Thursday, September 20, 2012

QROPS - The Pension That Travels With You

When you have earned the opportunity to retire abroad it makes sense to ensure your pension goes on working just as hard as you did. A Qualifying Recognised Overseas Pension Scheme (QROPS) does just that by allowing you to take your UK pension with you and invest it in the fund that best suits your needs.
A QROPS frees a pension from many of the restraints that surround it in the UK and can offer huge financial benefits if planned and executed efficiently. Essentially a QROPS pension transfer allows anyone living abroad or planning to move abroad in the near future to put their UK pensions, free of UK tax, into any offshore fund approved by HM Revenue and Customs.
Control and flexibility
You control not only how it is invested but where it is invested, allowing you to choose the jurisdiction with the most beneficial tax system for your circumstances. In some cases this can mean paying no tax at all on your retirement income. A QROPS is also very flexible with a range of investment options that allow you to balance factors such as risk level against the growth and income you expect to receive. And that flexibility extends through the life of the pension, allowing you to take advantage of changes in your situation or in the economic climate.
The key difference between a UK-based pension and a QROPS is that you retain ownership of all the money in your pension fund. You do not have to buy an annuity on retirement, although you can if you wish. Instead your money is invested directly in a QROPS under an asset management plan geared to suit your requirements. And in the event of your death all unspent pension funds can be left to your beneficiaries without being taxed at source.
A QROPS is suitable for anyone living abroad with a UK pension, both expats and people from other nationalities who retire to their home countries. There is no set figure for the amount required to set one up, but experience has shown that an initial investment of over £25,000 is needed to make it worthwhile. It really comes into its own, however, with a pension fund exceeding £100,000 which will allow you to place you investment with an approved offshore portfolio bond of your choice.
As with all financial planning it is essential to seek professional QROPS advice before making any decisions. An independent financial adviser will consider your circumstances and be able to advise on whether a QROPS is right for you or whether an alternative plan such as a qualifying non-UK pension scheme (QNUPS) would be a better option.

Company’s Profile:
Whichoffshore provide professional expatriate information on QROPS pensions and offshore tax in order to help British expatriate make the most of their money. For more information, please visit -

Monday, September 17, 2012

Zurich City - Just How Expensive Is It?

Zurich in Switzerland is a cultural Mecca and renowned for being one of the most desirable cities to live in many a survey. It is also however one of the most expensive cities to live in, ranking in the top ten worldwide and in Europe, in the Xpatulator Cost of LivingRanking Survey for 2012, being surpassed only by Hong Kong and Tokyo respectively.

Costs in Zurich, like the rest of the nation are particularly high for groceries, restaurant meals out, hotels and transport, for example a cappuccino costs around 4.95 CHF / 5.34 USD, while a litre of petrol / gasoline around 1.95 CHF / 2.10 USD.  It is also compulsory for expats to pay taxes, insurances and licenses, making life in this idyllic country extremely expensive, but comparatively it is also known for its high salaries, high buying power and high quality of life.

As in most of the cities we have covered to date, Zurich is no different when it comes to high costs, high competition and limited availability of accommodation. The Household Accommodation Basket has a weighting of 30%, this means that an expatriate who earns, for example 10,000 would typically spend 3,000 (30% of 10,000) on housing. Utilities are also paid out of an expats salary and can cost up to 10% of the cost of the rental amount.

Rental prices for a secure upmarket apartment in the city centre range from 2.59 CHF / 2.79 USD for one bedroom, while a 3 bedroom family apartment can cost up to 4,700 CHF / 5,069 USD per month.  Suburban accommodation is much cheaper and ranges from 1,500 CHF / 1,618 USD for one bedroom, while a 3 bedroom family apartment can cost up to 2,700 CHF / 2,912 USD per month. 

Interestingly the taxes you pay are correlated directly to where you live, if you live in a prosperous area you will pay a lower tax rate, the prosperity is what drives the rate down in that the higher the concentration of companies and wealthy people in a location the lower the rate, thereby benefiting those individuals who are not as well-off. The resulting impact is that as much as accommodation is expensive in cities, the tax rate is less in comparison to outlying areas.

