Sunday, 29 December 2013

Financial Pages in Spain – Annual Review

What’s caught the eye of readers in 2013? What stories have been most read? Is there something in the trends?

Trending, of course, is looking at topical popularity on Twitter. My own account is @davidgspain

I thought I’d share with you some interesting trends on my blog over the last year;


  1. My postbag, or should I more correctly call it my Inbox contained more questions, enquiries and requests for second opinions on the subject of QROPS than any other. People appear to be wary – Quite rightly, but my stance against unscrupulous ‘advisers’ seems appreciated. Read more about QROPS This subject is always popular.

  1. I wrote a post in early 2012 which I updated  in August 2013. It’s always been popular and shows how much help and information property owners need in Spain. ‘Five Non-Resident Spanish Taxes’ can be accessed here TAX Remember that not knowing is no defence.

  1. Another ever popular post is Getting Professional Advice’. Often the cost of putting something right is more than getting it right in the first place! Financial Advisers, Accountants, Lawyers, Surveyors and other professionals that I recommend NEVER CHARGE AN UP FRONT FEE. Read more here about the BEST ADVICE

Not surprisingly, this also contrasts with the activities of UNAUTHORISED ADVISERS . This update was triggered by the unfortunate experience of a reader.

  1. Unsurprisingly, Banks are not my readers’ favourite organisations. Their service is often poor and you never know whether they are giving YOU a good deal or just bagging a Bankers’ bonus! Foreign Exchange is typical.

You would think that transferring from one bank to another would be the most efficient and give you the best deal. BUT IT ISN’T.

La Torre Fx – Foreign Exchange uses the powerful FTT Global platform to give you fast efficient service and better exchange rates when you BY-PASS your bank. CHECK OUT La Torre Fx Foreign Exchange for ALL MAJOR CURRENCIES

Spain and the United Kingdom have always been the most popular in ‘audience’ figures for ‘Financial Pages in Spain’. UNSURPRISING! But recently there is a growth in readership in USA and France, you are very WELCOME.


I hope you enjoyed Financial Pages in Spain during 2013 and will continue to read in the future. Your comments or queries can be sent my email at your convenience.

Wish everyone a very happy, prosperous and peaceful New Year 2014


David Goodall
Financial Pages in Spain
davidgoodall.spain@gmail.com


Sunday, 1 December 2013

Financial Pages in Spain – Trending

What’s caught the eye of readers in November? What stories have been most read? Is there something in the trends?


Trending, of course, is looking at topical popularity on Twitter. My own account is @davidgspain

I thought I’d share with you some interesting trends on my blog over the last month;


  1. My postbag, or should I more correctly call it my Inbox contained more questions, enquiries and requests for second opinions on the subject of QROPS than any other. People appear to be wary – Quite rightly, but my stance against unscrupulous ‘advisers’ seems appreciated. Read more about QROPS This subject is always popular.

  1. I wrote a post in early 2012 which I updated earlier this year in August. It’s always been popular and shows how much help and information property owners need in Spain. ‘Five Non-Resident Spanish Taxes’ can be accessed here TAX Remember that not knowing is no defence.

  1. Another ever popular post is Getting Professional Advice’. Often the cost of putting something right is more than getting it right in the first place! Financial Advisers, Accountants, Lawyers, Surveyors and other professionals that I recommend NEVER CHARGE AN UP FRONT FEE. Read more here about the BEST ADVICE

  1. Unsurprisingly, Banks are not my readers’ favourite organisations. Their service is often poor and you never know whether they are giving YOU a good deal or just bagging a Bankers’ bonus! Foreign Exchange is typical.

You would think that transferring from one bank to another would be the most efficient and give you the best deal. BUT IT ISN’T.

La Torre Fx – Foreign Exchange uses the powerful FTT Global platform to give you fast efficient service and better exchange rates when you BY-PASS your bank. CHECK OUT La Torre Fx Foreign Exchange for ALL MAJOR CURRENCIES

Spain and the United Kingdom have always been the most popular in ‘audience’ figures for ‘Financial Pages in Spain’. UNSURPRISING! But recently there is a growth in readership in USA and France, you are very WELCOME.


I hope you enjoyed Financial Pages in Spain during November and will continue to read in the future. Your comments or queries can be sent my email at your convenience.


David Goodall
Financial Pages in Spain

davidgoodall.spain@gmail.com

Tuesday, 22 October 2013

QROPS – Comparing jurisdictions

Qualifying Recognised Overseas Pension Schemes (QROPS)


Always remember that QROPS are UK Pension Transfers. In the opinion of Financial Pages in Spain and the rules of the regulator Pension Transfers NEED specialist advice.


