Month: October 2020

best year in Thailand 31 Oct

What was the best year for expats in Thailand?

Everyone will have a different view on their favourite year as an expat, usually it is the first few years they lived in Thailand. However asking around the same year came up a lot….

The year is 2005 and UK expats in Thailand never had it so good, you received 75 THB to 1 British Pound, so if you were a pensioner your state pension of around 150 Pounds per week would have given you around 48,000 THB a month. Beer was around 40 baht a bottle in a restaurant or beer bar and rents for a studio condo outside central Bangkok was around 5,000 THB a month.

I remember I paid 15,000 THB for a return flight for my first holiday to Thailand in 2003, which seemed a lot at the time, if you can get a flight for that now, you are probably flying on Aeroflot where the plane is held together by duct tape, or your flight is in 5 parts with days stay overs at various airports and although you left clean shaven, you arrive at your final destination with a beard a bear trapper in the Rockies would be proud of!

We flew into KL Malaysia, where we looked around the city for two days then got the sleeping train (with a bed and air con) train to Thailand which I remember costing less than 8 pounds at the station for a 600 km journey. We crossed the border to Songkhla in March 2003, en route to 10 glorious days on Koh Samui island.

The first thing I remember was the heat and buying a coke, and I got it in a plastic bag with ice, which was the first time I was introduced to the Thai’s dependence on plastic, the coke was 5 baht, and I remember the shock at how cheap a street meal was at street meal was 15-20 baht!

Cow pat Gai Kai dow khaap

Fast forward today; Pensions are around 175 GBP per week if you can get the full entitlement, and you now get circa 40 THB for the pound, so about 30,000 THB per/month after the exchange and beer in a club is on average 150-200 baths a bottle and rents for studios are currently around 10,000 THB a month. A street meal still one of the cheapest in the world is around 60-80 baht.

 Is it any wonder the general happiness of retirees is rock bottom? Throw in a global pandemic and it sometimes feels the only joy for many is remembering the good old days.

175 GBP is also the top amount you can get if you are 65 years young today and paid into your National Insurance for around 25-30 years. If you are mid 50’s now you have to wait until you are 67 years old to collect.

Any good financial advisor will have his head in his hands sobbing for you if you tell him you only have your state pension to look forward to and you cannot wait to retire!

State Pension payments are provided by the Department for Work and Pensions (D.W.P.) to diligent Britons who have put forward years of National Insurance contributions. However, while the sum is a valuable source of income in retirement, those who are looking at leaving the workforce soon have been warned it may not be enough to see them through their later years.

Financial experts have warned that Britons could not simply rest on the state pension to see them through retirement. You can’t rely on the state pension alone, it isn’t guaranteed, and at what the current amount offers you monthly, it’s nowhere near enough to provide you with the lifestyle you are currently used to if you have a good steady job.

How much for 1 GBP?

“But even if you have a company pension, that and the state pension on their own probably are not going to get you very far to the level of income you’d be hoping for.

Auto-enrolment has been great as it means more people now have a pension because you don’t have to proactively opt-in. However, the downside is that some people assume that because this is set up you don’t need to do anything else and that it’s all sorted. That is an area which is worth looking deeper into because on its own it really isn’t going to be enough.

The vast majority of people need to be thinking more about putting money towards your retirement in an active way. If you just rely solely on what is going into your company pension, you’re likely to get a bit of a rude awakening.

The pensions freedom act came in in 2015 and thereafter so many UK pensioners are finding the freedom to do as they wish with their savings is sadly not quite delivering the happiness they had hoped for.

Since rules governing how pensions can be taken were dramatically relaxed in 2015, more than a million over-55s have gone on a freedom-fueled spending spree.

More than £23bn has been “cashed out” from the nation’s pension pots via more than 5m individual payments. Research suggests that much of this cash has been spent paying down debt, renovating homes, upgrading cars or helping adult children on to the property ladder.

Whilst property is, and should be part of anyone’s portfolio, I am not sure paying off debts, whilst helping you sleep better at night and protecting your kneecaps in the most extreme of cases, is a good financial decision.

The sad fact is:

Most can’t be trusted with their own cash

In Robert Kiyosaki’s best selling book Rich Dad Poor Dad he asked a group of young people what they would do if they won the lottery or came into a large cash windfall, and the overwhelming reply was property. Yet he insists they are making a fundamental mistake, because they have no financial acumen.

Buying a house is a good decision for most working people, because it will become their most valuable asset and they will more than likely stay in the house for more than ten years which is the historical point when property starts to grow in value, and gain good equity.