Grocery costs in Zurich are extremely high, making this city one of the most expensive in the world. 
Food prices range from:
1kg of apples – 4.89 CHF / 5.27 USD,
1kg medium sized potatoes – 2.91 CHF / 3.14 USD,
1 dozen eggs -  7.06 CHF / 7.61 USD,
1 500g white bread  - 3.05 CHF / 3.29 USD,
1 litre full cream milk – 1.57 CHF / 1.69 USD
1kg boneless, skinless chicken breast – 31.41 CHF / 33.88 USD,
1.5 litre bottle of water – 1.14 CHF / 1.23 USD.

A good idea is to shop around and not in the City Centre as this is the most expensive place for goods, go to the Shopping Malls around Zurich for the best prices. At the Supermarkets buy unpackaged goods, which are much cheaper and avoid pre-sliced, pre-washed and pre-packaged fruits and vegetables. You can drink the tap water as it is pure and safe, so leave the bottled water in the shops. Meat is very expensive, so either buy conservatively or buy the meat that is in the discounted areas. This meat is close to the expiry date but if frozen at home it can last longer. Discounts are also available for toiletries and the Supermarket branded products are usually cheaper.

Education for expats is average, however expatriate international school costs can range from 30,000 USD for primary schooling to 35,000 USD for Secondary.  
The public schools in Switzerland are of a very high standard and each canton has its own head of education, there is also a Swiss Federation for Private Schooling. So look around before you head straight into the expensive international schools.

A three course meal out for two in a mid range restaurant will also cost up to   97 CHF/ 105 USD, while a burger meal similar to McDonalds will set you back almost 13.17 CHF / 14.20 USD and a Coke / Pepsi  4.56 CHF / 4.92 USD. The price of a monthly membership to a Fitness Club will cost 97.37 CHF / 105 USD per month.

Transportation costs are high for example a one way ticket on local public transport 4.28 CHF /  4.62 USD. The normal taxi tariff starts at 7.40 CHF / 7.98 USD, while a one hour standard taxi tariff is 56.82 CHF / 61.28 USD. One litre of petrol / gasoline will set you back by 1.95 CHF / 2.10 USD.  Many people opt to travel via bicycle to and from work as it is so much cheaper, a yearly bike licence will cost up to 10 CHF / 10.78 USD, it is obligatory and covers you for any personal liability.  If you do commute, look out for discounts and special fares.

Exchange rates as at 16 September 2012 : 1 CHF = 1.07926 USD.

Personalized cost of living indexes for Zurich in Switzerland are based on the basket groups and comparison location(s) selected in the Calculators.

In terms of the hardship people are likely to experience, assessed in global terms, Zurich in Switzerland is ranked as minimal hardship with a hardship index of 10%.

Personalized hardship index premiums for Zurich in Switzerland are based on the comparison location(s) selected in the Calculators.

Denise is an Expat and Marketing Manager at a website that provides cost of living index information and calculates what you need to earn in a different location to compensate for cost of living, hardship, and exchange rate differences. The complete cost of living rank for all 13 baskets is available here.

Wednesday, September 12, 2012

Caracas: The Americas most expensive City to live 3rd Quarter 2012

The combination of North and South America cost of living rankings has the oil rich countries of Venezuela and Brazil as the most expensive places to live for expatriates in the Americas.

Caracas is the capital and largest city of Venezuela.  Caracas is the Americas most expensive place to live in July 2012, both overall and based on the cost of living excluding the housing, education, healthcare and transport baskets. Sao Paulo and Rio de Janeiro in Brazil follow a close 2nd and 3rd.  Overall Caracas, is the 5th most expensive place to live in the world and has an overall cost of living index of 135,7. Important industries in Caracas include chemicals, textiles, leather, food, iron and wood products. Caracas is a regional centre for the distribution of products.

The economy of Venezuela is dominated by the petroleum sector accounting for roughly a third of GDP, around 80% of exports and more than half of government revenues. Gold, diamonds and iron ore are mined as well. Venezuela contains some of the largest oil and natural gas reserves in the world and consistently ranks among the top ten crude oil producers in the world.

