Remember your good old days

30th May 2003 at 01:00
Being a pensioner can seem a long way off but it's never too early to invest in your retirement, writes Martin Whittaker

For young teachers considering an ex-pat career in international schools, retirement will usually be the last thing on their minds. Amid all the heady excitement of moving abroad for the first time, the dull, routine things in life such as pensions, national insurance or health cover will probably be fairly low on the list of priorities for someone in their twenties.

"There are teachers who are up for a challenge, adventure and excitement," says Therina Mulder-Reynolds, director of Worldwide Education Service, an international education consultancy.

"I did it myself all those years ago. My headteacher in London said, 'What about your pension?' I was 27 and I said: 'Stuff the pension - I'm off to the Sultanate of Oman.'

"But you may have invested some years in this, you want to protect it, you may come back. You just don't know. And it's a shame if just through ignorance people don't make some provision. It just seems eminently sensible to do so."

While the idea of being sensible in your mid-twenties may seem more foreign than the parts you're heading for, some teachers abroad are paying the price for living for today rather than providing for later in life.

One correspondent working in the United Arab Emirates wrote, somewhat ruefully: "A lot of us 'career' ex-pats have pension problems, so do something early. Health, too, is a problem - so think about keeping up national insurance contributions.

"Also, we regret not keeping our endowment going after we sold our house the first time we went abroad. It would be paid off by now."

What happens to your teachers' pension should you decide to spend some years working in international schools? Those in the Teachers' Pension Scheme (TPS) in England and Wales who leave pensionable employment to work abroad have several options.

One is to leave your pension credit in the TPS. If you do return to the scheme before the age of 60, the service you have already put in would aggregate with future pensionable employment. Another option is to transfer your credit to another pension provider.

Where a person has emigrated and therefore has no intention to return to the UK, a transfer value may be paid to an overseas pension scheme, although there are strict conditions attached to such transfers. Or you may, subject to certain conditions, pay combined contributions - where you pay the teacher's and employer's share of the contributions.

Capita Teachers' Pensions, which administers the Teachers' Pension Scheme, publishes leaflet 735, which gives further details about these options and which should be handed to all early leavers by their employer. Leaflet 735 can also be downloaded from The leaflet also includes a "ready reckoner" which members of the scheme can use to estimate retirement benefits.

Many international schools do offer pension schemes. For example, ECIS, the European Council of International Schools, offers international teachers a number of insurance, pension and investment plans under-written by big companies like HSBC and BUPA.

The ECIS pension plan has members in some 140 schools worldwide. The retirement funds have the advantage of growing in a virtually tax-free environment, and offer benefits that are untaxed at source. The pensions are also portable - Jthey can be moved from one ECIS school to another and from country to country.

But overall the picture with international schools is variable, says Ms Mulder-Reynolds.

Increasingly these days, schools seem to prefer to offer a total package which takes into account teachers wanting to make a pension contribution rather than isolating it and earmarking it for your pension. Some schools also give a bonus on leaving for senior-level posts.

"I would say that people have to be discerning," she says. "They need to look at their whole package, contact whatever association they belong to and get expert advice, work out what they need to pay, taking note that they won't get an employers' contribution any more, and then decide whether the package they are being offered meets their needs."

According to Susan Bailey of JBI international insurance brokers, a firm specialising in cover for international schools and military personnel, often young teachers have not done their homework on the financial practicalities of moving abroad.

"Although they should be aware of this as adults, some teachers go from school to university to teacher training college, not necessarily aware of the business side of life," she says.

She advises ex-pat teachers to pay and maintain class two national insurance contributions, a rate paid by the self-employed.

"It maintains your contribution level so that you are at least guaranteed your full state pension when you retire," she says.

"If you're away for 15-20 years and haven't been paying national insurance, it can make a big difference to your pension when you're 65."

Another practicality to think about before you jet off is the cost of health care in your new country. Many schools include health cover in their job package, but these can vary. Some might cover you just for emergency hospitalisation, while others might cover anything from the cost of childbirth to routine dental insurance. Susan Bailey says: "My advice would be before you go abroad, try to find out in writing from your prospective employer whether they are going to be covering you for health insurance andor possibly life insurance.

"Ask them whether they are going to pay the premium or whether you're expected to pay it, how much it's going to be and how it's going to be deducted from your salary if you're going to be expected to pay.

"And get that sorted out before you go rather than find out when you get to Hong Kong that there's the Sars virus going around, that you've caught it, that the bill's going to be $5,000 and you're not covered."

Next month: The impact of Sars

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