Saving from Income

Whether it is retirement provision, savings for a child’s education or just general capital building the same products are generally recommended.

The most common solution proposed to expatriates resident in UAE is a life assurance based savings plan. This type of plan is offered by large well known insurance companies, often based in Europe. They give retail investors access to funds from many investment companies in one place. Examples of  companies providing these are:

Friends Provident International
Generali International
Old Mutual International
Zurich International Life

Generically the plans sold by these companies are known as ‘contractual savings plans’. Here the investor agrees to pay a fixed amount for a fixed period e.g. $1,000 per month for 10 years. There are severe penalties if an investor fails to maintain the regular contributions into the plan especially in the first few years where the penalty for cancellation could be up to 100% of the amount invested.

Some companies offer ‘non-contractual plans.’ These plans have none of the restrictions of contractual plans. They have no fixed amount of contribution or term of investment.  Charges they are made on a ‘pay-as-you-go’ basis, so you only pay for the services you use. Generally there are no exit penalties. The majority of these plans are offered by investment companies. However there are one or two life assurance companies providing non-contractual plans, these plans usually have the same investment options as the contractual plans.

Handy Hint: One of the reasons for the cost of regular savings plans being so high in the offshore financial market is the high cost of transferring relatively small sums of cash across international borders on a regular basis. One of the best ways to combat this is to save money in a bank savings account and transfer a lump sum once a year. This could be in conjunction with an annual bonus. This also places the investor in complete control of how much is saved and when.