Is Your International School’s Retirement Package As Strong As You Think?

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Janette accepts a job at an international school in China.

She’s thrilled by the school’s retirement package. They match what she invests, up to an amount equaling 10 percent of her annual salary. In other words, if she were paid $50,000 per year and invested $5000, the school would pitch in an additional $5000.

That’s a 100 percent annual gain.

Most international schools don’t offer savings incentives for faculty. Among those that do, few are generous enough to match contributions up to 10 percent of a teacher’s salary. But for Janette to earn the bonus, she has to use the financial firm selected by the school.

There lies the problem.

Image courtesy of pixabay.com

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Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I’m happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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9 Responses

  1. ben shearon says:

    How about paying up to the match, then investing elsewhere? So in the example, the teacher would pay 5,000 dollars into the scheme to get matched 100%, then another 5000 elsewhere into low-cost index funds…

    Is it still worse than just paying the 10,000 into low-cost index funds?

    • That’s a very good idea Ben. Best of all, however, is to talk your admin out of this arrangement, to see if they will match a portion of your contributions regardless of the platform chosen.

      • ben shearon says:

        Of course. And it my case, it’s all academic anyway, as I don’t get a match…

        Just have to hope that the public pension scheme in Japan survives in any form into my retirement.

        And because I don’t believe that is going to happen, we save 40-50% of our income 😉

  2. valferdinandcaro says:

    Hello Andrew,

    Just revisiting your articles again….

    In my company they have this voluntary SRS for foreigners which is like the Singapore CPF, where you contribute 15% and the company matches 9%. We have 3 options:

    a) don’t volunteer or opt in …

    b) opt in and have your 15% and company match of 9% SRS money invested in a FA and platform chosen by the company… which is just like the example where they have layer of fees from FA institution and mutual fund..

    c) opt in and just have your 15% and company match of 9% SRS money sitting around the SRS account.. not invested.. that means 60% gain by just getting the company contribution…

    Lastly I am still negotiating if I could invest my SRS money directly to SGX ETFs….

    What do you think? C is the next best option…

    Cheers,
    Val

    • Hi Val,

      Option C sounds best. I have a feeling that the other options could mean that you end up with an offshore pension, such as with Zurich International, Friends Provident, Generali etc. Would that be the case?

      Cheers,
      Andrew

      • valferdinandcaro says:

        Yes.. it really depends on the FA assigned… most likely FA will profile you and subscribe you to mutual funds or trust units as SG gov only allows SG products to be invested.

        Again, thank you so much Andrew for all the help…

  3. John says:

    Hi Andrew
    Following on from Val, do you have any recommendations, thoughts on how to invest SRS money. The tax break from taking an SRS looks worth it but I’m not sure you don’t negate this with the higher fees charged when you invest.

    Thanks
    John

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