I often get asked what are the best saving plans for those that are looking to go into a pension scheme and want to contribute monthly or a regular income. I mostly reply that you would be better off going into a platform, however, I thought I would do a savings plan review for expats who are interested in using them.
If you prefer the option of just putting your money away without thinking about it which some people do, then you do have some saving plan options. These are not the cheapest nor or they flexible and are designed as a saving plan.
For expats that are looking for anything else or want to take money out midway through the policy term will be disappointed, plus a lot of these plans have high fees. Normally, these should be used in short time frames (10 years) rather than longer ones as anyone recommending anything over 20 is doing so based on commission and not in your best interest.
They should usually only be as small amounts of your income usually less than 10% or a maximum 20% depending on how much you have liquid and how much disposable income you have.
Now we have covered the basics of how to use these and the negatives as there is a number. I will touch on the positives, for those working abroad in professions such as expat teachers at international schools. They normally get better pay and benefits than you would back in the U.K/U.S/AUS/Canada but are not contributing to any pensions as they would back home.
For expats in this position, it can be attractive to have saving options that you can contribute to without thinking too much and use aspects such as dollar-cost averaging and compound interest to maximise savings.
If you have discipline, cheaper options such as Swissquote and other platforms are open to you.
But, here are my top saving plans for expats for those looking at regular contributions.
All these are my own thoughts and am not influenced by any platform over another
Dominion Savings Plan
I like this as, unlike the other insurance-based plan where you have complicated charging structures and high costs. This is a pure platform based saving plan.
The flexibility is one of the best in the market and has a good location in Guernsey by the GFSC and banks with BNY Mellon as a Custodian.
Some of the key points are:
- Free missed contributions
- Set portfolio with a good selection of fund from major funds
- Partial redemptions free of charge
- Charges 1.35% for a 10 year plan and 1.15% for a 15-20 year plan.
- One of set up fee of $25
- Flexility is as follows
As you can see on a 5-year plan you can get access to 75.6% from year 1
Negatives
Some of the negatives on the plan are that it has set portfolios although, the selection process is impressive and nothing wrong with the funds and the set portfolios based on risk profiles.
It does lack flexibility for those wanting specific options. And does also have surrender policies.
- Only in USD.
- No beneficiary option.
Conclusion
Although, this is for a specific person wanting set portfolios in USD. It is not a bad saving option for those who fit these means.
The flexibility in relation to other plans doubled with the location protection and set portfolio means that if used properly it would work out to be an efficient option.
In terms of the pricing, you could say it’s not the cheapest, but again for those just looking to save 1.15% on a 15-year term is not the worse option in the world.
Investors Trust Evolution Plan
Many expats like the S&P plan that ITA offers, however, when you break down the fees is it really worth paying the extra amount for something that has fixed returns? Economists who have studied the S&P 500 would say no.
But, you do have a reason why a disclaimer is put on every financial product that past performance is no guarantee of future performance. So regardless, of the S&P500 doing 8-10% a year depending on when you measure it from. There is o guarantee it is going to do this again.
Without going too off-topic, can the S&P continue to perform at an average of around 8% per year? I have written a number of blogs and posts about the S&P companies having limited room for growth in the market and growth at the upper end of the S&P. But, I do get it for those wanting a fixed return and willing to pay a higher amount.
Personally, I prefer the evolution plan that I have gone into detail about in a previous blog.
Who are Investors Trust?
Investors Trust describes itself as a group of global brands representing the ITA group that is a group of insurances companies in multiple jurisdictions which aims to give access to investors to global markets.
Where are they based?
They have various locations, Portico, Malaysia, Cayman, but its is based in Cayman for most uses.
Is it safe to Invest in ITA?
Although, Cayman is not as highly rated as other offshore jurisdictions. It still offers stability and is rated AA- by Moodys and is not currently at any political, or economic risk.
The Cayman Islands maintains a sophisticated financial regulatory regime under the control of the Cayman Islands Monetary Authority (CIMA). The Cayman Islands financial services industry has a strong compliance culture.
Investor Trust, although, not a major systemic bank it does have around $1-2 Billion AUM (as of 2021) and has been around for a number of years. Personally, I believe it to be stable for the medium-term outlook.
It also has a Custodian bank, that was HSBC U.S for the protection of investors assets.
What is the Evolution plan?
The Evolution plan is a saving plan for expats and locals. It is mainly used as a medium-term saving plan or an education plan.
What currencies are allowed?
- USD
- EUR
- GBP
How long do I have to save for?
You do have 5-year plans but due to the charging structure, only 10-25 years plans are available.
What amounts do I have?
1200 USD/GBP/EUR is the minimum amount and there is no maximum.
What are the charges?
It does depend on the amount and time, I have put a picture of ITA charging structure below.
In short, the charges
- 1.9% for 1-10 years. 0.35% after
- Monthly fee 7 USD
- Fee 0.125% a month
Figure 1: Is from ITA website of the charges
Do you get any benefits?
Yes, you do. However, only on certain amounts and time periods. You get set extra units depending on the amounts (see below).
Also, you get a loyalty bonus of the 7.5% of the premiums from years 1-10 and 5% after. This is only paid if you have not missed any monthly payments nor have you decreased the premiums.
Figure 2: Shows the extra allocation units you get for the number of yearly contributions and the duration of the plan
Can I take money out?
Yes, but only after the initial period (usually 18 months depending on the duration of the plan) and then it is calculated on the annual amount due left of the plan. Therefore the longer the time pay into the plan the more you can take out. Also after 15 years, this is not applicable to this product.
In short, it will not be feasible as you will lose the bonus if you take money out and should consider this before you buy the plan.
Can you decrease the plan?