2013 – The Financial Conduct Authority (FCA) which replaced the FSA has made it MANDATORY that when UK advisers meet clients who have moved or intend to move abroad, they must be told about the option of QROPS. This shows how important this option has become.

As a result of many changes, there are now four major jurisdictions;

1. Malta has four distinct advantages when dealing with British and Irish clients, especially those who become residents in Spain.

  • Malta is an English speaking country
  • A low cost economy
  • A member of the European Union
  • Retirement income can be taken at age 50

After many months of negotiations, Malta as an established Financial Services Centre was given approval by HMRC to offer QROPS in November 2009. Individual trustees then need to get approval from the Malta Financial Services Authority (MFSA). It was not until February 2010 that the first QROPS were approved. Without question, Malta benefited most from the rules changes which became operative from  April 2012

I can recommend an adviser if you email me.


2. Switzerland is a renowned centre for financial services, with security at the heart of it’s offering. There is one aspect of Swiss QROPS which could be seen, depends on your opinion, as either an advantage or disadvantage. The QROPS must be invested 70% in Swiss funds and held in Swiss Francs.

Funds are can be invested by a Discretionary Manager based in London, regulated by the FCA.

Membership of QROPS in Switzerland is highly restrictive, but for those who qualify and prefer the Swiss franc to euro or sterling, this maybe an excellent choice

·       Minimum fund of SwFr 100,000 (work on £66,000)
·       Retirement from age 55 to aged 70
·       Must be UK non-resident for five or more complete UK tax years
·       Withdrawals taken as lump sum

Though not a member of the EU, Switzerland has many close, financial, connections with UK, Ireland and Spain. Most importantly Double Taxation Agreements are in place.

Due to the EXCLUSIVE nature of the Swiss QROPS offering, I can deal directly with clients, who will be referred to the authorised adviser. Please email me for further information


3. Gibraltar has approved QROPS and this option is developing, quickly.  Up to 30% pension commencement lump sum can be taken from age 55. Income is taxed at a flat rate tax of 2.5% and declared as income in your country of residence. There are a wide range of investments available and self investment is permitted. 

I’m happy to provide information on an individual basis if you email me


4. New Zealand remains a viable and strong option for QROPS. Please note that since April 2012 full encashment is not possible.

The principal benefits which New Zealand enjoys are;

  • Tax Free Lump Sum is 30% of the Fund Value
  • Flexible income arrangements, as long as the 70% available for income rule is maintained
  • Tax Free investment portfolio which is ‘flexible’

As always, individual circumstances will dictate, but flexibility is certainly a realistic jurisdiction to consider. Email me to have access to professional advice

Non-UK Nationals

I am aware that people of many nationalities have, from working in the UK, preserved benefits. Good news – you do not have to take benefits when the scheme says so. You may also be entitled to a UK pension transfer to QROPS. Just email for more details.

Advice

Many advisers will not compare all jurisdictions before making a recommendation. The determining of your priorities should be the overriding reason for recommending a particular QROPS. Some advisers only deal with one provider in one jurisdiction. If you’ve received a recommendation and would like a second opinion please email me.

Qualifying Recognised Overseas Pension Schemes (QROPS) are for professional advisers and their clients and hopefully the unqualified, unregulated imitators will disappear.

I guarantee that you will be given only REGULATED advice if you contact me (with brief details) by sending me an email.  

No upfront fee guarantee


David Goodall
Financial Pages in Spain



Thursday, 26 September 2013

Moving to Spain

Some Key Issues

This is not intended to be a definitive list but I come across so many problems amongst UK nationals in Spain which can be put down to poor or even no planning. Even though there are costs, to get professional advice is almost always cheaper in the long run.

1.    Research
In the internet age there are huge numbers of resource waiting to be read. However, I always ask you to consider who is giving you the information. Beware of vested interests!

The more independent information you can gather, the better. The archive to my blog or my website are based on my own experiences but I encourage you to look at other resources. Financial Pages in Spain

2.    Know your area before you move
If you’ve been somewhere on holiday, and loved it, do you really know it? From my experience many people move on that basis and only then begin to know the place. It’s part of your initial research really.

I found the British Embassy in Madrid very helpful and follow them on Twitter (@ukinspain)

3.    Consider ‘Rent before you buy’
My Estate Agency friends and contacts will tell you I’m wrong because there are so many bargains to be had! I still think this caution is good advice and I’ve written about it before Rent before you buy in Spain

If you do buy, the research and knowing your area are even more important.

4.    Take health very seriously
Spain has one of the healthiest lifestyles in Europe and generally has excellent medical facilities. You must remember that whilst a European Health Insurance Card (EHIC) covers you as a tourist, once you settle in Spain, you need to register locally. This procedure can be different according to area so you need local information about health services and facilities

5.    Work out your finances including tax
I apologise if this seems obvious, but based on my INBOX, it doesn’t happen often enough!

