Providence Compass Saving Plan Review

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Think of the Providence Compass Saving Plan as your personal guide to finding that elusive pot of gold at the end of the retirement rainbow.

Most of us want to save, but don’t know how much we need to fund a comfortable retirement.

Giving up work, how long you will spend in retirement and working out just how much your life after career will cost are unfathomable variables. As much as you want to know, you never will, so you must rely on statistics and other research to try and find a satisfactory answer.

Many decide stashing as much cash away while working at least builds up a pile of money that gives retirement options.

But that doesn’t work for professional expats who are almost continually on the move between countries and financial jurisdictions.

Saving plans like the Providence Compass Saving Plan are designed for people on the move who need a savings anchor that’s safe and accessible at anytime from anywhere.

Review of the Providence Compass Saving Plan

The Providence Compass Saving Plan comes with a list of benefits for expats wanting to build a financial nest-egg for retirement.

The online dashboard puts you in control from day one, with 24/7 secure accessibility from anywhere with a smartphone or internet connection.

The dashboard offers an overview of your account, including where your savings are invested and details of payments in or out.

Expats can decide how often, how much and for how long they want to save at a click of a button. Switching funds is just as easy – and importantly free.

As a bonus, the Providence Compass Saving Plan dashboard updates fund values daily and connects savers to a wealth of investment knowledge via a library of fact sheets and data that give a useful comparison of likely fund performance.

The aim of the plan is to give expats a structured savings path that suits your risk profile over the medium to long term. Think between five to 30 years.

The Providence Compass Savings Plan is tailored to suit expats, with the option of regular or single premium payments.

About Providence

Providence is a fast-growing life insurance company providing expats with a new twist on saving and investing.

Fund managers are plugged in to a network of big names, such as fund managers Jupiter, Invesco and Fidelity.

Other well-known financial brands working with Providence include investment partners Barclays, Morgan Stanley and UBS.

The company is based in the thriving economic centre of Mauritius and fully regulated by the government’s financial watchdog, with Dubai administration offices in the United Arab Emirates.

Providence is an expat-centric company, developing products and services to help professionals on the move. The anytime, anywhere business model is based on a significant technology investment offering real-time account information.

What is the Providence Compass Saving Plan?

At the heart of your savings strategy is a whole-of-life insurance policy running for a fixed term.

When the policy term is up, savers have three options:

Keeping saving

The policy stays alive while money is going in, but must end when the saver reaches their 75th birthday. For a joint life, first death policy, the age limit relates to the older life, and for a joint life, second death plan, the age limit runs alongside the younger life.

Take your money

Choose to take a regular income or withdraw some or all your cash

Stop saving

When the policy term ends and no instructions are received about making further payments, the Providence Compass Saving Plan converts to fully-paid up.

Benefits for expats

The Providence Compass Saving Plan solves a dilemma for many expats – where to keep money while on the move.

Financial services are supervised separately in each country, so when moving to another country, expats either lose any tax benefits that come with their saving on becoming non-resident or lose out on growth by paying high charges for early encashment of their accounts.

Providence is an offshore savings plan and investment bond provider, so an expat’s cash always remains in one place regardless of where and how often they switch countries.

Besides that, the Providence Compass Saving Plan offers many more advantages to expats, including:

  • Access 24/7 from anywhere with an internet connection
  • Boost your regular saving by up to 6% 
  • Comes with a 5% loyalty bonus paid after 10 years to regular savers – with a 5% bonus following every five years up to the plan’s 30th anniversary
  • Comes with flexible saving amounts, subject to minimum single and regular premium levels
  • Select one of five major currency denominations
  • Free fund switching
  • Multiple premium holidays of up to 12 months are optional throughout the life of the policy
  • Take your cash through regular drawdowns, part surrender or full surrender of the policy
  • Take your pick of more than 100 investment funds
  • Pays a cash lump sum to named loved ones should the saver(s) die 

Policy term

The Providence Compass Saving Plan will tie up your money for a minimum five years, but for no longer than 30 years depending on your age at the start and finish of the plan.

The policy comes with three life assured options:

  • Single life – starting at 18 years old and ending at a maximum age of 75 years
  • Joint life, first death – starting at 18 years old and ending at a maximum age of 75 years for the oldest saver
  • Joint life second death – starting at 18 years old and ending at a maximum age of 75 years for the youngest saver

For example, a saver aged 18 can take a policy that ends when they are 48 years old, while a 48 year old has the upper age limit of 75 years, giving a maximum policy term of 27 years.

An expat can only take out a 30 year savings plan up to the age of 45 years old, while 70 is the oldest age a plan can start.