However people who come into money suddenly, do not realise how much their lifestyle will change often they find they will travel more and have more choices about where they will want to live, more then often will sell properties after a year or two making a huge loss, they then repeat this cycle until their subconscious mind takes them back to where they were happiest, and it is hardly surprising how many recent heirs to fortunes are unhappy as it is such a dramatic change for them.

Everyone needs to have a good friend who will be brutally honest to you, someone who is financially educated, and has done well regarding their own financial affairs, to help you not make original mistakes, the world of money has rarely changed over the last century,  we  should all take time out to educate ourselves into how money works, yes it does not buy happiness, but it sure is better to cry in a Mercedes than on the bus!

Let us have a coffee together and give you the best advice of how to try to enjoy your life now, and if you are lucky enough to make it to retirement age, have some cash then as well.

Many people I speak to are scared to have a financial review as it will highlight major misgivings and make them sadder, but the truth is your friendly neighborhood financial adviser enjoys a beer and golf too ,so they won’t make you lock yourself up at work everyday till you have a decent pension pot, they are all about ‘good balance.’

Golf and financial review with no guilt!

You would also be surprised at how educated they are on all the latest government changes that you could take full advantage of now, and perhaps change your future dramatically, but you will never know if you don’t try!

They even buy the coffee (they will kill me for telling you that!!)

work on the beach 26 Oct

Just build a website they said, live on the beach…oh really?

So, you have been on a Thai holiday, you have felt the sun on your back and tasted the inexpensive Thai food, now you want to live here? Excuse the sarcasm, those of us who have lived here ten years plus, we hear it every week.

“Now your friend, tell me about him again, the one with the websites selling Thai statues and cushions, yes him who is retired at 35, drinks all day, rings the bell in bars and is currently in some hedonistic utopia.”

It is human nature to boast about one’s achievements, especially if the reality is very hard to bear. Most people I have met in the last 17 years in Thailand have all lost cash in Thailand, yes made some, but in the end, they are mostly out of pocket than in the pocket.  Factor in 2020 and if you have a bricks and mortar business that relies on tourists coming in, it makes for very sad reading indeed.

Working online is an easy way to live on the beach.

Over the last few years, e-commerce has become an indispensable part of the global retail framework. Like many other industries, the retail landscape has undergone a substantial transformation following the advent of the internet, and thanks to the ongoing digitalization of modern life, consumers from virtually every country now profit from the perks of online transactions.

As internet access and adoption are rapidly increasing worldwide, the number of digital buyers keeps climbing every year. In 2019, an estimated 1.92 billion people purchased goods or services online, and during the same year, e-retail sales surpassed 3.5 trillion U.S. dollars worldwide.

So, if it is so easy why isn’t everyone doing it?

According to Malcom Gladwell’s book Outliers it takes around 10,000 hours to be good at anything, that is 13 months straight by the way, factor in rest and sleep, so; 3 years. This was roughly the time the Beatles honed their skills in Hamburg. This is generally the time to complete an apprenticeship or get a University degree.

The rule is based on research into the abilities of top performers in various fields like mathematics, chess, tennis, swimming, and music.

The research shows that for the overwhelming majority of experts who reach the top of their fields (for instance, chess grand masters or great composers) have spent a minimum of ten years acquiring and honing their skills.

The few who are exceptions to this rule are found to hit their expert status in year eight or nine of their careers—not far short of the average. So being a prodigy with a “gawd given” talent is just a myth.

The 10,000 hours rule dictates that you need an enormous volume of time. That’s what it takes in order to become a master of your craft.

This, says Gladwell, is true even if you are a prodigy. However, even though this has largely been disputed, there is some truth to it.

Practice makes perfect. In a world where our attention is short, this is a hard thing to learn.

However, whilst you are a newbie at a new trade, or you need time to build up a brand, you must compete with the human condition which is hunger, sleep, love and belonging, all the things that Maslow talked about in his hierarchy of being. All this ‘learning’ costs time, and time costs money so the big question is:

 Do you have 3 years ‘living money’ spare?

Further to this you are going to make mistakes in any new activity that you try to live in Thailand.

Back in 2010 we started an online business and a website company, naming no names but they were a Swedish outfit 2 brothers who charged us 1 million THB for a website! Yes, we threw 1 million Thai baht of our hard cash to build a website and this was when the baht was around 60 to the British Pound! Now we know to build the very basics of a website costs less than 50 U.S.D!

Then we paid a Thai /Danish company 1 million baht to do some marketing on Social Media for us which lasted about 6 weeks and they were done with us and stopped answering emails, unless we coughed up some more money.

