International Pension Funds - An Alternative to Superannuation?
Superannuation within Australia provides a tax effective environment for retirement savings. However, it provides a low tax environment only within an Australian context - with both contributions and earnings (until retirement) still attracting tax. Depending upon your personal circumstances, including the host country in which you are located, whether you intend to pursue a long term expatriate career, your remuneration levels and your retirement plans - it may be beneficial for you, and your employer, to consider participation in an International Retirement Plan.
The benefits of participation in an International Retirement Plan typically include:
Before deciding to pursue such an option - whether as a substitute for Australian superannuation or as a "top up" in addition to contributing to those funds - you must receive appropriate professional advice to ensure that there is an appropriate fit for your circumstances.
If you ask why participation in these structures might be preferred to simply maintaining an overseas investment account, there are a number of tax planning advantages associated with foreign superannuation funds. If the superannuation fund is properly established then on return to Australia the member's benefits can remain offshore and continue to grow with eventual taxation on a reduced basis consistent with Australian superannuation. However, these structures are relatively complex to establish and maintain and consequently the fund balances will typically need to be substantial to offset these additional costs.