Regular contribution plans for international investors and expatriates

Regular contribution plans are investment plans to which an individual will make regular financial contributions over the life of the plan. They can be used as part of a retirement planning process or to plan for future financial commitments.

The underlying investments for regular contribution plans will vary depending on the provider. For example, regular contribution plans can use a portfolio of funds or track specific stock market indices.

Typically, regular contribution plans will have a specific term – i.e. investments are made into the plan during that term, often as regular payments. Money becomes available at the end of the term. For example, a plan might have a 10 or 15 year lifespan.

Some regular contribution plans will allow a wide range of investment options to choose from, and the ability to switch between investments. This provides a degree of flexibility, allowing allocation money to markets.

For UK nationals working overseas, regular contribution plans can take the form of pension schemes recognised by the UK tax authorities (HMRC). In this case they will have to be certified as Recognised Overseas Pension Schemes (ROPS). Such regular contribution plans often suit UK pension scheme members planning to move abroad and come with additional benefits such as choice of underlying currency, and the ability to leave pension assets to beneficiaries on  death.

If you are planning to spend five years or more outside the UK, then regular contribution plans can potentially benefit from additional tax mitigation – for example relief from UK inheritance tax.

Regular contribution plans can be structured offshore, for example, using an offshore trust to ensure separation of the asset management function of the plan (day to day investment management) and the safe-keeping or custody.