Yes, we were stupid, but knowledge comes through learning and making mistakes. Knowledge that we use now to build on our websites and do our own marketing costing us 4 commas to the left of what we paid 10 years ago.

So, you need learning money too, unless you already are established online and have done your time.

Consistency is also the key to any online business success, back in 2000 a website was a fortune and you were almost guaranteed business by being so forward thinking, but technology is a fickle business.

Have you ever watched a movie from only 5 years ago and thought OMG! Would you look at that antiquated phone they are using? 

Technology moves so fast, if you are not updating your website 3 times a week with good original blogs that inspire, educate, give altruistically tips and tricks from your own knowledge that you have spent years learning to brand you as a business leader and someone whom people can do business with, you will be doomed to page 5 of Google and we website people have a joke:

Where is the best place to bury a dead body?

Page 5 of Google’s Search pages! Nobody ever looks there!

Globalization

How many websites??

When it comes to websites and working online it is not for the feint-hearted, the statistics will tell you this:

In 20202 so far there was around 1,780,279,247 and it appears to be growing quickly. The truth is, however, that only a fraction of these sites are actually active. 

 About 1,580,279,247 websites on the internet are inactive.

(Source: Internet Live Stats)

Although the number of websites as of 2020 online is not short of two billion, only a small number of these are active. In fact, only about 200 million websites are active. 

In business and life, the 2% rule prevails, no matter what you do only 2% are dogmatic enough to see it through to the end and have the patience to wait and try many different things to be successful.

So now you need 3 years domestic money, three years learning money and now you are up against the mountain of failures who will tell you working online is one of the most difficult ways to make money anywhere!

My advice to anyone is if you have started a website and aim to live online with your passion and you have ‘blind faith’ you  know you have something that satisfies the end need for consumers, fills an emotional gap and saves people time and money, then don’t give up after the first few months of your blogging. It does feel that no one is listening to you, but you are always closer to success than you think you are and if you give up now the race is lost.

For myself one thing is for certain regardless of the ‘shitshow’ that is 2020 and the fact that I had 1 years living money, no room for error, and only had the blind faith to continue when all common sense told me to go back home, get a job and stop putting your family through such turmoil.

I was determined to see it through, maybe entrepreneurs are masochists and love the pain of going cap in hand to almost everyone you know to survive, I am starting to see after 13 years of a real scary roller coaster ride with nothing holding the car to the ride’s structure, I can see some light at the end of the tunnel and what a glorious light that is. It is so worth it.

time+effort =success…you hope!

Maybe, you have something that you know can itch that currently unreachable spot and you just need to get it online, we can help, and maybe you are at the age I am and can use some of your pension pot now to make yourself a small fortune to re-invest , now you have learned the fundamentals of wealth and do much better than your current pension provider.  Or maybe you want a better yield for the pension you already have.

Then drop our experts a message with what kind of pension you have, and we maybe can help you get you find your living money whilst you get your online business running.

20 Oct

Rich Expat V Poor Expat

Whenever you read blogs about expats in Thailand you either relate or you do not, there is very little middle ground. Here is a day in the life of both the rich expat and the poor expat.

Tristan wakes at 0645 and gets straight into the shower, Felicity rolls over in bed and moans to Tristan to be quiet as she has an hour extra in bed.  Felicity wakes at 0800 and gets ready for her job at the UN where she is a liaison officer and case worker for rescued woman. The Three children have a bedroom each in their house in the suburbs and have their own pool where they are currently splashing about as their parents are getting ready for work. Their Nanny comes along and ushers them to get out of the pool and get ready for school.

A year ago, Felicity and Tristan were living in New York City with their 3 children and Tristan was offered the expatriate position as a Financial consultant of the Blue Chip company in Bangkok salary 180,000 THB per month with a very generous Tax break of less than 20% of what he was paying in the U.S. and Felicity asked a few friends from their Masonic Lodge to help her land the role rescuing sex workers in Thailand who do not want rescuing and she is on 130,000 THB  a month as an NGO.

Both their roles come with all necessary work permits with visas, the apartment in the plush area of the city, International schooling paid for by the company.  A Driver is waiting downstairs to drive Tristan to the city centre office. Felicity however roughs it and get the Sky-train with the ‘natives.’

Mr and missus middle class Stockphoto

Trevor wakes up and switches off the fan in his studio Condo and looks out the window on the second floor at the sprawling confusion that is Bangkok, and still wonders why he loves it so. He gets a cold shower and wonders if he should bother the landlady downstairs again to put in hot water, after he switches on his laptop and sighs at the state of the strong baht and the lack of business in 2020. Trevor works online and sells T shirts across the world.

