lindy-lou

This is my first post to this forum, although I have been monitoring the site for sometime. Hopefully we are at the last stages of the visa process and the realities of moving across the globe are hitting home fast.

Anybody any advice on what to do with endownments, do we sell or keep running? Would we have to pay tax to Oz government on maturity?



Lindy-lou

lee/jane

any thing over 10,000 u have to declare, so what we intend to do is use them as a pension, when the exchange rate is better and cash them over here ( uk ) so that meens taking a holiday and cashing the money in and then taking it back saves on taxs etc.
illligal yes

jockney

Hi,Before you do anything you need to find out how your endownments perfoming.A lot of them are going to get a lot worse in the years to come.The daily mail has been highlighting the good(not a lot) and bad performers you could check it out on this is money.co.uk.Bonuses on completion have been falling with final payouts with some companys down 50% in the last few years what will happen in the next few years nobody knows. jockney

Ozzy dog

I've just had a letter with FSA fact sheet advising that my longest serving endowment is running at nearly 50% short! Can't believe it, another 13 years to run on it.

The one thing I will be getting is advice from a financial adviser; the fact sheet encourages to act now! To claim I've been miss-sold, which would be right. When I got my first mortgage endowments were very encouraged with the promise that they wouldn’t only pay your mortgage at the end of the term - you were also told there would be a lump sum for a holiday or new car. My how things have changed. I was going to keep my endowments running as a sort of pension; now this one in particular is barely paying out what what's been paid in.

I really wouldn't want to go it alone as far as investments and pensions when we (hopefully) get to Oz, look what happened when I got my first mortgate!

A very hacked off Ozzy Dogs wife Tracey.

magnetman

1) It might be hard to keep up payments in GBP if you are earning AUS$
2) You could make the policies 'paid up' and sit and wait for them to mature BUT
3) You will have to report the current value every tax year to the tax man and the Aussie goverment will tax you on the increase in value every year, even though you won't have your hands on the money until the end of the term. So if Norwich Union or whoever you are with says that the value of your policy has gone up by 1000GBP one year (say $2400) you will have to find up to 48% of this sum to pay in tax for that financial year (depending on your tax rate of course). When the policy finally does mature, the whole sum is taxable in Australia, less the amounts of tax you have paid each year on the increase in value since arriving in Australia. Once again, if you have a higher tax rate, you are really screwed. The tax free lump sum you have dreamed of for 25 years becomes a very poorly performing investment, even if the fund itself performs well (not that any are performing well at the moment).

I don't think there are any personal tax free investments like endowments, ISAs, PEPs in Australia.

You might wish to cut your losses and cash the policies in. I know it goes against all advice you would receive in the UK, but the Aussie tax is the deciding factor.

dracupg

First of all, I would see if you have groups for a complaint. Look at www.endowmentaction.co.uk a site set up by Which to make the process easier. If you were sold a policy and it hasn’t done well (i.e. all of them!), then you may have grounds for a complaint.

Say that you were not properly informed of the risk associated with the policy. This is a good one, as it is very difficult for the company you bought it from to prove this wasn’t the case, as it is usually something skipped over in the sales pitch and seldom referred to in any official application documentation. If you are lucky, the company may even have lost your original records.

If you are looking to cash in your endowment, get a couple of quotes from third party endowment agencies like http://www.about-selling-endowments.co.uk/ There are a few about, have a look on Google. You can usually get a better quote from them than if you surrender it back to the company, but they are usually only interested in With Profits policies from the major life houses. You will need to get your current life company to provide you with a current surrender valuation before you can get a quote from the third party guys.

It is likely that endowments will not perform that well over the next few year as most of the life companies have switched from equities into cash. This is fine to reduce losses in a bear market, but when(if?) the market picks up they will not get the returns that equities would bring.

You should also take into consideration your life cover as well. If the policy is old, remember that the same amount of life cover will cost you more if you take out a new policy now.

Kiwipaul

I had a Barclays Endwment policy to pay off my mortgage in the UK. When I left I just turned it into paid up policy and was told how many units I owned. I don't pay anything and each year they send me a statement of it's current value.

I can also check it's value by checking the fund price in the Telegraph. If I sell it whilst in Australia I will have to pay CGT on it's increase in value since I arrived in Australia, but it pays no dividend so I don't have to declare it.

On the tax form it does ask if you own assets of greater value than $50,000 outside of Australia, it dosn't ask what these assets are or the total value just if they are greater than $50,000(not too sure of the figure could be less).