Multiple currencies

Expats can choose to save in one of five major currencies –

  • US dollar (USD)
  • Euro (EUR)
  • GB Pounds (GBP)
  • Australian dollar
  • Japanese yen

Each currency comes with different minimum premiums, but there are no maximum premiums. 

Premium levels can be increased at any time by at least 5%.

They can also be decreased, but must be the same or more as the minimum levels in the tables below.

Minimum regular premiums

Amounts in brackets are minimum premiums for plans lasting 10 years or less

CurrencyMonthlyQuarterlyHalf-yearlyYearly
US dollar300 (600)900 (1,800)1800 (3600)3600 (7200)
British Pound200 (400)600 (1,200)1200 (2400)2400 (4800)
Euro270 (540)810 (1620)1620 (3240)3240 (6480)
Australian dollar288 (576)864 (1728)1728 (3456)3456 (6912)
Japanese yen40000 (80000)120000 (240000)240000 (480000)480000 (960000)

Minimum premiums for each fund

Minimum fund premiums dictate the number of funds a saver can invest in at their level of contribution.

The Providence Compass Saving Plan only allows savers to invest in up to 10 funds at a time, so a US expat wanting to invest across 10 funds would have to pay in at least $600 a month to do so.

CurrencyMonthlyQuarterlyHalf-yearlyYearly
US dollar60180360720
British Pound40120240480
Euro54162324648
Australian dollar58174348696
Japanese yen8000240004800096000

The main currency at the outset of plan and cannot be changed, but different currencies can be set for underlying funds.

Making payments

Savers can make regular payments by debit card, credit card or standing order monthly, while quarterly, half-yearly or annual payments are accepted by credit card standing order or electronic transfer.

Single payments are made by electronic transfer.

Minimum savings limit

The minimum saving is US$300 a month, which adds up to $3,600 a year for plans lasting more than 10 years.

The amount doubles to $600 a month for shorter plans – or $7,200 annually.

Bonus payments

The Providence Compass Saving Plan boost savers with bonus payments:

  • Annual bonus – A generous 6% top-up of regular saving premiums
  • Loyalty bonus – Paid after 10 years – but not added to plans with a term of 10 years or less – and then every fifth year that adds up to 5% of regular premiums saved in the year before the bonus date

How the loyalty bonus works

Savers could pick up an $18,000 bonus over the life of a plan, assuming a regularly monthly premium of $1,000 over a 30 year term

10 years15 years20 years25 years30 years
Bonus paid:$6,000$3,000$3,000$3,000$3,000
Cumulative bonus:$6,000$9,000$12,000$15,000$18,000

Assuming the same $1,000 a month premium over a 30-year term, the annual bonus would add (paid at 6%) $740 a year, or another $22,200 over the life of the plan.

Together, bonuses could add up to more than $40,000.

Flexible funds

The Providence Compass Saving Plan lets investors choose from around 100 funds.

Funds are designed to match risk profiles, so include low-risk, managed and mirror funds.

Expats can self-manage their investments or appoint an adviser to manage their funds for them.

Charges

The Providence Compass Saving Plan has a range of charge – but what you pay depends on your personal tailored plan structure.

This includes how often you pay in, the funds you choose to invest in and several other factors.

The company charges a policy administration fee based on 2% of the total amount of premiums due each year. The fee reduces to 0.3% after 10 years of saving.

A policy fee is also deducted, based on the frequency of premiums, ranging from $3 a month for monthly premiums to $36 for annual premiums.

Other deductions can apply, including investment administration charges, establishment charges and early surrender charges.

Who can start a Providence Compass Saving Plan?

The Providence Compass Saving Plan is open to individual savers, companies or trusts. 

Policyholders and lives assured when the policy starts must be no younger than 19 years old next birthday. The maximum start age is 70 next birthday.

Compass is not open for savers who are: 

  • Expat US taxpayers 
  • Resident US taxpayers 
  • Japanese nationals resident in Japan 
  • Residents of Mauritius 
  • Residents of certain European countries

Tax

Any tax due depends on the tax residence and domicile of savers or lives assured under the policy.

Anyone planning to start a policy should take advice from a tax professional regarding the tax status of money held in the plan.

Summary

Depending on a saver’s tax status, the Providence Compass Saving Plan offers a tax-efficient savings vehicle that can run alongside rather than replace a pension. 

The plan is designed to overcome financial obstacles that can complicate expat finances as they move between countries on assignment.

Flexibility is also the name of the game, with options to stop, start, increase and decrease premiums that can ease and increase financial commitments in line with earnings and contract breaks.

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