Trevor first came to Thailand in 2010 on a few holidays and fell in love with the charming people, the weather, the food and the cost of living, so eventually after meeting Ploy an attractive Thai lady who is 20 years younger who now lives with him, he decided to make the move and become an expat in Thailand.

Trevor is a Plumber by trade, he is 48 years old and Thai Visa regulations are a continual stress on him. It would have been a lot easier if he did not have a son with Ploy just recently. Ploy is besotted with her handsome half Thai; half English son. She cares not that Trevor more than often struggles to make the 8,000 THB rent each month as sales from his T shirts online is his only income, as he cannot work as a plumber in Thailand. Ploy, forever a doting partner, sees the stress on his face and tries her best to relax him and care for him the best way she knows how.

Could be Trevor or the one on the left!

Trevor can get a retirement visa at 50 years old , but wonders whether the Thai authorities would consider his website and overseas sales of T Shirts as technically ‘working in Thailand’ he is on a 60 day tourist visa which clearly states you can not work on a Tourist visa or a Retirement visa.

He can get a Married Visa but he has to visit the UK where he is from at least once a year to see some clients and his T Shirt manufacturer, so a married visa is not always the best option for him. He wishes the Government would offer him a way to work online which would give him visa security which isn’t depending on buying an apartment for 10 mill baht first.

Tristan met Felicity through a family friend at Yale University when they were new graduates and their romance blossomed. Tristan and Felicity’s folks are part of the golf Club and are both lawyers. Their married life resembled their parent’s lives a lot, but this is what they both welcomed. A house in the Suburbs, a thriving portfolio and when they were offered the chance to work in Bangkok, they welcomed the chance to work abroad and ‘see the world.’

Trevor met Ploy at a bar on Sukhumvit Road in the red-light area of the city and was smitten by her dark and long beautiful hair, slim figure and her simple life back home on the farm in the North East of Thailand where she had previously worked for less than 200 baht a day planting rice and working on building sites in the searing heat.

Ploy found Trevor very sweet and attentive, she told Trevor of an abusive ex husband who was constantly with other woman, used prostitutes a lot, never let her have friends and raised his hand to her on many an occasion. Ploy even had the indignation of having to pay for the divorce, so Trevor’s kind and understanding nature was a world away from what she is used to.

Trevor has travelled on the train to her Farm to meet her parents and lived in one room ramshackle barn house and washed each day in a bucket of cold water outside the house next to the chickens and the pigs and looked at the beautiful mountains that surround Ploys farm and he felt good to be the explorer. And see the world from the base cultural aspect.

Tristan and felicity have seen the temples in Bangkok on a guided tour, and seem quite satisfied they have seen the culture, they have been to Phuket once, they flew in and then were taxied from the airport straight to the Sofitel resort and stayed there on the beach that is part of their resort. They went to some of the exclusive restaurants in the city whilst they were there.

Trevor and Ploy love street food like noodle soup or many of the standard rice dishes for 50 baht along with a 20 Baht coke. Ploy is a good cook and buys veg from the markets and cooks a good rice dish most days on the small balcony in their condo.

Tristan and Felicity meet each night after work at the local Irish bar in town and enjoy a western Bourbon or a pint of Guinness along with a dish they are familiar with like Steak and Fish or a western prepared Thai meal. They think 3-5000 Baht is an average bill for a meal.

At the end of the 2-year posting Tristan and Felicity are excited and happy to return home to the US to see family and get back to the Golf and friends. They have many photographs at the temples and the beach at the Hotel and the Irish bar. And have saved a lot of money which can be added to the extensive portfolio.

Trevor however is in a depressed state at the Airport, he had to borrow the money from his brother for the flight and has left just enough cash for a few weeks for Ploy and his son. He is in a bit of a panic because his  Visa has expired and he is a month or so overstay and faces and maybe fine and a small ban from entering Thailand again,  and now has to say goodbye to his son he adores and his wife he loves dearly and must now try to get a visa for Ploy to visit the UK which will be very tricky for him as he does not receive a regular income from his website.

Trevor has worn out 2 phones with so many photographs of all the cities and towns he and Ploy went to see together on the buses, boats and trains where he met the wonderful farming folk and the farm animals he has grown to love and care for. His portfolio is his memories, but he also he berates himself for the state he is in financially, if he could have saved more his heart would not be breaking as they call for the final boarders to get on the plane.

There was a television program that aired in the UK which really peaked my interest; it documented over time; 2 classes of school children in UK in the 1960’s both with equal number of girls and boys between 6-7 years old. And asked the children what they wanted to be when they were older.