Choosing a Bank is often an early decision. It can be a problem if you choose the wrong one. Personally, I prefer Internet Banking but it doesn’t suit everyone. Whether you can speak Spanish is another key issue, as the local service you get can vary. Another reason to ask around and see which one gets the most positive comments. There is no ‘best’ or even ‘worst’ bank but local knowledge is, in my opinion, key.

Getting Professional Advice for which there is no substitute is also very important. I often refer people to advisers that I have checked out or my contacts have recommended. After 11 years experience, in Spain, I’ve learned only to recommend the very best advisers.

Tax is vital and often misunderstood. Some people have said to me (in summary) ‘I thought it would be the same as in England’, that’s so, so wrong. From my own experience the starting point is that it’s always different from the UK! Especially in the early days and vitally if your Spanish is poor, you need a Fiscal Representative, mainly to help with the endless paperwork. It maybe a service your solicitor could provide but if you need specialist tax advice please Email me.


6.    Get independent legal advice
If you were buying a house in the UK, chances are you’d choose your own Conveyancing Solicitor or one recommended by a friend. That should apply in Spain too, but buyers seem happy to accept the recommendation of the builder – he’s not independent or even on your side – he’s the builder’s solicitor

Your solicitor, knowing your situation, is also the best person to advise on a Spanish Will which you do need

If you don’t know a solicitor, please ask around or I will recommend one if I know a proven one in your area. Certainly in your early days in Spain, you need an English-speaking legal adviser. Email me for a recommendation.

7.    Put your UK affairs in order
In many respects it’s the mirror image of what you need to do in Spain. I would however suggest in particular that you tell the tax authorities. If you don’t then HM Revenue & Customs (HMRC) will chase you for years to come. Timing your departure can also be beneficial in having a tax-free year, if applied correctly. Email for more information.

The Department of Work & Pensions need to know of the change in circumstances whether or not you are retired and should be informed. You should also tell your local authority and GP.

8.    Don’t become isolated
Even if you get to know many British expats, learning Spanish can really help your life in many respects. I’ve always found the Spanish very tolerant even if you only try to speak their language.

Courses are widely available and always of value



There is much more information on many subjects in my BLOG ACHIVE but the following are especially recommended;

Offering better rates and service than the banks, internet facility available 24 hours per day.

If you live in Spain, should your savings be in the UK. It’s worth considering.

Serious reasons to move to Spain but my light hearted review




David Goodall
Financial Pages in Spain



Thursday, 12 September 2013

La Torre Fx – Foreign Exchange

By-pass your bank for a better deal, saving time and money.

LaTorre Fx provides this excellent service, with great rates and high quality customer service, by linking to the very best Foreign Exchange Platform – FTT Global.

Questions and Answers

What does FTT Global do?

FTT allows you to exchange currencies at market leading exchange rates. FTT will transfer your purchased currency to your nominated bank account anywhere in the world. Check out LaTorre Fx

What does FTT NOT do?

FTT does not provide facilities for you to gamble on the currency exchange markets. FTT does not provide travel money for your holidays.

How can La Torre Fx provide the best exchange rate?

FTT has developed smart technology to reduce the costs of trading currencies. We pass these cost savings onto our clients. Other currency brokers employ teams of highly paid traders to talk to clients and convince them to deal through their brokerage. This is an expensive way to run a foreign exchange trading company and the costs are passed onto their clients. Banks have a long established history of charging high fees and providing poor rates of exchange which nets them fat profits at the expense of their clients

What hours are La Torre Fx and FTT open for business?

FTT is open for online trading 24 hours per day, 7 days per week, 365 days per year at LaTorre Fx. FTT is open for telephone based trading between the hours of 9am and 5pm British standard time.

How can I get help or support?

FTT is fanatical about providing a fantastic support to our clients. Between the hours of 9am and 5pm British standard time, call us on +44 (0)203 004 4444. Email us 24 x 7 on support@fttglobal.com, mentioning La Torre Fx. There is always someone ready to respond.

How do I open an account with La Torre Fx?

Any private individual or company can open an account with La Torre Fx through FTT Global. Click the 'Open Account' button on any of the FTT pages. You will need to fill in a few pieces of information but it is a very quick process. In fact, we aim to open your account and have you up and trading within 5 minutes of you clicking the open account button. Note that we do have strong anti-money laundering procedures in place. You can Register here

What are the fees, charges and commissions?

