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Expats and Pensions | Malaysia & Singapore
If you live in Malaysia or Singapore, have a UK pension, QROPS or have been advised to take out an Investment Bond or wish to receive high quality investment advice taking into account Double Tax Treaties, then we are able to assist you.
For many expats living in Malaysia or Singapore the key issues or concerns are summarised by us, with some pointers as to how you can avoid the mistakes that we commonly see, and consider the things that make a difference to every Malaysia and Singapore expat.
We regularly blog on the latest matters affecting you, and within these pages we have put together Malaysia and Singapore specific pension information for expats. We also focus on the main tax considerations for expats in Malaysia or Singapore and then go onto to discuss specific investment strategies including the pro’s and con’s of investment bonds.
There were 90,000 UK-born people with residency in Malaysia and Singapore in 2016, according to the Malaysia and Singapore statistics agency, which used figures reported by Malaysia and Singapore authorities.
For expats that need advice on pensions and investments, the investment regulator is here
KEY POINT: QROPS – There are no QROPS in Malaysia or Singapore.
KEY POINT: Pensions – Singapore does not tax pension income remitted into the country. Malaysia- Pension paid in consideration of past employment is not taxed twice.
While the UK and Singapore have a Double Taxation Treaty, closer examination of the rules leads to the assumption that either:
– tax on the pension would be in the UK and not Singapore, or
– a Singapore resident may volunteer to have UK pension payments received in or remitted to Singapore for tax in which case the DTA may still provide relief from UK taxation on such payments if the local tax office agree, in effect making it only taxable in Singapore (at up to 20%).
Under the DTA between the UK and Malaysia, pensions paid in consideration of past employment to a tax resident of Malaysia and any annuity paid to such a tax resident, shall be taxable only in Malaysia and not the UK. For pensions not paid in consideration of past employment it is possible that they shall be taxable in both States.
KEY POINT: Overseas Tax Charge – If a resident of Malaysia or Singapore transfer their pension to a QROPS, they will be subject to the 25% Overseas Tax Charge.
KEY POINT: For those expats who were advised to take out a QROPS or International SIPP and put the investment into an Investment Bond for tax efficiency reasons – you must review this arrangement.
There is a saying ‘Don’t let the tax tail wag the investment dog’. Investors should be interested in the best strategy to get the highest net return after tax AND fees.
KEY POINT: If the fees for a tax strategy are higher than the tax saved, then it would be sensible to look at taxed option with lower fees. When we review existing products often recommended in the Far East, we discover in 95% of cases that the clients would have been better off not taking out the supposedly “tax-efficient” investment bond!
The adviser should look at alternative strategies, suggest options to discuss with you, finalizing a best solution for you, the client, based on investment, fees and the overall tax liability
Key issues / concerns
Insurance bonds, whether sold within QROPS or International SIPPS vehicles, are to be avoided .
The main consideration should be the balancing of tax efficient advice which takes into account future plans, and charges of products.
The taxation of pension lump sums is rarely mentioned and we wonder how many may have encashed pensions in the past ( e.g. via New Zealand until 2011) or taken a lump sum without disclosing this?
The vast majority of advisers, providing investment or pension investment advice, do not have investment licences and are circumventing this by selling insurance wrappers that are expensive and commission laden.
What should you be considering
If you are confident enough, then do your research, and place investment directly.
If you need assistance, then seek advisers who are regulated themselves in the UK for pensions advice, and / or regulated for INVESTMENT advice in the Far East.
Consider not only tax efficiency, but also costs!
Point 4 – is, make sure the costs are accurate! If you are told the costs are 1% or 1.5% per annum in total and there is no fee up front, then you are probably being lied to in 95% of cases.
Don’t get taken in by the great claims over QROPS and Insurance bonds or investment platforms that are really investment bonds. These add layered charges and are usually not the best outcome for clients (although we accept that in around 15% of cases they are).
Don’t be a sheep. Just because your best friend was advised to do something, never assume this is the right thing. Each person is an individual and requires individual solutions. If your friend were to walk off a cliff, would you follow them?
Our Empirical evidence from clients we have spoken has shown us that many expat sales advisers in the Far East, just sell a product to their clients for commission and do not provided financial solutions. The product is often a QROPS or an International SIPP or an investment bond, which may or may not be the best advice but this is not really considered. Don’t listen as 85% of the time you would be better off doing something else with your hard earned money or pension.
We co-operate with a regulated adviser in the Far East who can provide you with the advice aspects with respect to where you live including the tax issues of a UK pension. If you are from Malaysia or Singapore seeking advice on UK pension we are legally able to provide the advice you seek but you will not be covered by the Financial Ombudsman Service in the UK. We apply the same high standards of advice to your pension as we would if you were in the UK, but we are effectively giving advice at arm’s length to you, and you would have to accept this.
Trading Names: TailorMade is a registered trading name, but does not provide expat pension advice in that name. This website is aimed at individuals not resident in the UK or USA. Please see www.aisagroup.org in order to ensure that you are dealing with the most appropriate group company.
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TailorMade aim to challenge the status quo by optimising returns through transparency and intelligent investing, allowing our satisfied clients’ to enjoy a comfortable journey to their investment goals. Comfortable because we ensure that investment risk is aligned with clients’ aspirations. We know that if you are satisfied with the risk strategy on your investment, then it allows you to spend more time on other things in your life.
We deliver greater returns by giving you the best options of SIPP’s, QROPS or pensions to consider. We ensure you minimise potential death taxes and relaxed, knowing we will not use investment bonds purely because it pays commission as we offer transparent fees on all of the options available to you.