One school was in a very deprived area were predominantly working class, and the other school was at the other end of the not so blatant UK Class system where the parents of the school children were all upper middle class.

They then revisited those same children 20 years later in the 1980’s. it was an experiment in the types of work and opportunities that were open for both sets of children. What they found was although the education they received was of a reasonable equal standard and the child who excelled the most through their academic studies was actually in the poorer set, the children from the more wealthier backgrounds mostly had good steady skilled jobs, lawyers, accountants , doctors and engineers, The poorer set mostly were train drivers, car mechanics and shop workers.

My takeaway from the television documentary is that you are not wholly bound to your upbringing, but if you are happy and live within your happy bubble there will be little pull for you to become more.

So, my blog is not an attack on either my fictional types of expats, it is just merely an observation from my own quarters about certain expats I have met and the types of lives they live in my 20 years living here.

You can become what you want to be if you are prepared to enter the not so comfort zone and challenge the normal.

One thing the rich do is have more of an eye on the future, their parents drum it into them, whereas poorer people tend to live more for today. Wealthy people understand the laws of money as in save ten percent of all you earn and use your savings to make money work for itself and compound its own interest and to spend ten percent on yourself frivolously, these are the first two main rules of finance you need to master, and it makes no difference what background you hail from.

If you find yourself more in the corner of Trevor than Tristan, then perhaps you always berate yourself for having little liquid cash. Well if you have a QROPS pension you can do yourself a favour and cash some in and use that to make more cash through many alternative ways, and put the rest of your  your pension into a more tax efficient jurisdiction and maybe you can start to have a Guinness in the Irish bar instead of coke on the road!

For free advice on pension cash-ins and moving your QROPS to a better more tax efficient jurisdiction drop us a message

Thai beach UK Expats 10 Oct

Can you afford to live in Thailand?

Many expatriates live in Southeast Asia for many reasons. One erudite chap I met told me there are always 4 good reasons to move abroad and one of them you won’t like, its just the other three will be the deciding factor to stay. I thought about his strategy and as he had said I found 4 vital reasons why I moved:

1 The sunshine.

No need to explain this to anyone who hails from Northern Europe. I spent hours trying to explain to my Laos wife what Seasonal Affected Disorder was and how it feels to not see the sunshine for weeks on end.

Have you got your coat today?

Saying this however, I regularly meet holiday makers who just complain it’s too hot and struggle to breathe in the climate and find it just too much. Each to their own I suppose. For me I love the chronological regularity of the seasons and you have an excellent idea of what you can expect from the skies each day.

2. The people.

Asian people especially Southeast Asians have a different mindset on many things and if these things go for your own nature then it is a match made in heaven, however many things may abrade your nature, and you will question whether the move is right for you.

They are extremely polite people and that generally works well with British people, annoying so to many others, telling you always what they think you want to hear than the truth, which is awful for directions! 

Southeast Asians are also quite open on many things that Westerners find hard to talk about which makes a delightful change in many circumstances. I will take many years of embarrassment and hard work to create the balance between which is good from your culture and theirs to combine to be happy and to earn your ferlang (name Thais give to Westerners) badge!

3. The food.

This is where I fail out of the four reasons, I hang my head in shame and have struggled with any kind of spices, I feel like starting a Facebook support group called ‘Anti-spice ferlangs’ for those of us who are constantly ridiculed for settling in a country famous for aromatic and wonderful inexpensive but mainly very spicy food.

Would sir like some food with your chilly?

I managed to try many dishes till I found myself a portfolio of 6 or so Thai meals that I can eat, and friends still invite me out. I  have met one Thai lady in 15 years who did not eat spicy food and she was very nice but had few Thai friends, I wonder why?

4. The cost of living.

Expatriates in Thailand have bemoaned about the change in their financial circumstances over the last 20 years where the Thai baht has strengthened to make their western currency half of what it was worth back in 2000, meaning an expat with a state pension from UK now lives on half the value of what they could back in 2000 when the baht was hovering around 80 Baht to the pound. And of course, inflation has not wavered. A small can of coke when I first came in 2003 was 5 baht from 7/11 and is now 20 baht. So, the prices of things have gone up and the value of western currency has gone down. Throw in a Covid virus Pandemic in 2020 and many expats are really feeling down in the dumps at what a truly dire year it is indeed.

