As the world is going global, the importance of labor movement across countries cannot be undermined. In standard terms, these people who travel thousands of miles to earn their livelihood and provide labor to other countries are known as expats.
To help the world economies grow, these expats play a crucial role, and their health and security is of utmost importance. The role of an expat is filled with quite many uncertainties as it is unlike a typical private-sector job or a government job.
Nowadays, because of the the unsecured future, countries debt growth and lack of information for expatriates, most of us don’t know what to do in term of securing and growing our savings. Pension funds are often miss-known solutions for expatriates who live in emerging countries such as Vietnam, Thailand or Laos.
What is an offshore pension?
As a regular employee of a big firm or even an owner of a small business or even a government employee, one gets way more benefits in terms of insurances or retirement plans. But expats have a whole different life; one never knows where they will land next to or in which country. As this is a hectic process, because so many countries get involved, and every country has its own set of rules and regulations, the expats might go through some stress about their after retirement time. The whole funds are managed by the investors outside of their home country in which expats are settled.
This is the reason why some international banks and insurance companies have created a wide array of tailor-made offshore pension plans specifically for expats community. This is majorly done by the expats who are thinking of retirement abroad and want to have a secure future. The most beneficial part of an offshore pension is that you get a full tax-free pension that many can only dream of.
Though it is our inbuilt system that we would think about our retirement plans on the verge of retiring, however, it is explicitly advised for expats to plan the retirement since the start indeed. That’s where offshore pension plans come into place. Using the funds from an offshore pension scheme is often considered the most convenient and cheapest way to save their way to retirement.
Banks in Vietnam and savings plans onshore
Vietnam has a lot of legit banks to manage the daily life of an expatriate: receive the salary, pay the bills but when we compare them with international solutions, they are not the most optimal.
As a foreigner, we wish to have access to certain guarantees, dealing with various currencies, having flexibility in terms of receiving and transferring money abroad. Adding these criteria to the ranking of the main banks, they are no longer the best alternatives for a expat savings-perspective.
Pros and cons to Offshore Pension plans for Expats
Every scheme does look attractive at some point in time. Still, there can be challenged to every investment, especially if you are thinking of retirement plans. No doubt for many expats, this is a reliable scheme that helps them to live their life after retirement with all the amenities that they want. For others, it might be a bane rather than a boon. However, in this section, we would be dwelling into the challenges and advantages that one experiences for an offshore pension.
Advantages of using it as an expatriate
The most viable option that offshore pension presents are the fact that it poses flexible contributions. One might never know when their income stops or resumes. Accordingly, one can add more or less money or even stop the contributions at all to their pension plan. No one would be asking you why you were not able to add money or charge you any interest rate for late additions. You can create a plan that suits your personal circumstances at best.
Also, other attractive offers that offshore pension presents are that the expat has access to a wide range of investment opportunities that are equally beneficial for you. Also, unlike other pension plans, you can get your entire savings paid at once without zero delays. This kind of offer is difficult to find in other retirement plans. Generally, the expats prefer to get their sum paid in full and final so that they can sit back and relax rather than having to think about the pension plan.
Another leverage that offshore pension proffers is that one can add money to their retirement fund while sitting anywhere in the world. It is as easy as doing an online bank transfer doing at the convenience of your home. Because of the expats work nature that can take them anywhere anytime, this option had to be considered by the investors so that they have an easy way to manage their retirement funds.
Risks : choosing a legit and reliable service with track records
Where there’s good, there would be bad of everything, and the same goes for offshore pension plans. The most prominent and the only most significant disadvantage associated with expat’s retirement planning with an offshore pension is that their money is directly invested in the world stock markets that, too, by fund managers. Stock markets possess a volatile risk already and are unpredictable. So, your investment money value depends on the trend that the stock markets pose at the time.
Depending upon the stock markets, your retirement savings would go up and down, which is a little tricky. Experts always advise to read and carefully go through the contract offer documents to be clear what expats are getting themselves into. It is essential to scrutinize the area of risk and other investment opportunities before agreeing to the offshore pension scheme. Also, the investors should be trustworthy, or else your money would go down the drain.
Be serious about your future and take actions
Your retirement is the most critical step in your whole career. One earns and saves for a lifetime only to spend lavishly after retiring. Savings are an essential factor that lets you take benefits and plan your retirement carefully. Specifically, you need a plan to check how and when you would invest to earn maximized profits to have the most benefits with your selected scheme of pension plans.
Planning of retirement becomes more necessary where you know you don’t have a stable job or income or would have to move to a different country anytime. Whether or not one goes with an offshore pension plan is a separate thought, but before that, the whole retirement planning is a must for every expat. Would you retire abroad or to your home country? That’s also to be considered before giving thought to investment schemes. Plan your way through your expenses that you need to take care of after your retirement. One can agree that you cannot foresee all the situations in advance. Still, if you have an action plan at your disposal, then things don’t go haphazard.
After all, retirement is the only time when one can enjoy after a long life of hard work, so planning and plotting is crucial.