Regular Savings Plan for Expats: Five Questions to Ask Before You Sign

A regular savings plan can look like a simple way to save from abroad. But the charges are often heavy in the early years, and leaving early can cost you a large share of what you have paid in. These five questions show what to check before you sign.

This guide is general information, not personal advice. Plan terms differ, so read the key documents and ask for answers in writing.

What a regular savings plan is

A regular savings plan is a long-term savings contract with a life company. You commit to pay a set amount each month or year, usually for 10 to 25 years, and the money is invested in funds. Plans for expats are often sold offshore, in sterling, US dollars or euros.

The commitment is the point. Charges are usually set up on the assumption that you will keep paying for the whole term. If you stop early, the plan can look very different from the sales illustration. Our page on regular savings plans for expats covers how the products work. This guide covers what to ask before you commit.

Question 1: What is this money for, and when will I need it?

Start with the goal. A plan that runs for 15 or 25 years suits money you will not need. It does not suit an emergency fund, a house deposit in three years or school fees due next year.

Ask yourself:

• Will I still be abroad, and still earning, in year 10?
• What if I lose my job, move country or retire early?
• Is there other money I could use first if I need cash?

If you might need the money within a few years, a flexible account or a simple investment platform may fit better. Our guide to school fee planning shows how to match savings to a known date.

Question 2: What are the total charges, year by year?

This is the question that matters most. Do not accept a single percentage. Ask for a written list of every charge and when each applies. Typical items include:

• an initial or establishment charge, sometimes spread over the first years
• an annual management charge on the plan
• policy or administration fees
• fund charges inside the investments
• adviser charges or commission, which may be built into the plan
• switching or dealing costs

Ask for the charges in pounds, not just percentages, for years one, five, ten and at the end of the term. Ask which charges continue if you stop paying.

Reading a key features document is useful, but it does not replace the question. If the adviser cannot give you a clear year-by-year picture, treat that as a warning sign.

Question 3: What happens if I stop or reduce payments?

Life changes. Ask the provider in writing what happens if you:

1. reduce the monthly amount
2. pause payments
3. stop altogether and make the plan paid-up
4. restart later

Some plans let you reduce or pause without penalty after a set point. Others apply a penalty, or carry on charging fees on a plan that has stopped growing. A paid-up plan can keep charging while your money stays invested, so ask what the charges are in that case.

Ask also what happens if you lose your income, leave your country or become unable to pay.

Question 4: What would I get back if I surrendered early?

Ask for the surrender value at each year, in writing. That is the amount you would receive if you cashed in. In many plans the early figures are much lower than the total you have paid in.

Look at three things:

• the surrender value at years one, three, five and ten
• whether a loyalty bonus or commitment reward is paid only if you stay to a fixed date
• when the exit charges end, because waiting may cost less than leaving now

Our review pages show what these tables look like for named plans, including Zurich Futura, Utmost Focus and Hansard Ascend. For a plain explanation of how early exit works, read our guide to early exit charges on regular savings plans.

Question 5: In which currency, and who is being paid?

Currency. Most plans are in sterling, US dollars or euros. If you earn and spend in a different currency, the exchange rate affects both what you pay in and what you get out. Ask why the plan uses that currency, and whether you can change it.

Who is paid. Ask how the adviser is paid. Some are paid commission by the plan provider, which is recovered through the charges. Others charge a fee directly. Neither is automatically wrong, but you should know which applies, how much it is and whether it continues if you stop paying.

Ask also whether the adviser is authorised to advise in the country where you live and where the plan is sold. Check the register of the regulator yourself.

A worked example

This example is illustrative and uses invented round figures.

A 38-year-old expat signs up to pay £500 a month for 20 years, after a presentation that shows the plan growing steadily. Three years later, after a job change, she stops paying. She has paid in £18,000.

If the early charges have been heavy, the surrender value shown in the plan documents may be well below that. In this illustration it is £9,000. She now faces a choice: surrender and take the loss, leave the plan paid-up and accept continuing charges, or restart payments when she can.

If she had asked Question 4 before signing, she would have seen the figure and could have chosen a more flexible product or a smaller commitment.

Red flags

Be careful if the adviser:

• will not give written charges and surrender values
• says the plan is risk-free or guaranteed to grow
• pushes you to sign at a meeting
• compares the plan to a bank deposit
• cannot say how they are paid
• advises you to cancel an existing plan to start a new one without explaining the cost

If something feels rushed, take the documents away and read them. Most plans have a cooling-off period after signing, but its length varies. Check it before you sign and check whether you would get back everything you paid.

What else to consider

If your goal is long-term investing, other routes may cost less or be easier to leave, such as a regulated investment platform or a pension. They have their own rules and tax treatment, so take advice. Our guide to pensions for expats explains one alternative. If you hold a UK ISA, see whether expats can keep or use a UK ISA.

Checklist before you sign

1. Write down the goal and the date you may need the money.
2. Get a written list of all charges, in pounds, by year.
3. Get a written answer on reducing, pausing or stopping.
4. Get a written surrender value table.
5. Confirm the currency, who is paid and the cooling-off period.
6. Take the documents away and read them before you sign.

For the wider picture, see our expat savings hub.

Frequently asked questions

What is a regular savings plan for expats?

It is a long-term contract where you pay a set amount each month into investment funds, usually for 10 to 25 years, and often through an offshore life company.

Can I stop paying into a regular savings plan?

Usually yes, but the plan may become paid-up, keep charging fees or have a lower surrender value. Check the terms before you sign.

What is a surrender value?

It is the amount you would receive if you cashed in the plan. In many plans it is much lower than your total payments in the early years.

Are regular savings plans a good idea for expats?

It depends on your goal, how long you can commit and the total charges. They suit people who will keep paying for the whole term, not those who may need the money early.

How do I check how my adviser is paid?

Ask in writing whether they receive commission or a fee, how much it is and whether it continues if you stop paying.

This article is for information only and is not financial advice. Plan terms and charges differ and can change. Read the documents and take regulated advice before you commit.