Malaysia

Your Money

In Malaysia there are organizations called Islamic Banks. These are banks which operate according to Islamic principles. They have conventions and practices which adhere to the Muslim philosophy. Compared with conventional “western” banks the major difference is that they observe the Islamic prohibition of usury. For retirees from non-Muslim countries it is probably best and easiest to deal with the branches of western banks that operate here in the banking market place alongside Islamic banks. The Central Bank of Malaysia provides a list of commercial banks. However, on this list of banks there is no indication which are Islamic banks although some of the western banks can be identified by names that are used all over the world. A more comprehensive list of financial institutions in Malaysia is available which specifies the nature of each organization listed. It is always interesting and useful to gain as much knowledge about the place that is to become “home” as is possible.

The best course for retirees is to obtain from their home bank details of corresponding banks in Malaysia. For day to day convenience it is useful to know where to find local ATMs. The Virtual Malaysia site is the best for this purpose. It is also helpful to be aware of the local rules for importing and exporting currency. This information is more often needed for short term trips such as those that should be made to evaluate the suitability of Malaysia as a retirement home. It is the vital “Golden Rule” that such visits should be undertaken to avoid costly mistakes that will occur if a precipitate move is made to what is, ultimately, an unsuitable country

The links provided at the "Resources" tab on this site and the book "How to Retire in Malaysia" by Les Johns provide much more detail on the above points. The book can be purchased directly from this site.

Pensions

It is likely that a pension or pensions will form the basis of the income requirements for those qualifying for the "Malaysia My Second Home" program. Proof that such income is assured or arrangements to have it paid to a Malaysian bank will depend upon the organizations or countries that are the source(s) of the pension(s). These will be either a government paying the pension provided by the social security system or your employer paying a private pension or both. You freedom of action with respect to moving your funds to your country of retirement may be quite different for each income source.

One vital point that has to be mentioned with regard to the British old age pension so far as Malaysia is concerned is that it will be frozen if you retire to Malaysia. It will be frozen at the rate being paid on the date of the move to Malaysia. A number of countries are in the same situation for British pensioners.

An additional problem for those moving from Australia is that there will have to be references to CentreLink. This can be a very difficult organization withwhich to deal because of its size and the fact that different areas of expertise in administering Australian age pension are in different cities.

The Hobart, Tasmania office deals with "international" matters and one can learn from there that an Australian age pension can be paid almost anywhere in the world. There are often unrevealed conventions with respect to payment of the pension overseas. This can easily result in a pensioner, having moved abroad, finding that even though, apparently, all necessary forms and formalities have been completed no payments are forthcoming. Given also that the department's toll free overseas telephone numbers do not always work it easy to see that a person can become frustrated, angry and financially embarrassed.

The British Pension Service, part of the Department for Works and Pensions, is, compared with the Australian CentreLink, easy to deal with by telephone or by letter. There is a reluctance to deal with or comment upon anything of a confidential nature over the telephone and this even more the case when e-mail communication is used. The Department's web site is not easy to follow but in writing, by letter, communication is concise and accurate. There is no hesitation in providing information, all forms that may need to be completed and any explanatory publications, booklets or pamphlets that may be available.

For those with pension arrangements to which contributions are still being paid or which have partly matured there are ways to move benefits to Malaysia and many other countries. There are many firms which deal with such transfers which are known as "Qualifying Recognized Overseas Pensions Schemes”. A QROPS Pension Designer site explains such plans but there are others such as Horizon QROPS which offer a range of plans.

Other Income

As a retiree it is unlikely that local income will be derived by you. Residents who move to Malaysia under the MM2H program cannot take up full-time local employment so all income must be derived abroad. The use of offshore bank accounts is essential to derive and administer such earnings. This is the simplest "one size fits most" solution to the problems of moving about the world and having easy access to your funds.

There is a myriad of organizations, such as this one, offering to open an offshore bank account for you. They will charge anything from $400 or $500 dollars to perform a simple operation that you can do equally well yourself. As in dealing with any bank for the first time it is best to do things in person. This does not necessarily mean that you have to go to some obscure or distant part of the world. Some banks offer online facilities to open and manipulate accounts. Firms which attend to the needs of those requiring more complex trust and company structures also exist. They are usually expensive.

It is essential to keep abreast of changes in regulations regarding banking, exchange control and financial matters in general. The rules governing the movement of money between countries can change in an instant with devastating results if adverse effects cannot be at least mitigated. Having just a “nodding acquaintance” with political matters in all countries which may have a bearing on the safe keeping and transmission of your funds can allow the anticipation of changes and the quick adjustment of arrangements.

All of these matters are explored in the links provided atthe "Resources" tab of this site and in the book "How to Retire in Malaysia" by Les Johns which is available directly from this site.