moving abroad & monthly income advice needed

daffydill_3

Due to marriage break-up and therefore inability to afford to live here, I am planning on moving to Cyprus in the next few months. My problem is that I should have about £100,000 to invest for a monthly income after purchase of house abroad and other relevant expenses, but don’t know where to put this or what to do with it to ensure that I have enough money to live on.

Will be receiving £250 a month by way of pension (State forecast confirmed – married women’s stamp in the past unfortunately) + £100 per month in private pension. This, lumped with another £4-500 a month would give me a reasonably standard of living over there.

Any suggestions how I can safely achieve this and if it is at all possible. I am nearly 60 and female.

Thanks very much for any suggestions,
Daffydill

Cook_County

1. I am not clear why your projected State pension is quite so low. Can you not claim on your husband's contributions?

2. Does your ex have any other company pensions where you could receive a part of as part of the divorce settlement?

3. Do check out what Cypriots typically do given that they have their own tax regime and anything that works for UK purposes may not work in Cyprus.

4. I assume you have checked that you are covered under Cypriot health care system and whether there are any other benefits you are entitled to under Cyprus law.

CIS

Even with having paid MWE, a divorced persons pension would top up your own record.

Best thing is to contact state pension forecasting and ask for amarried about to be be divoced forecast, give them an estimated date, adn see what difference it makes.

EdInvestor

http://forums.moneysavingexpert.com/showthread.html?p=2134878#post2134878

See this thread - if your ex has a full record and is over 65 you should get a 100% pension.

This should help a lot as you can really only take an income of 5% with safety (however you save/invest it) from the 100k.

IIRC Cyprus has a very beneficial tax regime for UK pensions.

daffydill_3

Thanks for your replies. In answer to some of your queries:-

Regarding husband pension – he wont be 65 until 2014 which I believe means I cannot claim on his for another 8 years. I will apply for ‘a married about to be divorced forecast’ as CIS suggested.

He will receive a small private pension but as he has agreed for me to have the sale of the house provided I pay off his credit card debts of approx 15K this probably doesn’t matter.

We are not divorced as yet and when/if this happens it wont be for some time.

I’ve checked and I will be covered under the Cyprus health care system.

To EdInvestor – Quote “This should help a lot as you can really only take an income of 5% with safety” Could you tell me how could I get 5% safely.

Thanks all of you.

EdInvestor

This should help a lot as you can really only take an income of 5% with safety” Could you tell me how could I get 5% safely.

If you mean with no risk at all, it's not possible in the UK without giving up the capital I don't think, unless you have already built up a giant ISA which I assume you haven't.I have no idea about interest rates in Cyprus, or whether it's wise to switch all the money into the local currency.

You can get a 5% income if you are willing to take some risk with some of the money.Risk is reduced by a system of asset allocation.

This calculator may help

Bear in mind that you should leave some of the money invested in rising assets ( eg shares, commercial property) to deal with long term inflation, especially as the UK inflation indexing on the state pension may undershoot the inflation level on Cyprus. Your income comes from tax free dividends ( at the 5 % level overall) while the capital will hopefully increase over the longer term, enabling an increasing income as well.[It's important to get good performance and low charges for this to work well.Also check tax treatment of divi income in Cyprus.]

Alternatively you may like to look into a "purchase life annuity" for some of the money, perhaps to top up the basic pension income. You will lose the capital with this.The PLA has tax advantages over the ordinary pension annuity.

Even so the price of annuities these days is pretty ghastly ( it would cost you 108k to buy the state pension income, for instance.The high cost is due to the index linking.)

You probably need to look at factoring in a way to cover the 8 year gap until the additional state pension kicks in.Would it be sensible to delay purchasing a house in Cyprus over this period, so you would have extra interest/dividend income from the capital which would not be invested until later? I assume it would be easy to rent a property in Cyprus.

daffydill_3

Hi, thanks for the info. I looked at the calculator and understood what you meant, but i wouldnt have a clue as to how to go about it. i asked a friend who is supposed to be an IFA and he suggested investing the whole lot in a capital investment bond - Skandia. He said i should get at least 5% growth. But most people think that figure is a bit optimistic, so i havent got much faith in him. Any thoughts of this type of investment?

Also, how do you put money into commercial property? Is it through a fund?

sorry to be ignorant, but keeping house and bringing up kids was my strong point, i know nothing about the greater scheme of the financial world.

thanks

EdInvestor

daffydill wrote:

Hi, thanks for the info. I looked at the calculator and understood what you meant, but i wouldnt have a clue as to how to go about it.

So tell us what the result was.

i asked a friend who is supposed to be an IFA and he suggested investing the whole lot in a capital investment bond - Skandia. He said i should get at least 5% growth.

Typical advice from an advisor to anyone with a large lump sum.Most of these products pay very high upfront charges.See here , look under investment bonds. The 5% "income" is acrually withdrawn from your capital ( that's why it is tax free in the UK) so you can find your lump sum gets depeleted if markets are poor and charges high.

Also, how do you put money into commercial property? Is it through a fund?[/url]

Yes.

sorry to be ignorant, but keeping house and bringing up kids was my strong point, i know nothing about the greater scheme of the financial world.

I'm afraid you're going to have to put some effort into learning how to manage your money, not least because it will be difficult to find quality advice because you are leaving the UK.

A good advisor would need to research the situation from the Cyprus end as well and most won't want to bother.Expat advisors found in places like Cyprus are especially to be avoided IMHO as their charges are massive and their products usually duff.

As a start, have you looked into the level of bank interest rates in Cyprus yet? And the tax rate applied?How much could you get if you left the fund in cash over there? IIRC the tax rate on overseas pension income in Cyprus is 5% but you should check.

missile

i asked a friend who is supposed to be an IFA - mark him as an "ex-friend"

With Profits Bonds could to be a viable low risk option for you?

Difficult to predict the future, but I would suggest you keep your money invested in UK, ISA etc. Open a Nationwide Flex Account before you leave UK, this will enable you to draw money without charges whilst in Cyprus.