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Emirates Provident Fund and Mondial

Middle East Many expats still flying in Knoteetingham. Regional issues can be discussed here.

Emirates Provident Fund and Mondial

Old 17th Mar 2015, 14:30
  #81 (permalink)  
 
Join Date: Apr 2007
Location: Planet Janet (sand pit)
Posts: 66
Be very careful with your ETF's. I got very badly burned with them recently as the spreads can be hidden.

This morning star article is well worth reading on the subject I read it too late. Also my ETF was geared with synthetic derivatives in it which almost killed it.

Total Cost of ETF Ownership: The Bid-Offer Spread | Morningstar

I do use the C fund for some monies but it's just one investment amongst others so like everything better to spread the risk round a few different options. None of the charges on the C fund though are anywhere close though to the 2% Dropp mentions most are 0.75%pa with no spreads due to the discounts Emirates gets on them. We just need more choice of them I think.

Happy firkin investment
thefoxandfirkin is offline  
Old 17th Mar 2015, 14:52
  #82 (permalink)  
 
Join Date: Jun 2005
Location: MIDDLE EAST
Posts: 1,040
Stjuk

I would second fox's advice. Whilst there are some on here with the time, interest and financial acumen to use other investment vehicles, the C fund is a useful way to invest in equities and to build up steady growth over time. It's not a get rich quick scheme and shouldn't be seen as such. It's ideal for the majority of pilots, most of whom are pretty crap at investing generally. Especially the lazy ones!

First step is arrange a free meeting with Mondial. You get 2 per year so take advantage of it. There's no hard sell, just good advice based on what you want the fund to achieve when you retire and how much risk you're prepared to take. They'll also look at your other investments and assets to make recommendations.

One thing I will strongly advise against though is using ETF's if you're not au fait with the basics first.

Harry
harry the cod is offline  
Old 18th Mar 2015, 08:29
  #83 (permalink)  
 
Join Date: Jan 2002
Location: On the beach with a cerveza.
Posts: 1,183
If anyone wants something to read to help their investment decisions I recommend Where Are the Customers' Yachts - although it was written in 1940 it is still very relevant today at exposing the problems with managed funds.

Its very funny and you dont need to be an expert in the markets to read it.
Jet II is online now  
Old 18th Mar 2015, 12:35
  #84 (permalink)  
 
Join Date: Apr 2005
Location: Cloud 9
Posts: 89
I'm being advised to move my UK pension into QROPS - any of you financial gurus have any constructive comments on benefits and pitfalls please? Yes I am being a bit lazy but on the other hand input from ones peers can be very useful!
GA Button is offline  
Old 18th Mar 2015, 18:20
  #85 (permalink)  
 
Join Date: Jun 2001
Location: Knoteatingham
Posts: 829
Ga, As one who has been involved in QROPS for about 5 years now, may I offer the following advice.

First of all, anyone who is trying to sell you something is a salesman first and an IFA last. Very last.

If you have a government pension preserved from age 55, 60, 65, whatever, under no circumstances transfer it into a QROPS. By transferring into QROPS you are effectively gambling that you will die early. Who would bet on that?

Your IFA will tell you (in search of his commission at 7% of the transfer value) that if you die early there will be a lump sum to bequeath to your family. This is true. However, what he wont tell you is that if you live to be 95 (not unrealistic nowadays) your QROPS drawdown pension will be worth zip, nada, zilch, by the time you are 85, whereas your government pension will have kept growing at inflation rate throughout this period and will continue growing until you die.

Do not, under any circumstances, transfer a government pension scheme or any final salary pension scheme, under the vague promises of a pot of gold from an IFA. They are all salesmen and more interested in their commission than your retirement.

Last edited by BANANASBANANAS; 18th Mar 2015 at 18:31.
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Old 19th Mar 2015, 03:16
  #86 (permalink)  
 
Join Date: Jan 2002
Location: On the beach with a cerveza.
Posts: 1,183
If you intend to retire back to the UK at some point then QROPS is probably not worthwhile due to the cost and tax implications. If you are intending not to retire to the UK and your pension assets in the UK are frozen then it can be a good deal. As has been said above if your pension is a Government or an index linked final salary scheme then QROPS are probably not for you.
Jet II is online now  
Old 19th Mar 2015, 07:16
  #87 (permalink)  
 
Join Date: Nov 2003
Location: Inmate of District 11
Posts: 442
Who knows when "you" will die with a government pension in action. With QROPS you can reinvest it AND allow the whole sum to pass onto your spouse and then the children as it has now become an investment. A final salary pension will be halved for your wife and lost when you die.

Should you cash out and drop it into a QROPS or SIPP initially then you can take up to 30% cash at 55 and the annual 10800 tax free sum. If you now "INVEST" that money appropriately, the whole fund and investment will pass onto your wife (not half) AND then onto your children, ie fund not wiped like an annuity.

The key to cashing into a QROPS is to invest the funds appropriately and not waste it away and it will have been a better deal. Future government salary pensions are also not a guaranteed amount.

J
jack schidt is offline  
Old 19th Mar 2015, 11:38
  #88 (permalink)  
 
Join Date: Apr 2007
Location: Planet Janet (sand pit)
Posts: 66
Thumbs up

I looked at a QROPS for my government pension (AFPS 75) but the adviser (to be fair to him) told me I would be mad to transfer it due to the inflation linked guarantees on it. I took fee based advice which was well worth it as you say as the commissions on the QROPS can be up to 7% so at least the adviser was not conflicted.

