International Health Cover Costs Deter Expat Bosses

A quarter of employers want to provide international health insurance to expat staff but can’t afford to.

This is according to research by medical insurer Expacare which examined employers’ attitudes towards providing international health insurance for staff, revealing that more than one third of employers consider it a personal choice for employees. However, more than a quarter of employers view international health insurance as essential for any staff working abroad.

Healthcare inflation is currently at an all time high, meaning businesses are ever more wary of costly insurance. Nearly two-fifths believe medical evacuation is crucial, a quarter value a 24-hour medical helpline and nearly a third want their staff to have a choice of medical facilities and doctors. Yet many still omit a number of vital provisions, despite there being a number of flexible options available.

Worryingly, a further one in ten employers believes that when operating in the EU there is no need for health insurance.

Beverly Cook, managing director of Expacare, said, “The research shows a lack of understanding among employers of how best to care for their staff working internationally.

Due to costs, some employers are simply not offering international health insurance to employees working abroad. Meanwhile, others risk omitting some crucial elements from the cover.”

She also warned that many wrongly believe travel insurance would cover all healthcare needs.

Manx Money on UK Tax Radar

The UK taxman has announced yet another disclosure facility, this time with the Isle of Man government.

The new facility which will run from April 2013 to September 2016 enables those people concealing assets on the island to come clean to the UK taxman and secure a mitigated penalty. People holding accounts on the island can now come forward and settle up before their details are passed to HMRC.

Accountants Baker Tilly say HMRC has agreed they won’t be looking to tax any undeclared income or gains arising before 6 April 1999, and penalties may be as low as 10% but could be higher where offshore accounts are involved.

Isle of Man financial intermediaries will now be required to contact their clients who are known to be so-called ‘relevant persons’ to advise them of this new arrangement. These people will include UK resident individuals with a beneficial interest and ‘relevant property’ on the island such as a bank account, annuity contract or company.

Professional advisers will also be allowed to make initial contact on behalf of clients on a ‘no names’ basis, with the attraction of having a single point of contact within HMRC’s Isle of Man disclosure team.

All of this may seem very similar to the now well-established Liechtenstein Disclosure Facility. However there is a subtle but important difference in that the Isle of Man facility does not give the taxpayer immunity from prosecution. Anybody with serious offshore tax issues may therefore still wish to consider using the Liechtenstein route to settlement, but of course professional advice should be taken where necessary.

Expats who are genuinely non-UK resident have nothing to fear from the new agreement. Only those who have left money in the Isle of Man when they become UK resident need to check that they have fully disclosed this to the UK taxman.

Health Cover For Africa

Healthcare insurer Bupa International has a new partnership with Jubilee Insurance, east Africa’s largest insurance group.

Jubilee Insurance will be providing Bupa’s international health insurance products to its customers in Kenya, including the recently launched Vital Africa product, an ‘emergency only’ plan which ensures customers get the emergency treatment they need, anywhere in Africa.

International private medical insurer InterGlobal is also targeting Africa by enhancing its Africa UltraCare plan. It now provides immediate cover for HIV/AIDS with the limit doubled to US$10,000 on UltraCare Select and Comprehensive; overall plan limits increased to $150,000, $250,000 and $500,000 on UltraCare Standard, Select and Comprehensive respectively; wellness benefit increased to $150 and $250 on UltraCare Select and Comprehensive respectively; and eye examination benefit increased to $50 on UltraCare Select and Comprehensive.

Pension Money Flees Britain

Government and Bank of England policies are prompting a growing number of British pre-retirees and pensioners to move their pension funds out of the UK.

This is according to figures from advisers deVere Group which said it transferred 35 per cent more UK pensions into HMRC-recognised Qualifying Recognised Overseas Pension Schemes (QROPS) during 2012, compared to the year before.

Nigel Green, chief executive of the firm that specialises in expat wealth management, said: “More and more Britons who can move their pensions into a QROPS – in general terms that’s those with a British pension and who have left the UK or are planning to – are doing so. Our QROPS business is up more than a third over a 12-month period.

“We attribute this significant increase to the mounting public perception that the government, which people believe is constantly changing the rules on pensions, cannot be trusted with them.

“As such, increasingly our British expat – or soon-to-be expat - clients tell us that they want to move the money that they have prudently put aside for their retirement out of the UK in order to safeguard it from the government, which is quietly and not-so-quietly plundering pension pots in the form of scrapping age-related benefits, and with plans to cut pension tax-breaks and the tax-free allowance, among other things.

“And the public is ever more aware that even if there were a change of government, pension raids would continue, with the opposition recently setting out its plans for a £1bn tax grab on pension contributions.”

He added: “Another major factor in the rising popularity of QROPS is the Bank of England’s quantitative easing (QE) programme which has permanently damaged the retirement income for millions of pensioners by helping to push annuities, which give retirees an income for life, to record lows. A QROPS does not force you to buy an annuity.

“With it being revealed that Sir Mervyn King, the outgoing governor of the BoE, is in favour of extending QE, it is likely that we will see a further jump in the numbers of people considering moving their retirement funds out of the UK.

“In addition, as the pound looks increasingly weak – it’s at its lowest against the dollar since last summer and at its lowest against the euro for more than 12 months – QROPS are likely to be seen as an increasingly attractive prospect because they can pay out in a currency other than sterling.”

Expats Make Money Go Further Abroad

Less than a third of retired expats say their pension income is enough to sustain the life they want. And more than half of working expats recognise they will have to reduce their spending substantially once they retire.

Despite the squeeze on expat pensions, significant numbers of pensioners felt that their best course of action was to remain abroad, according to a survey by Lloyds TSB International. Nearly half said that they thought their pension income would go further if they remained outside the UK, against less than a fifth who thought they would be better off in the UK.

High living costs in the UK are the main reason for this sentiment. Only a quarter of respondents thought they would have a lower cost of living in the UK than in their current country of residence.

Currency fluctuations are also a source of concern, with half of retired expats with a UK pension saying they were worried about the effects of exchange rates on their pension income. Many Britons who retired in eurozone countries saw their UK pension incomes reduce dramatically at the start of the financial crisis, when the pound fell heavily against the euro.

Emiko Caerlewy-Smith at Lloyds TSB International said: “A growing pension gap is a real worry for many expats, some of whom will have to significantly scale back the lifestyle they have been used to. These worries have been particularly compounded for retired expats who draw a UK pension income, but spend in their local currency, as it means they are running a currency risk on perhaps all of their income.

“An alternative approach could be for expats to transfer their UK pension into the currency of the country in which they have retired to, or plan to retire to, thus eliminating exposure to foreign exchange fluctuations.

"Various international pension arrangements exist to serve the needs of British nationals working or retiring abroad. Your pension can be one of your greatest lifetime assets so we would always suggest customers seek professional financial advice in this area.”

New Issues By Nationwide

Nationwide International has launched new issues of its sterling Bonus Access, Bonus 1+ and Bonus 95 accounts.

The rates of annual interest on the new sterling accounts are: Bonus Access account (issue 6) paying up to 1.5%; Bonus 1+ account (issue 5) paying up to 1.6% gross; and Bonus 95 account (issue 5) paying up to 1.7%.

You can invest between £5,000 and £5 million in the accounts.

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