However, a direct comparison with living in a suburb in UK to a suburb in Thailand is still good value for money. A good 3-bedroom house with a reasonable sized garden and community pool, in a suburb of a major city in Thailand will cost around 4million baht, currently around 100,000 British Pounds. Whereas a 3-bedroom house in the north west of UK with a decent garden is around 220,000 GBP. Utilities in Thailand will be 30-50% cheaper than UK even using air con 8-12 hours a day.

Renting a 30 square meter unfurnished flat in London will cost you 1500-2500 GBP a month depending on how close you are to the city, and of that size unit they will call a bedsit. There is Council Tax on top of that as well.

4,500 THB a month 10 min walk to BTS trains

You can, if you look around, rent a room fully furnished with air con wi-fi and Cable TV for 5,000 THB -upwards (150 GBP) per month in Bangkok with no extra taxes, with a 10-20-minute air con train ride to the city center for no more than 2 GBP, so commuting is very cost effective in Bangkok. (The above pic was my old room in the Lad Prao suburb of Bangkok back in 2009, it was just built when I moved in, with a ten min walk to train to the centre of Bangkok. Rent was 4,500 THB a month furnished with Air con and hot shower, I have seen them in the same building for 6,000 THB a month now)

Cost of food, which was once the one reason travelers boasted at the value of a meal in Thailand, has slowly crept up in price all over the region. food in UK has got a lot cheaper, but one wanders about the quality of cheap processed food in the UK compared to ‘cooked in front of you’ street food in Bangkok.

A Street meal with a drink costs an average 100 baht (2.50 GBP) compared to a fish and chips meal in UK at around 6-8 GBP. It is apples to oranges comparisons, if you go to an Irish pub in Bangkok and have a couple of pints of Guinness and a steak meal you won’t get much change from 50 quid.

The amount of money one can live on quite comfortably is a very relative issue, if you are royalty then 50,000 THB a month would be impossible, but a young man on his own living in a nice condo in the suburbs could afford his rent and a couple of good nights out a week if he cooks and eats street food most days and could have a steak and Guinness twice a month as well on 50,000 THB (1200 GBP a month) which is roughly the UK average salary after tax and NI, getting a job here with this kind of salary is a another issue, yet here he could have a better life. Families would find it harder as kids will cost you especially if you want an English curriculum in Thailand.

Point is regardless of the currency diving since 2000 halving the average expats spare cash to spend, it is still far better value for money than living in UK and if you like spicy food, massages, the sunshine and smiling people each day, is a warm reminder of why you moved.

I work online and found a way to stay

Everyone has had to contract when it comes to money in 2020, however there is a way you can tap into some spare cash…..If you are over 55 now or wish to ensure that you have FULL access to your UK Private or Company Pension at age 55 (UK Government Pension cannot now be accessed before age 66) or especially a QROPS, you can move the administration to Jersey and access some or all your pension pot tax free, whilst enjoying much better rates of return or managing yourself.

Contact us now for a no obligation free review.

ice cream pension 6 Oct

Can you be trusted with your own pension pot?

Are you like a 5-year-old outside a sweet shop with a ten-pound note when it comes to your money? The UK government seems to think so!

But then again let us look as some recent research:

The average person in Britain has a poor understanding of many aspects of personal finance.

We Brits grossly underestimate the cost of big life events such as having children, the cost of further education and retiring.

The average person thinks that it costs just £50,000 to raise a child from birth to leaving home, one study puts the actual figure at £229,000.

Similarly, we think the average debt for a student coming out of university is only £21,000, when the actual average student debt is more than £44,000.

Perhaps most worryingly, the average person thinks they only need to have a pension pot of £124,000 to get an annual income of £25,000 per year, including their state pension. A quick check of any pension calculator shows that is woefully short, and most people will need well over £300,000 (taking receipt of the full state pension with 30 years NI stamps into account).

Brits are “worryingly exposed” to financial shocks, a report from Schroders Personal Wealth has found.

A survey asked 2,000 UK adults how they feel about their financial situation.

This was then rated in four main areas: getting the basics right; managing borrowing; protecting against the unexpected; and planning for the future.

She is not free!!

The surveyed Britons scored only 3 out of 25 when it came to protection against the unexpected, and for planning for the future the rating was only slightly higher, at just 5 out of 25.

Pension Freedoms

The British over-55s have withdrawn more than £30bn from their retirement savings since the introduction of pension freedoms in April 2015, according to the latest statistics from HM Revenue & Customs. Savers withdrew £2.4bn from their pension pots in the third quarter of 2019, an increase of 21 per cent from the equivalent period in 2018.

The number accessing their savings in this quarter was 327,000, HMRC said, a 27 per cent increase on the 258,000 who did so in the same period a year ago. However, the average withdrawal per person has fallen — from £7,600 last year to £7,250 in the third quarter of 2019.

