Questions Of Cash: 'Should I go Dutch, or put my savings in the UK?'


Q I am British, working for an American company in the Netherlands. I am 39, earning €52,000 (£36,000) and own a flat in Edinburgh which is rented out. The mortgage is for £50,000 and the property value has risen to £180,000. I have three company pension schemes in the UK from previous jobs. I joined the Dutch company pension scheme a year ago. Where should I put my pension savings, here or in the UK?
AW, Netherlands.

Q I am British, working for an American company in the Netherlands. I am 39, earning €52,000 (£36,000) and own a flat in Edinburgh which is rented out. The mortgage is for £50,000 and the property value has risen to £180,000. I have three company pension schemes in the UK from previous jobs. I joined the Dutch company pension scheme a year ago. Where should I put my pension savings, here or in the UK? AW, Netherlands.

Clive Fathers, senior manager of employer solutions at the accountant Grant Thornton, says: "The key is to decide where you intend to stay in the longer term. If you expect to return, your pension and savings strategy should be based on this assumption. If you intend to settle overseas you should make decisions taking into account the tax structure of that country.

"This should influence where to invest, because long-term saving schemes (pensions for example) are usually tax-effective only in the country where they were set up. European Court judgments may ease this restriction. You could consider making voluntary Class 2 contributions (£2 a week) to the UK state system to protect your state pension.

"If you move again, take advice. If you lived in your property as your home before you left for your assignment and reoccupy it on your return, the entire period of absence would qualify for capital gains tax (CGT) relief when you sell.

"Special rules apply where individuals do not occupy their home because they are on an overseas assignment. Under normal circumstances, provided the individuals live in the property as their home, before and after the assignment, the entire period of non-occupation qualifies for relief under the principal resident provisions.

"Many individuals come back to the UK and sell and buy a property without reoccupying, exposing a portion of the gain to CGT, which could be avoided if they reoccupied. You might consider selling the property before you return to the UK to avoid CGT, but a comprehensive review of your situation is necessary before determining if this is tax-effective, in the UK and the Netherlands."

QYour Deals of the Week has highlighted ING Direct's 4.3 per cent instant access savings Account. I wish to put £20,000 into a high-interest, no-risk savings account. But the ING Direct call centre cannot tell me if deposits would be protected by the Financial Services Compensation Scheme (FSCS) (100 per cent of the first £2,000 and 90 per cent of the next £33,000 guaranteed). I also note ING Direct is based in the Netherlands with a UK operation known as ING Direct (UK) NV. ING Direct (UK)'s terms and conditions state: "You may be entitled to compensation from FSCS under the Depositors Protection Scheme". These terms also state that ING Direct (UK) NV may merge into the parent company ING Direct NV in the Netherlands.

Does the UK depositors' protection scheme apply to their UK operation? And would it apply if the UK operation was moved to the Netherlands' parent company? WB, Merseyside.

ING Direct is covered by UK compensation arrangements. The parent company is covered by the Dutch compensation scheme to €20,000. Any losses above that up to the UK maximum would be met by the FSCS. This would still apply if the UK subsidiary were merged with the Dutch parent company under EU compensation passporting arrangements, provided the bank remained authorised by the Financial Services Authority.

Q I have an instant access account with Coventry Building Society which I tried to close three weeks ago. I have written twice more and phoned. It insists I must use a password to close the account, but I cannot recall having one. Even if I did, why aren't my letters sufficient to close the account? RC, by e-mail

Coventry Building Society accepts it has not provided you with an adequate standard of service. It does insist your account is a phone-based one, which relies on passwords. It is in the terms and conditions that accounts can be closed only by use of the password. But in your case it has agreed to comply and has sent you a cheque for the balance.

Q I have had car insurance with Norwich Union for years, paying monthly. In May, it took the full annual amount of £237.83 from my account and in June the monthly premium of £18.30. I have tried to get this back but they said they have to "clear it with their underwriters" first.

Then it will be by cheque which will take four or five days to clear. Why can't Norwich Union return my money by direct transfer, the way they took it out? I will cancel with them as soon as I have their cheque because I have found a company much cheaper. PP, by e-mail.

Norwich Union admits it made mistakes and apologises. It is sending you a full refund, its administration fee and £20 compensation.

* If you have questions about personal finance, write to Questions of Cash, 'The Independent', 191 Marsh Wall, London E14 9RS, or e-mail cash@independent.co.uk. We regret that we can reply only to letters published here. Please send copies, not originals, as we cannot return material.

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