Venezuela is a country ruled by politics. Irrespective of the socialist system instituted by President Hugo Chávez, with vigilant price controls for a range of basic products and a wave of nationalizations and expropriations, life in Caracas perhaps more than in any other Latin American capital, is still defined by its reliance on one volatile commodity: 
Despite oil prices being relatively low, oil-export proceeds create arbitrage opportunities for everyone in the community. The abundance of oil further attracts companies that want to extract it, regardless of the politics. Hence the influx of these people from as far as China and Russia, including representatives from other multinational groups selling products in Venezuela, explains why even a basic apartment in Caracas can be rented for as much as $4,000 a month, with rents in some districts running to double or triple that amount.
Caracas also differs from cities elsewhere in the hemisphere in that Venezuela operates a stringent system of controls of the currency, the optimistically named bolívar fuerte, or “strong bolívar.”

*On January 2010, the government of Venezuela created a two-tiered official exchange rate system. Imports designated as "non-essential" receive a rate of 4.3 bolivares per dollar, and "essential" goods are exchanged at a rate of 2.6. There is also a third and unofficial exchange rate in the black market valued at around 6.8 bolivares per dollar (March 2010).

The Venezuelan government decides what "essential" goods qualify for the 2.6 rate. They include imports for sectors related to food, health, education, equipment, and technology; remittances to relatives settled abroad; students' academic expenses abroad; expenses related to health, sport, culture, and scientific investigations; payments to retired and resident pensioners abroad; and currency conversions related to diplomatic activities. Full details (in Spanish) can be found through the Central Bank of Venezuela.

Caracas is particularly expensive for clothing, education and groceries. For example a litre of milk costs around 1.60 USD and a loaf of white bread 1.80 USD in Caracas compared to 0.90 GBP / 1.40 USD and 1.03 GBP / 1.62 USD respectively in London. Not everything in Caracas is expensive, while a litre of petrol costs around 0.13 USD in Caracas, it can cost around 1.02 USD in New York.

The cost of living in Caracas in Venezuela is very high compared to other places with the overall cost of living being determined using the prices for defined quantities of the same goods and services across 13 Basket Groups of 780 places.

Alcohol & Tobacco costs are very high compared to other places sitting at 57th more expensive in comparison to 780 other places, for items such as alcohol at a bar, beer, locally produced spirit, whiskey, wine (where alcohol is legally sold) and tobacco related products.
Domestic Beer can cost up to $2.60, while Imported Beer is approximately $4.30 and a pack of Marlboro Cigarettes will set you back almost $5.

The cost of Clothing is also very high and Caracas is the 4th most expensive for items such as business suits, casual clothing, children's clothing, coats, evening wear, footwear, hats, shoe repairs and underwear.
A ladies suit consisting of a blazer/jacket, summer dress, pantyhose and a pair of shoes can cost between $250 – 730 while a man’s suit including blazer/jacket, shirt, jeans, socks and a pair of shoes will set you back between $350 – 430. A pair of Levis can cost up to $100 and a plain Zara or H&M summer dress ranges up to $80 - 100.
When it comes to shopping you can find the same quality clothes and appliances as in the US, but it can cost up to three times the price.

Communication costs are average compared to other places for various costs such as call charges, home telephone rental, Internet connection, mobile data costs, mobile phone contract and service provider fees. There are 389 places that are more expensive, and 390 places that are less expensive for communication.
A Prepaid Mobile Tariff for local calls (including no discounts or plans) comes to $.042 per minute, while the internet (6Mbps, with unlimited data via Cable/ADSL) can cost approximately $49 per month.

Education costs are very high compared to other places for items such as creche / pre-school fees, primary school fees, high school fees and tertiary study fees. There is 1 place that is more expensive.
An international school can cost approximately the following per Year group for annual tuition and often there is a one-time capital fee that must be paid :
PreNursery - N-PK: $10,078;
Kdg.- grade 5: $18,076;
Grades 6-8: $22,481;
Grades 9-10: $23,473; and
Grades 11-12: $24,128.

Furniture & Appliance costs are very high compared to other places for items such as a DVD player, fridge / freezer, furniture, household equipment, iron, kettle, light bulbs, microwave, television, toaster, vacuum cleaner and washing machine. There is 1 place that is more expensive, of the 780 comparable places.

Grocery costs are the highest compared to all other 780 places for items such as baby consumables, baked goods, baking, canned foods, cheese, cleaning materials, cleaning products, dairy, fresh fruits, fresh vegetables, fruit juices, meat, oil & vinegars, pet food, pre-prepared meals, sauces, seafood, snacks, soft drinks, spices & herbs.
The price for a basket of 39 items ranges between $465 - 505, and these are on the increase. A 1.5 litre bottle of water can cost $2.00, a bottle of mid-range wine $15 and domestic 0.5 litre beer $2.20.

