Some expatriates are fortunate enough to be able to receive a company pension the benefits of which have to be determined by the individual expatriate on a personal basis when they have all the information about the scheme to hand. However, one question will then immediately arise, i.e., is a company pension better than a private pension? And the answer is relatively simple – a company pension may well be beneficial and advantageous to the individual expat, however, it should not be seen as an alternative to a private pension.
Private and company pensions may have similar benefits ultimately – but through the utilisation of both, or at the very least a private and personal pension, an expatriate has greater potential control over their retirement savings scheme. Additionally, the utilisation of both types of pension allows an expat to diversify their retirement savings.
To illustrate this fact we draw on the case study of an expatriate living in the Far East who was opted in to his company pension. As something of a second thought this 58year old man had also decided to take out a small private pension, but he paid little heed to it. His company pension was of course made up of company stock, and when his company suffered in the recent stock market turmoil and the value of the stock fell by almost 50%, he not only found himself out of a job approaching retirement, he also discovered that the value of his company pension had dropped significantly and now has little chance of recovery. His private pension meanwhile has stayed the course and made good return, but it is far smaller than he would have wished, and he sincerely regrets not having contributed more to this instead of his company pension.
This is of course an extreme and tragic situation, and one ideally you will never have to face – it does however, graphically and clearly illustrate why one should never confuse the choice between a company pension and a private pension to be an ‘either’ ‘or’ choice.