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; request a free guide on NISAs from Hargreaves Lansdown

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

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    BA/PM,EMIR/Dodd-Frank,London,£450-650P/D

    £450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...

    Senior Analyst - ALM Data - Banking - Halifax

    £350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

    Java developer - Banking - London - Up to £600/day

    £500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...

    Liquidity Reporting-Basel III-LCR-Bank-£400/day

    £400 per day + competitive: Orgtel: Liquidity Reporting - Basel III - LCR - Ba...

    Day In a Page

    Save the tiger: The animals bred for bones on China’s tiger farms

    The animals bred for bones on China’s tiger farms

    The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
    A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

    A former custard factory, a Midlands bog and a Leeds cemetery

    Introducing the top 50 hidden spots in Britain
    Ebola epidemic: Plagued by fear

    Ebola epidemic: Plagued by fear

    How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
    Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

    From 'Parks and Recreation' to 'Guardians of the Galaxy'

    He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
    How live cinema screenings can boost arts audiences

    How live cinema screenings can boost arts audiences

    Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
    Shipping container hotels: Pop-up hotels filling a niche

    Pop-up hotels filling a niche

    Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
    Native American headdresses are not fashion accessories

    Feather dust-up

    A Canadian festival has banned Native American headwear. Haven't we been here before?
    Boris Johnson's war on diesel

    Boris Johnson's war on diesel

    11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
    5 best waterproof cameras

    Splash and flash: 5 best waterproof cameras

    Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
    Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

    Louis van Gaal interview

    Manchester United manager discusses tactics and rebuilding after the David Moyes era
    Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

    Will Gore: Outside Edge

    The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series
    The children were playing in the street with toy guns. The air strikes were tragically real

    The air strikes were tragically real

    The children were playing in the street with toy guns
    Boozy, ignorant, intolerant, but very polite – The British, as others see us

    Britain as others see us

    Boozy, ignorant, intolerant, but very polite
    How did our legends really begin?

    How did our legends really begin?

    Applying the theory of evolution to the world's many mythologies
    Watch out: Lambrusco is back on the menu

    Lambrusco is back on the menu

    Naff Seventies corner-shop staple is this year's Aperol Spritz