Expat Focus Financial Update 05 October 2016

Pension rules could be relaxed for British expats

The UK government is apparently considering a raft of measures that would see the easing of consumer protection on pension transfers for British expats.

The regulations currently enable an expat to access their pension pot which has a safeguarding benefit including a final salary pension or a guaranteed annuity, and is worth £30,000, but they can only do so after taking advice from an authorised independent financial adviser.However, the government believes this need for an authorised financial adviser may create difficulties for pension members living abroad.
The Department for Work and Pensions (DWP) says in a consultation paper published on 30 September that there have been concerns raised about the appropriateness of pension members who live abroad in seeking financial advice.

Unnecessary risk

The DWP says British expats are being put at ‘unnecessary risk’.

The DWP said: “Those who live overseas and want to transfer their pension may have additional or different circumstances and motivations for transferring their pension benefit to an overseas scheme.”

The government has now begun a consultation on what alternative safeguards can be put in place to help protect expat pension savers.

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However, UK pension experts have said that the easing of rules may put savers at a bigger risk of fraud.

Overseas pension transfers

One pensions expert told a newspaper that the consultation should not lead to the watering down on the advice required to a point where overseas pension transfers can be made by expats without them taking any financial advice whatsoever.

He added: “This move could open the door for unscrupulous pensions salesmen and reduce the Treasury’s tax take as people find it easier to move their pension savings into different tax jurisdictions.”

The Association of British Insurers is also calling for a change to the rules and says a mandatory guidance session would be better than having expats pay for the advice fees.

Saudi Green Card schedule revealed

The Saudi Arabian government has announced that the new green card system, which is being introduced for non-Saudis, will take effect over the next five years.

With 45% of the kingdom’s workforce taken up by expats, the government says many expats are welcoming the move to a green card system, particularly by those expats born and raised in the country.

Now they have settled in the kingdom and have no plans of returning home they will be able to claim permanent residency and invest their savings in the country.

The Saudi government has flagged up that the new green card system will also lead to the end of the Kafala, or sponsorship system, being granted to highly qualified and well educated expats who can help play a leading role in developing Saudi Arabia.

Meanwhile, the country is also looking to cut its public sector bonuses, which affects expats and nationals alike as the fallout from the oil price slump continues.

This is the second time the kingdom has cut benefits and bonuses for the public sector since oil prices collapsed. The announcement was made by Royal decree, which is a sensitive move as around two in three Saudis are employed in the state sector.

In addition, ministerial salaries in the kingdom will fall by 20%.

British expats can get a UK bank account

A rule has come into force that prevents financial firms from discriminating against expat customers so they can now have a UK bank account.

Any British expats living in Europe who have previously been prevented from opening an account since they have no address do not now need to have roots in the UK to open a bank account.

One reason for expats being rejected is that financial firms said they could not check an applicant’s credit history before opening an account.

Industry experts believe the rule change will affect 1.2 million British expats living in Europe and if they are legally resident in a member European Union country then they have access to banking services in the country where they live and also in any other member state.

However, banks can still refuse to open an account but they must explain the reasons for doing so – and generally these will cover criminal activity such as money-laundering.

Irish expats will not get tax breaks

A plan to attract Irish expats back home with a series of tax breaks has been dismissed.

The government says the idea is not only discriminatory but unfair since expats may return home and be working with people doing the same work but at a higher tax rate.

The move follows a report that the country’s Employment Minister, Mary Mitchell O’Connor, was looking at a proposal to offer certain expats, mainly those who are highly skilled, a lower 30% rate of tax for up to five years if they returned home.

The European city with the highest proportion of expats is…

Statistics published by the European Union’s Eurostat statistics arm reveals that the European city with the greatest ratio of residents from outside of its country is Torrevieja in Spain.

According to the agency, nearly 47% of those living there are foreign-born residents, which is closely followed by Brussels, where just over 44% of residents were born elsewhere.

To underline Spain’s popularity as an expat destination, nearly 13% of all residents in the country are foreigners.

In third place is the Estonian city of Narva, followed by Germany’s Offenbach am Main and Fuengirola in Spain. Benidorm ranks in eighth place.

In its report, Eurostat states that the Spanish coastline is popular with elderly expats wanting to retire to a place in the sun.

Expats offered short-term contracts in Oman

According to media reports, there has been a sharp rise in the number of short-term contracts being offered to expats working in Oman.

The country’s struggling economy is being blamed and employees and trade unions say that expats are increasingly being told to sign a short-term contract to keep their job.

One trade union leader told a newspaper that their organisation is increasingly coming across employees being forced to sign short-term contracts, usually for six months, and it’s affecting all employment sectors.

