The promotion of offshore bonds as an alternative to pension investing is a very credible one. tax relief in pension saving has always served as a compelling force for most people investing in the long term.

But recently the government announced reductions in tax relief on pension contributions for higher earners, for many the £50,000 annual tax free saving allowance is not a bad deal with tax relief at their full marginal rate (up to £50,000) also now up to three years unused allowance can be rolled up. Why Offshore Bonds Unlike pensions there is no restrictions on when the money can be taken out, as the cash is accessible at any time. There is no limit on contributions or withdrawals (although there is tax charge on any gain over 5% deferred withdrawal option ( if the investor becomes a non-UK resident there may be no tax on withdrawals, although there may be in their new country) The main emphasis on Offshore Bonds should be to compliment other pension savings as a balance for retirement planning. Although no up front tax relief the tax relief of the investment is the same as no tax within the funds, other than withholding the tax and no tax for the investor until his money is taken out Main Advantages

• Accessibility

• Flexibility – can be assigned to other people, subject to a lower tax rate. There is no tax on assignment so long as a gift. tax on withdrawals will be assessed on the new owner Can be put into trust as part of inheritance planning

• Contribute more than pension due to tax relief limits Don’t just think tax relief when building a retirement portfolio there are other considerations you should consider i.e. income options, underlying investment options and charges.

Also you need to consider flexibility, access, investment risk plus financial strength of provider and compensation arrangements just like you would any investment portfolio Charges As should always be the case, you Have to shop around to assess the best deals as charges can be high. Nowadays most of the big players are competitive on cost effective charges and choice of funds. Which means now the cost of offshore bonds as opposed to on shore bonds is comparable on cost and the gap has narrowed Investment risk You can construct any type of risk portfolio within offshore bonds it is the underlying asset selection rather than the bond wrapper itself which drives the level of risk investors

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