Here I am going to review some of the offshore saving options that expats have available to them. I have noted in many of my blogs that these tend to be high cost options and should only be used when sure you want to make the most out of the saving plan. Be aware of charges and fees when looking at these types of plan.
Table of Saving Plans
| Company Product Name | Type of Plan | Charges | Can you take Withdrawals | Can you stop paying | Where is it Based | Features | Currency Options | Rating (out of 5) |
| Investor Trust S and P plan | Saving | 1.9% | Yes after the first 18 months | Yes you can and will be subject to the surrender value | Cayman Islands | 140% back guaranteed on the S and P plan while being linked to S and P 500 Index | Yes | 3.3 |
| Investor Trust Evalution plan | Saving | 1.9% for the first ten years then 0.35% after | Yes after the first 18 month | Yes you can and will be subject to the surrender value | Cayman Islands | ETFs funds ranges by Morgan Stanley and Pimco. As well as 200+ funds | Yes | 3.5 |
| Royal London Paragon | Saving | 1.5-2% for the first 10 year | Yes you can after the establishment period | Yes but high surrender values speak to IFA about this | Isle of Man | A decreasing charging structure and bonus system after 10 years | Yes | 1.2 |
| Generali World Wide Vision | Saving | 1.6%-2.2% depending on the plan type also fund management charges apply 1-2% | Yes after the first 12 months | Yes after 12 months based on the surrender value | Guernsey | A well know Investment brand | Yes | 2 |
| Friends Providence International saver advance | Saving | 1.7-2.1 for the first 10 year depending on the plan type | Yes after the first 12-24 months depending on the plan type | Yes valued on the surrender value | Isle of Man | Low premiums for starting investors | Yes | 1.9 |
| Zurich Vista | Saving | 1.4–1.9 depending on the structure | Yes 12-18 month based on the term of the plan | Yes valued on the surrender valued calculations | Isle of Man | A popular choice for any expats although being out done these days by lower chargers | Yes | 2.7 |
Review of saving plans
Investors Trust Evolution Plan Review
Investors Trust is an international insurance company licensed and regulated by the Cayman Islands Monetary Authority.
Investors Trust specialises in the provision of medium to long-term investment-linked products tailored to meet the needs of investors around the world and delivers a range of flexible, tax-efficient products including regular and single premium annuities, designed to suit various income levels and financial planning needs.
With service offices established to support plan participants around the world but not in the UK, USA, or EU, Investors Trust seeks to provide opportunities to its plan participants through access to the global financial markets.
Investors Trust are not a large company by international standards and given that they are based out of Cayman, with its lack of regulatory enforcement and protection, this is a red flag if the company were to suffer any financial set-backs.
What is it: The Evolution family of savings plans provide the flexibility for investors to save on either a non-contractual (flexible) or contractual basis. They are unit-linked savings plans designed to help investors save for the future, however, they wish, subject to low minimum premium levels.
What’s the investment choice: You can select from a range of around nearly 300 funds from the biggest names in global fund management. The funds are all directly held funds, so no additional layers of cost. And there are no additional costs for switching between funds.
As it is a unit-linked regular savings plan, the Investors Trust Evolution is susceptible to market risks but effective management of the investment strategy and expert guidance of an investment adviser may add considerable mileage to the growth in fund values of the plan.
Multi-currency: The Evolution Plan can be denominated in USD, GBP and EUR.
Minimum Deposit you can contribute: $/GBP/Euro 100 per month for the contractual plan and $1000 per month for Evolution Plus and Select non-contractual plans.
The minimum term is 5 years up to a maximum of 25 years for the contractual plan. The Plus and Select versions have no term, just the requirement that the fund value at the end of year 1 is greater than $10,000.
What if I need access to the money early: On the Evolution contractual plan, if there is full early encashment then penalties will be applied through surrender charges linked to the term of the policy. However, Investors Trust waives any surrender penalties after the plan has been in force for 15 years.
In effect, this means that evolution contractual policies will have a low surrender value during the early years. However, regular withdrawals and partial surrenders can be paid out after the primary initial period has ended and provided there are sufficient accumulation units available in the policy to surrender. These partial surrenders are free of any penalty charge.
For the Evolution Plus and Select, there are no surrender charges or penalties, as long as the plan has been going for 1 year. It is an extremely flexible option for clients who need to make changes may be due to a variable income stream, or just the short term that they can save for.
What are the fees and charges: For the Evolution contractual plan a charge of 1.9% each year is charged to the premiums expected and based on the value of the initial units, it is deducted monthly. This charge will be deducted for the first 10 years and then reduces down to 0.35% per annum.
There is also a Policy fee of $7, which will be deducted in arrears from the policy.
Yearly an asset management charge: this charge is based on the policy value and will be deducted on a monthly basis at a rate of 1.5% each year.
The Evolution Plus has a clean 1.9% per annum charge, deducted monthly in arrears, plus a policy fee of $10 per month. There are no additional annual management charge from Investors Trust.
