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Many unhappy returns from pension funds

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HONGKONG, with its low tax base, good salaries and perks packages, has given most expatriates more money than they had hoped of earning back home.

For the financial planner it has given rise to a multitude of financial products and packages aimed at giving the expatriate peace of mind for the future.

Pension plans are a key ingredient of most packages put together by financial advisers. On the surface they offer extremely good returns, but scratch the surface, just a little, and you could find that with ''hidden'' costs the financial adviser has alsomade a killing . . . at your expense.

There are a multitude of retirement or pension plans on offer, many of which are based in attractive tax-free havens such as the Isle of Man or Guernsey.

Perhaps it is a bit of a misnomer to call them pension plans. In reality they are nothing more than unit trust saving schemes with both an additional layer of management fees and heavy up-front charges. And it can be argued whether any additional benefits are received for the substantial increase in costs.

Most funds, whether pension plans or unit trusts, charge an initial fee of five to seven per cent, which gets you into a fund, and an annual management fee of between one and 1.5 per cent. But that is where the similarity ends.

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