Back in 2015, the hubbub was that investors would start shoveling money out of their pension and not think about the consequences. But the reaction to the COVID crisis suggests that lots of people understand the associated risks. Investors are taking more responsibility for their retirement and thinking ahead to the future.

However, it’s one thing to choose a flexible retirement option knowing the risks, and it’s another to experience them first hand. The recent stock market dip would’ve shaken the confidence of lots of pension investors.

If you’re thinking about taking money from your pension, it’s important you get the full picture first and get some expert advice for free.

If you have a defined contribution pension today, things are different. From the age of 55 (rising to 57 in 2028), you normally have the option to keep your pension invested how you choose and withdraw money when you need to? You can even withdraw the whole pension in one go if you want to. Usually up to 25% of the pension is paid free from tax and the rest is taxed as income. All of it if it is under 30,000 GBP

Giving up on secure income brings with it extra risk and responsibility. The fear when these freedoms were introduced was that investors wouldn’t take this seriously and could end up running out of money earlier than planned. But the recent drop in people flexibly accessing their pension might suggest that they’re being more sensible, and perhaps deserve a little more credit.

So, with this information to hand, the Government seems to be putting up many hurdles that counter the pensions freedom act of 2015, making it harder and harder to cash in your pension. Many experts foretelling the end to Pension freedoms.

Are you sure you want to cash in Sir?

It is the responsibility of the Financial Conduct Authority (FCA) to police the industry and protect consumers.

So, it’s no wonder that the regulator has tried to make sure people are using their new freedoms wisely and that firms are only recommending transfer where appropriate.

Putting the £30,000 ($38,704, €32,959) limit in place meant smaller pots could be accessed without advice, which would likely not have much impact on a person’s overall retirement pot.

The balance has got to be your health and your future, and how much time you really feel you have left versus what you have already got in your bucket list.

Doors are closing on Pension Freedoms

All this means if you are 55 years old now, and you are adamant you could do a better job yourself with the cash from your pension and place  in an investment vehicle your uncle Charlie knows about, or a startup or perhaps, maybe you know of a great property that just needs a lick of paint and you can double your cash, well they do on the telly every day eh! Or you can take advice from experts.

But you got too be quicker based on the above research many experts feel this is the prelude to a turnaround on how you can move or cash in your pension.

One really good reason to have a pension review now, is that Jersey has only recently become a jurisdiction available to non-residents. So, if you are 55 years and older and have a QROPs that is currently not getting a good return, or you haven’t seen your Broker for a while, or maybe you want to access 100% of your Pension money ASAP, then you need to speak to us.

Have a coffee with our Bangkok Based financial experts and you will be wiser for it and at the very least make a more informed decision over your future.

**Terms explained!

Pension freedom rules: The rules introduced on 6 April 2015 allowed retirees to take as much out of their defined contribution pensions as they wanted. Before this, most people were restricted as to how much they could take out in one go.

Drawdown: A way that people from age 55 can flexibly access their pensions. For example, drawdown is flexible since you can take out as much as you want. It’s a higher risk option as your income varies depending on the performance of the investments you choose. The first 25% will be tax-free and the rest taxable.

Lump sum payments: A flexible retirement option that lets you reach into your pension and take however much you want as a single cash payment. 25% of the amount will be tax-free and the rest taxable.

Annuity: A retirement option that will pay you a regular income that’s guaranteed for life.

JERSEY QROPS 3 Oct

Why Jersey for QROPS?

If you have a pension in a QROPS and you are wondering what all the talk about Jersey is about then read on….

Jersey enjoys its standing as one of the world’s leading International Finance Centres offering reliability, political and economic stability, with a sophisticated and comprehensive infrastructure of laws which have kept Jersey at the forefront of global finance for over 50 years. The Island has a AA+ credit rating with Standard & Poor’s (S&P).

The Island is a Crown Dependency which means constitutional rights of self-government for this jurisdiction, and judicial independence. This means both businesses and investors can enjoy the benefits of an independent international finance centre which is close to the United Kingdom and mainland Europe. Jersey is in the same time zone as London and daily flights are available along with regular flights to other European centres. Jersey remains one of the favourite regulated international finance centres, a position that has been regarded by independent assessments from some of the world’s leading bodies.

So why move your pension pot to Jersey?

QROPS Pension is written under a deed of trust subject to Jersey law and is available to both Jersey resident and non-resident members.