Evolution Select charges 1.5% per annum, as above, plus the $10 per month policy fee. There is an additional 1% per annum charge based on the value of the plan for the first 5 years.
Underlying fund charges – the fund charges are made by the fund managers and include (but are not limited to) annual management charge, performance fee, bid-offer spread and/or switching fee. These can be between 0.5% and 3%.
What about discounts or bonuses available: Investors Trust Evolution plan gives you a welcome bonus when you save more, this bonus is based on the annual contribution (up to 105%) and the extra percentage is added to every premium you pay for the whole term of the plan.
You can also earn a loyalty bonus after 10 years of 7.5% of the premiums paid and thereafter every five years of 5% to help give your savings a regular boost.
The loyalty bonus and the maturity bonus is dependent on all expected regular premiums being received.
The Evolution Plus and Select do not receive any additional bonus units during the term of the plan or at maturity.
Considerations before committing to an Investors Trust Savings plan
The Investors Trust Evolution plan is recommended by traditional financial advisers as an ideal savings product for people who want to save to reach a financial goal.
If you choose the contractual version of Evolution with a fixed term to the policy then if you surrender early you may get back substantially less than you actually invested, due to early encashment penalties. It is not intended as a short-term plan. You should not invest in such a plan if you may need the money for short-term financial goals. You should also not commit to saving a high monthly premium if you are unsure whether you will maintain that level of premium for the duration of the plan, as fees will depend on your initially agreed premium.
If you do require more flexibility to the term of the plan and to the premiums that are paid each month then the Evolution Plus and Select are better options for you.
Investors Trust S&P Savings Plan
The Investors Trust S&P500 Savings Plan is a contractual offshore regular savings plan.
If an investor fulfils the contractual terms they sign up to, the plan provides a guaranteed return at maturity of 140% of premiums paid, or the S&P500 market upside if greater.
The S&P500 Savings Plan was launched in 2004. If you sign up to it you are contracted to save an agreed amount, from US$200 per month, on a regular basis for a fixed 15 year term.
An Investors Trust S&P500 Savings Plan should not be taken out unless you fully intend to contribute for the full term agreed, and at the agreed premium payment frequency.
This savings plan is actually a regular premium life assurance scheme, issued under Investors Trust Assurance SPC’s Cayman Islands insurance license.
Your returns are linked to the S&P500 index, or the guaranteed return of 140% of premiums paid if higher, and there is no switching allowed.
If you miss more than 90 days’ premiums then your invested amount will just track the S&P500 and no guarantee will apply.
Investors Trust has a segregated portfolio structure in the Cayman Islands, which they say gives investors “100% security via an independent third party custodians’ nominee trust account.” In terms of fees and charges, there is an annual administration charge, a policy fee and an asset management charge, as well as a bid/offer spread below US$6,000 per annum.
If you surrender early before the 15th anniversary, an early surrender charge applies.
There are no credit card charges on any card including Amex, and there aren’t any other hidden costs.
You can apply and manage your account online and in multiple languages.
This regular savings plan is structured very differently to most of the usual offshore contractual savings plans, but its underlying structure and guarantee mean that it is only suitable for lower risk investors.
RL360 Paragon Plan
RL360 is based in the Isle of Man which is generally held to be a secure and well-regulated jurisdiction independent of the UK (making it a popular offshore financial hub).
Policyholders are protected by the Isle of Man Compensation of Policyholders protection scheme. However, this does not necessarily protect individual investors from poorly suited products.
RL360 products are designed as long term international investment products and are not subject to any ongoing tax in the Isle of Man.
The minimum to invest in Paragon is GBP 100 per month with over 100 funds to chose from.
Plan holders are not required to invest in mirror funds. The AMC of the underlying fund still stands (normally 1%-2% and there can be a bid/offer spread of up to 7%…
RL360 claims the, “unique bonus structure means Paragon tends to come into its own after 10 years or so – making it suitable for clients who have the insight and ambition to look beyond 5-year returns”.
The truth is that the Paragon is highly unlikely to make any investor any money in the first 10 years because of high commissions paid to advisers who sell the plan and passed on to the investor.
Surrender charges are also horrific.
As an example the policy holder can pay up to pay 54% of whatever they put in for the first 4 years if they want to exit. However, even if you don’t surrender, these initial or establishment charges are taken anyway to cover sales costs. In this example, the 54% is taken over the first 5 years.
Generali Vision Saving Plan
Generali Vision is a regular premium, the whole of life, life assurance contract issued by Generali International. It is characterised by its offering a wide range of available investment funds and relatively short initial periods (when initial units, as opposed to accumulation units, are being purchased). As specialists in this marketplace, Generali International have good administrative and technological systems in place.
It is relatively easy for this endowment-type of regular savings plan to be misrepresented. The main area of contention is often to do with a lack of perceived flexibility and difficult to understand charging structures. Many plan holders are often also unaware that upon early full encashment most, if not all, of the first 18 months – 2 years premiums are lost through surrender charges.
Although this regular savings plan is probably the market leader within this type of product, this entire family of offshore savings policy (known as Maximum Investment Plans) has now been superseded by other better options.