Healthcare costs are very high with Caracas sitting at the 6th most expensive place for general healthcare, general practitioner consultation rates, healthcare/medical insurance, hospital private ward daily rate and non-prescription medicine.

Household Accommodation costs place Caracas at the 27th most expensive for items such as accommodation, apartment, flat, house, villa, rent, electricity, household fuels, household gas, water, and local property rates / residential taxes / levies.

Basic Electricity, gas, water and garbage rates for a 85m2 Apartment can cost up to $86, while a house for rent in La Lagunita with a garden, pool, barbecue, service areas, electrified perimeter, closed street surveillance and daily maintenance can cost up to $11 600/month.  

Comfortable neighbourhoods for expats to live in with a family, include Valle Arriba, Lomas de la Alameda, Campo Alegre and Santa Rose de Lima/Lomas de San Roman/Lomas de Tamanaco and la Lagunita.  Other attractive areas comprise Altamira, and Los Palos Grandes as they are close to public transportation, goods and service stores, restaurants, cafes and business centers and are also considered safe areas to live in.
Las Mercedes can be noisy, but it is safe with all the amenities in walking distance. Most children play in areas set aside for them in apartments rather than in parks. There is one large, safe park in the city, Parque del Este, which is near the neighborhood La Florida.

For pricing and availability use a real estate agent that can help you find the right area to live in - 

Miscellaneous costs for items such as dry cleaning, general goods, general services, linen, magazines, maid, newspapers, office supplies, postage stamps and stationery place Caracas at 81 more expensive, e.g. a subscription to the Economist for 51 weeks can cost up to $337.

Personal Care for items such as cosmetics, hair care, moisturizer, nappies, pain relief tablets, shampoo, soap, sun block, toilet paper and toothpaste, are very high with 47 places more expensive.
A 2 in 1 shampoo can cost $12, while woman’s cosmetic that cost the equivalent of $3 in Europe can cost $11 in Caracas.

Recreation and Culture costs place Caracas at 49th most expensive for items such as books, camera, cinema tickets, fitness/health club membership, sports goods and theatre tickets.
A monthly Club Fitness membership can cost $57 for 1 adult while a cinema ticket for an International movie can cost up to $8.

Restaurants, Meals Out and Hotel costs are very high compared to other places for items such as a business dinner, dinner at a family restaurant (non-fast food), 4 star and 5 star hotel rates and take away meal (fast food). There are 6 places that are more expensive.
A reasonable restaurant can cost between $46 – 50 for a dinner including a starter, main dish and a desert per person.  The cost of a double room at a 5 Star hotel $194 - 215, a cappuccino $21.0 and a Combo McDonalds Meal $8.53.

At 44th most expensive Transport costs are very high compared to other places for items such as car hire purchase, car insurance, car lease, car maintenance, car rental, car service, diesel, petrol, tyres and public transport. 
A round trip ticket on the Metro de Caracas will cost about 75 cents -- pricier than Mexico City's system, but a lot cheaper than some of the high dollar systems you find in the U.S. 
A normal train ticket one way can cost $0.55 while a monthly pass can cost up to $14. 
A 5km/3mile taxi ride can cost between $6 – 6.97, while the normal 1km tariff is $4.25.  Gasoline will cost you up to $0.14 per litre. Public transportation is fairly accessible almost anywhere but can be challenging with children in tow.

Personalized cost of living indexes for Caracas in Venezuela are based on the basket groups and comparison location(s) selected in the Calculators.

In terms of the hardship people are likely to experience, assessed in global terms, Caracas in Venezuela is ranked as extreme hardship with a hardship index of 40%. 

Cost of Living Rank - The Americas Locations - Overall Cost of Living & All Baskets (Highest to Lowest):
10. Canada, Edmonton

Further interesting reading on the rising costs in Caracas can be read here:

Denise is an Expat and Marketing Manager at a website that provides cost of living index information and calculates what you need to earn in a different location to compensate for cost of living, hardship, and exchange rate differences. The complete cost of living rank for all 13 baskets is available here.