 It has tax approval from the Jersey Income Tax regulatory body and is recognised by HMRC as a QROPS. Background With effect from 1st January 2015 amended legislation enables Jersey QROPS as an option to pension investors living off the island. For many years the Island has had many QROPS pension schemes recognised by HMRC however local law restricted these only to Jersey resident individuals. The revised Income Tax (Jersey) Law permits non-resident pension members to transfer their UK tax-relieved pension funds into the jurisdiction, offering a secure environment to protect your client’s pension assets.

One of the biggest draws of a Qualified Recognised Overseas Pension Scheme (QROPS) is the ability to withdraw money in a more flexible and convenient way. For example, from the age of 55, you have the right to withdraw a tax-free lump sum of up to 30% of your total pot. You are under no obligation to have the QROPS based in the same country in which you are resident, allowing you to find the combination that works best for you, wherever in the world you are.

However, before you sign on the dotted line, you need to be fully aware of the QROPS withdrawal rules.

What Are the QROPS Withdrawal Rules?

As we’ve mentioned, you can withdraw a 30% tax-free lump sum from your QROPS once you’ve turned 55. This initial lump sum is known as the Pension Commencement Lump Sum (PCLS). If you are a high earner and would normally expect to pay up to 45% in income tax, the QROPS removes that tax requirement after 5 years. Also known as the Five Years Rule.

When you come to withdraw money from your QROPS, whether it’s the lump sum or a smaller payment, you have greater control of the currency. Unlike a UK pension fund which can only dispense British Pound, a QROPS can be used to withdraw money in a wide range of currencies. This is ideal for making the most of any favourable exchange rate.

Long life V quality of life

There is a fine balance between living longer and living healthier. Sure, many say we are living longer now, however if that means stuck in your home or a care home for the last ten years of your life is that a life at all?

If you have many grandchildren who visit often then maybe, this is a consideration that many must make when it comes to cashing in some of your QROPS pension pot. It is a fine balance with length of life versus quality of life. If you are relying purely on your state pension heed this advice:

Fewer than one in three Brits is confident we will get a state pension from the Government when we retire. 

You currently need 35 years of National Insurance contribution credits to collect the new state pension of £8,767.20 a year. This extra income would cost £300,000 to buy as an annuity.

But the state pension age not long ago shifted to 66 for both men and women and will rise again to 68 between 2044 and 2046. This comes after woman born in the 1950’s are now made to wait to collect their state pensions when the age at which they were eligible was changed from 60 to 65. 

A think-tank the Centre for Social Justice has also controversially suggested the state pension age should eventually rise to 75 to take into consideration the nation’s improving health.

Experts have even predicted that the state pension could one day be means-tested.

Recent analysis from investment platform Hargreaves Lansdown has found most of us are not holding out any hope for retirement backed by government.

A poll found only 28 per cent of under-35s and 35 per cent of those aged 35 to 54 think the state pension will still be around when they retire.

Even 23 per cent of over-55s were not sure it would be around when they hit retirement.

If you are like me and many others it seems, you feel the UK Government is trying hard to give us all a big hint that we cannot afford to keep up state pension payments in the UK as more and more of us are living longer and not necessarily better.

The UK daytime TV is full of Television shows that are about how to make money from antiques, how to make money from property, how to invest in penny stocks and day trading, I think the hint is:

Find out now how to look after yourself cos we the government cannot!

Trash in the Attic find your own ruddy pension!

Perhaps like me you feel you could probably do better with the cash right now, maybe you know of a property you could buy for buttons and refurbish and sell for a profit. many are doing this right now, perhaps you could use a lump sum towards a startup invention you know will corner the market, or perhaps you have found a place in the world to buy gems at an amazing price where people will pay a lot more for. Or perhaps you have found oil in your garden and you need some cash to get a pump and sell to shell!?

Cash is always king and liquidity rules, ask anyone in any kind of business how much liquidity plays a part in everything they do!

QROPS encashment.

If you are in Thailand now and by switching the jurisdiction (Trustees) of your QROPS to Jersey you can enjoy much better tax options than other European jurisdictions.

**Please note the above table is for Thailand resident Expats as there are different QROPs rules through DTA’s (Double Tax Agreements) for Expats in other countries that have arrangements in place with QROPs based in the IOM and Malta**

Request a free introduction to a pension specialist

If you have funds invested into a QROPS or have some questions about QROPS which you don’t feel have been answered, or you have not seen your advisor for some time, you can request a free introduction to a trusted independent financial advisor through our website

Needless to say; you will not be pressured into making any decision, neither will you be under any obligation to proceed with any advice. Could be the best cup of coffee and free advice you ever had!