A little like bookshops being replaced by Amazon, the outdated construction of this plan now makes it a relatively unattractive option for many international investors who wish to maximise their return.
Generali Worldwide Vision Savings Plan charges
The Generali Vision Plan is a regular premium, whole of life, life assurance contract, these are its charges: –
Charges: Will vary according to the type of plan taken out from Generali as they offer different charging structures largely linked to the amount of commission or earnings being taken by the third party salesman or adviser.
Initial period: The Initial Period is determined by the Premium Payment Term of your Plan. It is the period after Plan commencement during which Initial Units are allocated. The Initial Period (in years) is equal to the total administration fees due over the Premium Payment Term divided by the initial annualised Regular Premium. (If the premium payment frequency of your Plan is monthly, your annualised Regular Premium is the monthly premium multiplied by 12.)
In summary, Initial Units incur additional charges at commencement, and then throughout the term and may be worthless if you cancel the policy early.
Where a Premium Payment Term of five years or more is selected at Plan commencement:
- Payable up to year 5 – 2.75% per annum of total Regular Premiums.
- Payable after year 5 -2% per annum of total Regular Premiums.
Where a Premium Payment Term of ten years or more is selected at Plan commencement:
- Payable up to year 10 – 2% per annum of total Regular Premiums.
- Payable after year 10 – 0.3% per annum of total Regular Premiums.
Plan fee: £3 per month or currency equivalent.
Establishment charges: Applies only to single premiums and levied at 1.5%
Investment administration charge: 1.5% per annum is deducted annually in arrears from the Accumulation Units allocated to the Plan.
Charges within the underlying fund: Internal Funds bid/offer spread – 0% to 1%, External Funds bid/offer spread – 0% to 2%. Internal Funds AMC – 0%, External Funds AMC – 0.5% to 3%.
The fees and their structure look frighteningly high.
Early encashment warning – A full encashment results in penalties being applied through surrender charges linked to the term of the policy. In essence, all your premiums are forfeited if surrendered during the initial period. For a 25 year plan, this period would be 23 months.
It is important to be aware that the Generali Vision Plan is a long term savings plan, if you decided to cancel the plan early it is likely that you will lose a large proportion of the money you have saved.
Friends Providence International Advanced Savings Plan
Friends Provident International Premier Advance Savings Plan
The first 18 months of your regular contributions plus the first 18 months of any increase are used to purchase initial units. These have a penalty (up to 100%) if you withdraw them before the end, or do not complete your plan. All regular payments to the Friends Provident International savings plan after the first 18 months are used to purchase accumulation units.
Initial units have a charge of 1.5% per quarter and there is a plan fee of $6 per month. There is no entry cost (bid-offer spread) for regular payments; they buy units at the bid (exit) price. However lump sums will be subject to a bid-offer spread of 7%, that is they are deposited at the offer price and immediately drop down to the bid price.
All withdrawals and switches between funds are done at the bid price.
There are other hidden charges, taken out before the funds are priced and so are not seen: Friends Provident savings plan take 1.2% pa out by reduction of the fund prices each day. The performance of the mirror funds are therefore 1.2% pa less than the underlying funds being mirrored.
Although this product is one of the better within this type of product, this entire family of product type (known as Maximum Investment Plans) has now been superseded by other more attractive options.
Friends Provident International Premier Advance Savings Plan Features
Premier Advance is a unit-linked regular payment savings plan designed to be held as a medium to long-term investment.
Investment Choice – The 100 risk-rated funds covering all the major world markets and investment classes. The funds section contains performance statistics which are updated monthly, fund prices which are updated daily and Fund Fact Sheets on each fund.
Multi-Currency – The FPI Premier Advance may be denominated in US dollar, GB pound, Hong Kong dollar, Japanese yen, Swedish krona (SEK) or Euro. Benefits will be paid in the plan currency.
Minimums – £300 per month. You can pay additional amounts via a number of different methods including credit card. Payment by credit card into the FPI Premier Advance will result in a charge of between 1% and 1.95% of each payment additional cost.
Zurich Vista Plan
Vista is an international, unit-linked, life insurance policy.
The policy is designed to be held for the medium to long term, and is subject to minimum premium levels.
Investment Choice – You can select from a range of around 170 funds from the biggest names in global fund management. However they are MIRROR funds, which means additional expense .
Policy Currency – The Zurich Vista Plan can be denominated in USD, GBP, EUR, HKD, SGD, JPY, CHF, AUD.
Policy Term – 5 years to 25 years depending which is selected.
Minimum Premiums – £200 Monthly, £600 Quarterly, £1,200 Half-yearly, £2,400 Yearly (or currency equivalent)
Charges – These will depend on the amount of commission taken by a third party salesman or adviser. See our FAQ for a full breakdown of all fees and charges levied.
Early encashment – A full early encashment results in penalties being applied through surrender charges linked to the term of the policy. In effect, this means that on polices with an original term of more than 15 years most, if not all, of the first 18 months to 2 years of premiums will be lost upon surrender.