Yes, you can decrease the amount to the minimum value. Although, this will affect the bonus.
Can I skip a month if I don’t have enough money?
Yes, you can, however, you will be required to top it up in future payments. Also, this will sacrifice your plans bonus.
Can I increase?
Yes, you can increase the plan value.
Can I put more in one month if I have a bonus?
Yes, you can. This can also be counted towards your monthly contributions or used as an additional payment.
Can I have a beneficiary?
Yes, you can and in the event of death, it will pay 101% of the account value.
What is the tax status of the plan?
It varies for individual circumstances dependent on location. Please see a qualified tax or financial advisor for specific information. However, Cayman Island has no tax on Income or Capital gains so can work out to be tax-efficient if set up correctly with your personal circumstances.
Who can have this plan?
Any between the ages of 18-65 and is not a U.S citizen or U.S residence.
What is the fund range on the plan?
The plan has an adequate funds range in GBP/EUR/USD
https://www.investors-trust.com/products/fund-platform/
Few fund names include Black Rock, Franklin Templeton, Ishares, Morgan Stanley, Pimco.
https://www.investors-trust.com/products/product-family/evolution/
What are my thoughts?
The charging structure is not the cheapest working out at 2%+ for a 10-year plan and 1.5+% for a 15-year plan (if you don’t get the bonus). However, this can be redeemable in the way of a bonus of 7.5% and extra allocations 1%-5% (depending on the amount), if you use it over a 10-15 year term it can bring the charges down to a reasonable amount.
The fees aren’t too bad when you look at the funds, if you are going into a fund such as Morgan Stanley Global Opportunity could cost 5% entry that ITA doesn’t incur.
The fund range is good enough for you to make a good portfolio and includes Index funds with Ishares which is what I like.
I personally use this but only as a pension plan for a small amount of money that I don’t see go out of my account. I would highly suggest if you are to consider this you do the same.
I have stated in a number of blogs and videos these can useful but they are highly ineffective if not used right due to the illiquidity and charging on the platforms and may want to consider other options if you might need the cash.
Finally, from a time perspective, I would use 10-15 year time frames as they have sciatically a higher chance of completion.
What is the platform and service like?
In terms of ease to use and moving digitally, it is one of the best around due to its online system and electronic applications.
https://www.investors-trust.com/products/fund-platform/
You also have online access and 24/7 support which you can trade and switch funds if needed.
In terms of setting up, you will need to fill out an electronic form then Investors Trust electronic system will then give you an email confirmation and ask for a Docu sign or E-signature with the terms and conditions.
With your login, you can reset your password. Also having a breakdown of funds and sectors that I personally like
It is pretty easy to navigate systems outlining the policy structure.
Conclusion and rating
As with a lot of products in the expat space, for saving it is not the cheapest, however, out of most others ITA evolution is one of the better options due to its fund range and online system.
I would prefer to use this than most other saving plans. If I were to rank it, it would get 3.5 out of 5 with individual ratings being
- Cost 2.5/5
- Online system 4.2/5
- Funds 4/5
- Protection and location 3.5/5
Platform One
Unlike a lot of the contractual based plans, such as RL360, the Platform One options offer some flexibility in saving plans. That can be beneficial to a lot of expats even more so in uncertain times which we have seen have an impact on many sectors in the economy.
This is also RDR compliant in the U.K version.
As well as this it has a wider range of currency than ITA and Dominion in JPY, HKD.
What are the fees?
Establishment Charge:
There is a set-up fee of £500 charged by the adviser.
Platform 1 Hallmark Savings Plan Administration charge
- Annual Portfolio Charge – €78 p.a.
- Annual Platform Charge – 0.30% p.a.
- Minimum regular contribution – €50
- The charges you have agreed with your adviser are deducted at the same time as the Portfolio and Platform charges
- There are no dealing charges (subject to terms) or initial fund charges
Other Charges:
- There are also fund management charges, usually 1% to 1.5% pa each year- depending on the funds chosen, although Platform 1 Hallmark Savings Plan rebates up to 50% of the fund charge making this a very unique proposition for the investor.
- Additionally there may be an adviser charge to manage the portfolio, this typically can be between 1 to 1.5% per annum depending on the chosen advisers charging structure and service provided.
- Fund range it has over 5000 listed funds on its range.
- Full details can be found here www.platform1online.com
My views on Platform One, in terms of flexibility it ranks top and charges if used for the longer term are also quite competitive with a transparent fee schedule. Although, as it’s a fee-based model the 500 GBP must be paid at onset making use for smaller and lesser amounts less feasible.
Summary
| Platform | Flexible | Fees less than 2% ongoing | Fund options over 1000+ | Protection | Surrender charges | Transparency | Over All |
| RL360 Saving plan | No | No | No | Yes | Yes | No | 2/5 |
| Friends Provident International advance premium saver | No | No | Yes | Yes | Yes | No | 2.3/5 |
| Friends Provident International ultra advance saving plan | No | No | Yes | Yes | Yes | No | 2.3/5 |
| Utmost International | No | No | Yes | Yes | Yes | No | 2/5 |
| Hansard International Vantage II | No | No | Yes | Yes | Yes | No | 2/5 |
| Investors Trust Evolution Plan | No | No | No | Yes | Yes | No | 3.5/5 |
| Investors Trust S and P plan | No | No | No | Yes | Yes | No | 3.2/5 |
| Zurich Vista | No | No | Yes | Yes | Yes | No | 2.4/5 |
| Platform One | Yes | Yes | Yes | Yes | No | Yes | 3.8/5 |
| Dominion Saving Plan | No | Yes | No | Yes | Yes | Yes | 4.2/5 |