However, this growth in job insecurity is leading to growing numbers of expats to return home or find other opportunities in the Gulf.

Expats pour money into buy to let

Building society Skipton International says expats from the UK have invested around £100 million in buy to let properties with them.

The lender, which is registered in the Channel Islands, launched its range of expat mortgages two years ago to help British expats overcome the obstacles in finding a mortgage to buy an investment property.

Since then, Skipton has completed more than 500 mortgages.

The firm’s managing director Jim Coupe, said: “Our buy to let mortgages are popular with British expats around the world and we see demand growing, particularly from those in the Gulf region and Europe.”

He added that the main reason for growth is expats looking to invest over the long term, with many buying a property for their pension planning, while others wanted a UK property to provide a rental income.

Also, 87% of expats questioned said they had confidence in the UK’s property market and 70% said their property will increase in value over the coming year.

Call to limit EU expats working in UK

One organisation has calculated that after Brexit takes place, the UK will only need around 30,000 European Union workers for business to utilise their skills every year.

The findings from Migration Watch UK could see migration from the EU falling by around 100,000 people every year over the medium term if their recommendations are accepted.

The think tank says that those wanting to move to the UK for work should be in highly skilled positions that will help with the UK’s economic growth – the organisation says that around 80% of EU workers coming to the UK are currently unskilled.

Expats with ICT skills in demand

Employers in New Zealand are increasingly looking for expats to fill a wide range of jobs, particularly in information and communication technology (ICT).

That’s the verdict from jobs site SEEK, which has released data on jobs being advertised with nearly a 10% rise being seen in August compared with the same month last year.

Employers in Auckland and Wellington are leading the way with demand for expat skills in trade and services, manufacturing, administration and office support as well as logistics and transport.

SEEK’s general manager Jan Faulding said New Zealand’s job market was experiencing year-on-year growth with lots of opportunities for expats.

According to employers advertising on the site, the big demand is for developers, business system analysts, programmers, IT support and project managers.

Management roles in ICT in New Zealand pay an average of $128,000, followed by architects earning $126,400 and business consultants earning $110,700.

Ms Faulding said: “There is increasing demand for new technology and digital connectivity so it’s no surprise that the top advertising industry is ICT and this trend will, we expect, continue.”

In other news…

Dubai Police say they have met more than 2,000 expats at 13 awareness events aimed at highlighting laws and regulations and help build communication between expats and the police.

In a ground-breaking move, Pakistani expats have been able to use Skype to tell the country’s Federal Ombudsman of their complaints when living and working overseas. The service has been introduced at various Pakistani consulates and will shortly be rolled out to more; mainly in European countries.

According to the Japanese Justice Ministry, there are 2.3 million expats working in the country, with Chinese expats making up the biggest group. The second largest group of expats living in Japan are those from South Korea and then expats from the Philippines are in third place. Most of these expats are permanent residents while one in four are non-Japanese students enrolled in universities and colleges.

Destination Thailand is a new smartphone app aimed at expats and tourists alike to help boost visits to various parts of the country with exhibitions, conventions and incentives. There are activities and reports covering most areas of the country.

Growing numbers of British expats are heading to France to become au pairs, according to one leading childcare agency in Paris. They say there’s been a significant upturn in applications since Brexit and there’s also a growing number of expats moving to the city for work and looking for childcare services for the children.

Growing numbers of employers in Saudi Arabia are uploading the CVs of their workers onto a Ministry of Labour website so other employers can offer them work. One news outlet says more than 2,000 CVs have been uploaded, mainly of highly skilled expats.

Prime Minister Theresa May has promised to lift the ban on British expats from voting before the next election. She said expats would be entitled to vote regardless of the length of time they had spent overseas. The move follows legal action after thousands of expats were prevented from voting in the EU referendum with a time limit of 15 years spent outside the UK depriving expats of a vote.

In a bid to boost their employability overseas, growing numbers of Omanis are learning German. A news report reveals that Omanis are learning the language for professional reasons and for finding job opportunities and also when travelling to German-speaking countries as well as seeking medical treatment.

A survey has revealed the salary expectations of Emirati graduates is $7,350 a month – around three times that of expats say they are expecting to earn in the country. However, the survey by recruitment firm GulfTalent also reveals the graduates in reality earn around a third of their expected wages when they land a job.

Unemployed postgraduates in Saudi Arabia have launched a campaign for the Education Ministry to replace the 40% of university teaching staff who are expats with nationals. Organisers of the campaign say Saudis with suitable qualifications have been sidelined though a senior ministry official has told media outlets there will be no change to the universities’ employment regulations.


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