981 Ray Harryhausen adventure starring Laurence Olivier was for its
time. I guess it depends on the mood you’re in. Starring Sam Worthington
(the hero of Avatar) as Perseus, Liam Neeson as Zeus, and Ralph
Fiennes as Hades, and I found it fun to see what these actors did when
let loose on these parts. Generally unfavorable reviews. Shown in both
3D and 2D versions at Pattaya Beach, 2D at Major and Big C, which also
has a Thai-dubbed version. Note that the 3D is “converted,” i.e.,
not originally shot in 3D.
How to Train Your Dragon: US, Animation – I think
this is a really terrific family film. Set in the mythical world of
burly Vikings and wild dragons, the animated action comedy tells the
story of Hiccup, a Viking teenager who doesn’t exactly fit in with his
tribe’s longstanding tradition of heroic dragon slayers. Hiccup’s world
is turned upside down when he encounters a dragon that challenges him
and his fellow Vikings to see the world from an entirely different point
of view. Generally favorable reviews. Only at Pattaya Beach, and in 3D.
Green Zone: France/ US/ Spain/ UK, Action/ Drama/
Thriller/ War – Courageous director Paul Greengrass takes on the Bush
and Blair Administrations as he reminds us all, very forcefully, that
there never were “Weapons of Mass Destruction” in Iraq and the
governments knew it, and the whole fiction was created as an excuse to
go to war. Starring Matt Damon as a US Army officer who hunts for the
elusive WMD and finds only an elaborate cover-up. Rated R in the US for
violence and language, 18+ in Thailand. Generally favorable reviews. At
Major Cineplex only.
Saranae Sib Lor: Thai, Adventure/ Comedy – With
Mario Maurer of Love of Siam fame, playing a young man whose
father suspects he’s gay and is sent off on a road trip in an old
10-wheel truck to learn how to become a man. Will that do the trick?
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