Sure, if investments do well you might do ok from a transfer but with a government tax-payer backed scheme (depends of course which country you come from) you have certainty with a defined benefit and that's worth a lot. Also, with the QROPS your money can run out.....
thefoxandfirkin is offline  
Old 19th Mar 2015, 14:43
  #89 (permalink)  
 
Join Date: Jun 2013
Location: SA
Posts: 129
Which nationality is Qrops associated with ?
Desdihold is offline  
Old 19th Mar 2015, 14:45
  #90 (permalink)  
 
Join Date: Nov 2003
Location: Inmate of District 11
Posts: 442
Foxy, I totally agree with you but, my concern is for the other half who would be guaranteed a 50% cut in the final salary pension and then no one else benefits after that at all.

Unlike a previous poster mentioning the risk of gambling on your age of death, quite the contrary in that if you lock the cash away into property or otherwise, it will not be lost. It would not be an issue as you can receive an income from the drawn cash which you reinvested until the day you die. To be honest, keeping the final salary pension could almost be seen to be "good for you" but a poor choice for the other half.

Guessing as an example, someone aged 50 could invest the lump sum into a fund for 5 years and make the 7% fee back easily over that period (aged 55) when you would start to draw it down and put it into property or otherwise. Every year you could draw another 11k tax free and continue to pump it into a property until the fund is empty. You now receive your pension as a rent and preserve your capital to pass onto your better half and or the kids on your death.

Currently, unless you have an amazing deal and you wish to not transfer out, then you have done no one except yourself a favour.

Not an easy decision I agree and it only works if the money is reinvested. For some this would even allow an income from the money drawn out at aged 55 whereby you might receive it otherwise at 60 or beyond.

j
jack schidt is offline  
Old 19th Mar 2015, 17:32
  #91 (permalink)  
 
Join Date: Jun 2001
Location: Knoteatingham
Posts: 829
It really comes down to your appetite for risk. I strongly agree with Foxy. If you have a government or index linked final salary pension I would be most reluctant to transfer it into QROPS. Markets can crash and drastically reduce income, despite the most conservative portfolio structure. A government pension is about as risk free, fee free and guaranteed as you will ever get and it is a lot to give up.

You also talk about the consequences of a 50% cut in pension if you die soon. But supposing you and your wife live to 95 and the QROPS dries up in your 80s - as it is designed to do. Where would you and your wife be then.

If you haven't already done so, have a look at the GAD rates for male/female v age and it will paint a pretty picture into your 70s and will then get progressively worse and worse. Once you reach the actuarially determined age of death your QROPS will be completely drawn down and provide no income whatsoever - which is rather inconvemient if you are still alive.
BANANASBANANAS is offline  
Old 19th Mar 2015, 17:48
  #92 (permalink)  
 
Join Date: Nov 2003
Location: Inmate of District 11
Posts: 442
What about using the money over a decade or more to part invest in property for an income? This will preserve the pot indefinitely would it not? Again, if the rental return is fair then your spouse would continue to receive the same amount should you be the first to go?

The main thing here becomes the consideration of trying to preserve the fund on yours and your wife's death. There is never a winner who has never taken a risk.

J

Last edited by jack schidt; 19th Mar 2015 at 17:52. Reason: Second paragraph added
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Old 19th Mar 2015, 18:59
  #93 (permalink)  
 
Join Date: Jun 2001
Location: Knoteatingham
Posts: 829
Its true that there is hardly ever a winner who has not taken a risk but there are millions of losers that have.

Like I said, ultimately its down to your appetite for risk.
BANANASBANANAS is offline  
Old 20th Mar 2015, 08:47
  #94 (permalink)  
 
Join Date: Jan 2002
Location: On the beach with a cerveza.
Posts: 1,183
Originally Posted by jack schidt View Post

Not an easy decision I agree and it only works if the money is reinvested. For some this would even allow an income from the money drawn out at aged 55 whereby you might receive it otherwise at 60 or beyond.

j
Very true - that is a key attraction of the scheme and as I am retiring early I shall be making the most of it.
Jet II is online now  
Old 25th Jun 2015, 10:38
  #95 (permalink)  
 
Join Date: Jun 2003
Location: Global
Posts: 58
5 Year rule..?

Hi All
Just wondering if the 5 year Prov Fund rule starts from the Date you join EK or does it start when you start payments to Mondial which is generally 3 months after your start date with EK...? So is it really 5 years and 3 months...?

PM me if it suits better..!

Thanks in advance
Ride On is offline  
Old 25th Jun 2015, 14:20
  #96 (permalink)  
 
Join Date: Sep 2007
Location: europe
Posts: 110
Hi Ride On

Vaguely recollect Mike G from Mondial saying don't forget the three months if you're waiting for 5 or 7 years.
Enos is offline  
Old 26th Jun 2015, 14:15
  #97 (permalink)  
 
Join Date: Jun 2003
Location: Global
Posts: 58
Thanks

Hello

Many thanks for the response.



Ride On
Ride On is offline  
Old 26th Jun 2015, 14:39
  #98 (permalink)  
 
Join Date: Sep 2007
Location: europe
Posts: 110
Hi Ride on

Tried to PM you, not sure if you got it.

Definately call Mondial, the company pays for us all to visit them twice a year, they'd be happy to talk to you and explain right down to the last dollar how much you'll get.

The guys are very approachable.
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