Wealth Check: 'I'm ready to settle down in Holland or the UK'

Dr Exter is an astronomer at the Institute of Astrophysics in Tenerife, Carnary Islands. She has lived in Warsaw and Belfast; the former was a good experience but badly paid.

Dr Exter is an astronomer at the Institute of Astrophysics in Tenerife, Carnary Islands. She has lived in Warsaw and Belfast; the former was a good experience but badly paid. As a result she has a lot of pension contributions and savings to catch up on. Dr Exter has moved frequently, because there are not many jobs in astronomy. But she wants to make her next move her last, and to settle down, either in the UK or Holland.

She wants to save so that when she does settle, she will have money to buy a house and for retirement. She is wondering whether to part-buy with her sister, who is looking to buy in Milton Keynes. She would also like to know the best options for her savings and investments, if she opts to settle in Holland.

We put her case to Meera Patel at Hargreaves Lansdown, Patrick Connolly at John Scott and Partners, and Paul Willans at Blick Rothenberg.

KATRINA EXTER, 34, ASTRONOMER

Salary: around £14,800 after tax.

Education: PhD.

Debt: None.

Property: Renting.

Savings: £500 in Royal Bank Scotland. £500 in Nationwide.

Investments: 250 shares in Alliance and Leicester. £3,800 in Scottish Widows Isa.

Pension: £2,400 with Standard Life.

Monthly outgoings: Rent £240; expenses £240; bills £15; pension £180; savings £150; holidays £120.

PENSION

According to Ms Patel, one problem Dr Exter faces is that her pensions liabilities do not match her earnings. She is currently earning in euros but setting aside money for her pension in pounds.

If Dr Exter is looking to settle in a euro-zone country, such as The Netherlands, her current pension arrangements would force her to convert her fund to euros on retirement. This involves a currency risk which simply cannot be determined at this stage. Ms Patel suggests that Dr Exter should speak to a financial adviser in the euro zone, who is also familiar with the pension system in the country she plans to settle in.

Even if Dr Exter decides to move to the UK, her pension fund is short of what she needs to ensure a comfortable retirement. She will need to increase her contributions in order to achieve this.

But Mr Connolly suggests that Dr Exter might not have her priorities right. Although pension savings are tax-efficient, they are not flexible, and as an overseas resident her options are restricted. He suggests that Dr Exter should divert the money she is putting into a pension to cash savings, for a contingency fund and for a deposit for a house.

Mr Willans warns that the Inland Revenue is proposing to remove the time limit on pension contributions for non-residents - currently five years - but also remove the tax relief. If this goes ahead, he cautions, there will be little point in Dr Exter paying into a UK pension fund. She could, of course, resume contributions if she comes back to the UK.

SAVINGS & INVESTMENT

Dr Exter holds a Scottish Widows Environmental Investor unit trust, in an Isa wrapper. Mr Willans says that the fund has underperformed against its peers and the wider UK stock market, growing just 1.9 per cent over the past year. (The FTSE All Share index has risen 10.8 per cent in the same period.) He suggests that Dr Exter should diversify her holdings.

Mr Connolly goes further, and suggests that Dr Exter should sell both her unit trust and her Alliance & Leicester shares, and use the money to fund her house purchase.

Ms Patel points out that Dr Exter does have the option of transferring her investment to another fund, even though as a non-UK taxpayer, she cannot invest further in Isas. Dr Exter has relatively little in the way of cash savings and should look to build these up.

PROPERTY

Ms Patel is cautious about the idea of investing in UK property at the present time, in the light of recent price rises. Prices in other parts of Europe have not risen as fast, so the Continent might well offer better value. Again, if Dr Exter continues to earn in euros, it is safest for her to have a mortgage in that currency.

Mr Connolly says that there is no benefit for Dr Exter in buying a house with her sister. She is exposed to a fall in property values; if values rise, how would she access the profits?

Mr Willans cautions that as long as Dr Exter lives in the euro zone, a UK mortgage would expose her to currency risks. Unless she is heading back to the UK, she should avoid a sterling mortgage, even if it is with her sister.

Advisers' views are given for guidance only.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Suggested Topics
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Collections Agent

    £14000 - £16000 per annum: Recruitment Genius: This company was established in...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

    Reach Volunteering: Trustees with Finance, Fundraising and IT skills

    Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

    Day In a Page

    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

    'If we lose touch we’ll end up with two decades of the Tories'

    In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
    Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

    The Arab Spring reversed

    Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
    King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

    Academic claims King Arthur was real - and reveals where he lived

    Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
    Who is Oliver Bonas and how has he captured middle-class hearts?

    Who is Oliver Bonas?

    It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
    Earth has 'lost more than half its trees' since humans first started cutting them down

    Axe-wielding Man fells half the world’s trees – leaving us just 422 each

    However, the number of trees may be eight times higher than previously thought
    60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

    60 years of Scalextric

    Model cars are now stuffed with as much tech as real ones
    Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

    Why are we addicted to theme parks?

    Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
    Tourism in Iran: The country will soon be opening up again after years of isolation

    Iran is opening up again to tourists

    After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
    10 best PS4 games

    10 best PS4 games

    Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
    Transfer window: Ten things we learnt

    Ten things we learnt from the transfer window

    Record-breaking spending shows FFP restraint no longer applies
    Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

    ‘Can we really just turn away?’

    Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
    Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

    Nine of Syria and Iraq's 10 world heritage sites are in danger...

    ... and not just because of Isis vandalism
    Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

    Girl on a Plane

    An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent