Just turned 40 (UK expat in Thailand) - what next for my pension planning?

Niltava

Hello all,

First time poster here so be gentle with me!

I'm a British expat working in Thailand and have the following pension provisions so far:

1) a Scottish Equitable pension pot currently valued at about GBP15,000. The money is in a "balanced fund" in the UK (consolidated from two workplace pensions that I had earlier in my career in the UK before moving overseas 10 years ago).

2) Four years contributions to my current workplace pension which is a UK final salary scheme working on a ratio of 1/80th of final salary. My current salary is GBP 35,000 tax free and I contribute about GBP 230 pcm towards my pension, whilst my employers contribute GBP 460 pcm. I like my job a lot and have every intention of staying in my post for the foreseeable future.

3) Five years of contributions to an offshore personal investment fund which has an agreement for making contributions for a total of 25 years. This fund is held by Friends Provident International with my contributions spread across approximately 15 funds in FPI's portfolio. The selection of funds has recently been taken over by BestInvest (a large UK-based Investment management firm) who now actively manage it for me, previously it was done by my IFA in consultation with me. This fund is held as US dollars and is currently just about breaking even, valued after charges at US$ 28,000. I currently contribute USD 500 pcm.

4) I am making monthly voluntary NI contributions in the UK to keep my state pension.

I plan to continue living in Thailand for the foreseeable future (my wife has a Thai passport and we own a house), and we expect to retire there.

My questions for your consideration are:

a) how am I doing? Are my provisions to date (assuming I will work until I am at least 60 but more likely 65 or 67) way too low? just about right? more than enough? My aspirations of how much I want to live on during retirement would be 70% of current salary (allowing for inflation of course).

b) what else should I do? Currently I could put aside an additional GBP 500 per month for pension provision of some kind. I could increase my contributions to my Friends Provident offshore fund (rather than just making an annual adjustment in line with inflation), or I could save the money as cash and then each year put those savings into a five year fixed rate bond - for a bit more security.

Thanks for any thoughts or advice you might have to offer.

Thanks and best wishes

N

jamesd

The final salary part is good. One major reservation I have is about exchange rate risk with the Baht. Emerging economies can see significant increases in the value of their currency compared to others. This implies that since your plan is to retire in Thailand you might want to have significant retirement investments there as well, so those are linked to the local economy and exchange rate.

You might consider editing the topic title to include Thailand expat since this will make it more clearly visible and findable by those with experience and knowledge in this area.

Niltava

Thanks James.

I have so far avoided keeping money in Thailand because I really do wonder if the economy might go the way of Ireland at some stage - there seems to be so much wealth in Bangkok now, with new condominiums sprouting up like there is no tomorrow and the prices being paid for them off the scale. I hear stories of what happened in 1997 and it gives me the heebeejeebees and I just think its safer to hold Stirling and US$. However I admit that this is something I have not discussed at length with people with more knowledge of such things and it is good for you to bring up this point as I should explore it more than I have so far.

Can somebody advise me on how to revise the thread title in the way James has mentioned? Do I need to contact the mods?

Many thanks again

N

jamesd

If you click on Edit, then on the Advanced choice you'll be taken to an edit page where you can change the title.

What you need to be doing is diversifying. Not 100% in Thailand, just 20% or so. Enough to provide you with some protection if it goes up but not so much it hurts you badly if it goes down.

mania112

Looks good.

You should concentrate on the final salary and increase the contributions if possible.

Niltava

jamesd wrote: »

If you click on Edit, then on the Advanced choice you'll be taken to an edit page where you can change the title.

What you need to be doing is diversifying. Not 100% in Thailand, just 20% or so. Enough to provide you with some protection if it goes up but not so much it hurts you badly if it goes down.

James,

Thanks and noted. I will investigate options here and discuss the merits of doing so with other long term expats here.

Thanks for the IT support also!

Best

N

Niltava

mania112 wrote: »

Looks good.

You should concentrate on the final salary and increase the contributions if possible.

Thanks Mania.

My instinct was that making annual voluntary contributions to my Final Salary scheme would be a good way to go, as you suggest.

However I got a quote from my employers for this and I was rather underwhelmed by what it offered and as such I have started looking at other options.

Best wishes,

N

atush

Look at your Friends Prov investments. Holding even isn't good, as the US and UK stock markets have been up in the last 12 so you should be showing more of a profit.

Good call on the voluntary Nics.

You def need something in Baht, for currency reasons. What % can you get on cash there? What % is inflation? Do you hsve any cash savings anywhere?

Niltava

atush wrote: »

Look at your Friends Prov investments. Holding even isn't good, as the US and UK stock markets have been up in the last 12 so you should be showing more of a profit.

Good call on the voluntary Nics.

You def need something in Baht, for currency reasons. What % can you get on cash there? What % is inflation? Do you hsve any cash savings anywhere?

Thanks atush,

Regarding local interest rates in Thailand I don't know as I have not explored - but given that there seems to be some consensus that it would be a sensible move I will look into this.

Currently I hold a small sum of cash (circa GB 5,000) in an offshore (Isle of Man) regular savings account, but one of my goals in 2013 is to increase that significantly with monthly savings of GBP 1,000. This is a realistic target - during the last 18 months I have been paying GB 750 pcm into it (but ended up blowing a big hole in it to celebrate turning 40!).

Regarding the Friends Provident, you are correct that it has under performed. The selection of funds moved to BestInvest in August 2012 - it was down 3.6% when they took it on but is now 0.8% up so I am pleased with the performance so far. Prior to using them I had the money in a selection of five funds which I reviewed with my IFA on a 6 monthly basis. BestInvest has now split it across 20 funds.

Regarding AVCs to my Final Salary scheme, I am looking again at the projection I was given and will discuss with the scheme's representatives about the detail of the projection as I am starting to think that I have to some degree misunderstood it and secondly I had not taken into account the impact of inflation on that money if I chose to use it for some other purpose rather than AVCs.

Thanks so much for the advice given so far on this thread - rather than providing answers it has given me new questions to ask of my existing holdings, and this is very useful!

Very best wishes

N

atush

5K in cash savings is low- save into GBP and Baht until you have 6 months salary/spending saved.