Opening an account with LaTorre Fx and FTT is FREE. Trading amounts over £3000 is FREE. FTT will wire your purchased currency to your nominated bank account anywhere in the world for FREE. Fixing a rate for the future is FREE. Placing an order to be executed if the currency exchange rate reaches a particular level is FREE, even if you cancel the order 5 minutes later. FTT does not apply any hidden commissions or fees. The only fee that FTT will ever charge is if you exchange an amount below £3000. In this case we will charge you £10 for the telegraphic transfer fee to deliver your purchased funds to your destination account. FTT earns revenue by applying a small price difference between the exchange rate at which we buy currencies and the exchange rate at which we sell currencies.

What are the maximum and minimum amounts that can be traded ?

You can trade any amount from £100 or equivalent upwards.

How will I know the status of a trade or payment?

We confirm by email when you have agreed a trade. We confirm by email when we have received your payment to fund the trade. We confirm by email when we have sent your purchased currency to your nominated account. You can log into your account 24 hours per day, 7 days per week to review the status of your trade. You can contact us anytime to request a status.

Can I trade on-line?

Yes, FTT has developed a unique online trading system which is easy to use yet very powerful. This system is not available through any other currency broker or bank and is unique to FTT.

Can I trade via telephone?

Yes, some of our clients don't like to trade online and prefer to call or email us.

Can I fix a rate for the future?

Yes, there is no need to be exposed to future currency fluctuations. You can fix a rate for all major currencies up to one year. When you fix a rate for the future, we require you to put down a 10% deposit to secure the future rate. We have to do this in case the exchange rate moves against us and a client defaults on the trade. Surprisingly, future exchange rates can sometimes be cheaper than the current exchange rate. It is always worth checking the future rate of exchange.

Can I place an order to ensure that my exchange will occur if a certain rate is hit?

Yes, if you want to trade at a particular rate then you can Pre-order currency at the rate that you desire. FTT will monitor your exchange rate around the clock and notify you immediately if your order is filled. Take profit orders allow you to target a better exchange rate. For example, I would like to buy $US10,000 for pounds sterling if the exchange rate exceeds 1.5. Stop loss orders allow you to protect yourself if the market moves against you. For example, I need to buy $US10,000 for pounds sterling but I want to wait and see if the rate improves. However, if the exchange rate drops I want to make sure that the worst rate that I pay is 1.4.

Can you predict future exchange rates for me?

No and please don't trust anyone that says they can. Anyone who could accurately predict the currency exchange rates would have a limitless supply of money and would be living on their own island somewhere. Currency exchange rates are acknowledged as the most difficult rates to predict within the financial markets. Treat them with respect and reduce your exposure to currency fluctuations where ever possible by fixing a rate for the future.

How do I pay for my purchased currency?

The best way to pay for your purchased currency is through electronic bank wire. Contact your bank and ask them to transfer the required amount to the FTT bank account held at Barclays Bank in London. Our bank account details can be found by logging onto our system. If you are based in the UK, your bank can provide the FASTER PAYMENT SYSTEM and this normally takes less than two hours. If you are based outside of the UK, your bank can provide a SWIFT payment.

How do I receive my purchased currency?

FTT will transfer your purchased currency to your nominated bank account anywhere in the world using the fastest electronic bank wire method available for the receiving country. Outgoing payments are cleared the same day in the UK and same or next day in the US and Europe. Allow 1-2 days for payments to clear outside of the UK, Europe and the US. However, we are always seeking to improve our service to clients and recently we have cleared payments to China the same day so don't be surprised if your payment arrives earlier than expected.

Don't banks hate what FTT is doing?

They sure do but there is not much that they can do to stop us. As more people discover LaTorre Fx and FTT Global we expect the banks to get even more upset.


La Torre Fx – Foreign Exchange is a trading name used by Financial Pages in Spain

Though Financial Pages in Spain is a website and Blog for British and Irish expats and property owners in Spain, La Torre Fx can offer trading in Worldwide currencies.


David Goodall
Financial Pages in Spain

Tuesday, 10 September 2013

SAVINGS

Where are your savings?

I have been surprised to learn just how many British and Irish citizens, living in Spain continue to keep their savings in the UK in sterling. Apart from interest rates lower than inflation, there is always an exchange rate risk.

In April 2013, the Financial Conduct Authority (FCA) took over most of the powers of the previous regulator the Financial Services Authority (FSA). Naturally, the new regulator wants to show it means business and the latest announcement affects Savers.

·        Inflation on the agenda

·        What interest rate are you getting?

·        Do you have a financial plan?


Many UK and Irish residents in Spain still have significant Savings in UK Banks and Building Societies. There are a variety of reasons for this but the one which concerns me most can be called ‘inertia’.

 “I should do something about it but I never seem to get round to it!”

The FCA says you should, and so do I

This announcement may affect you;

“Savings ‘teaser rates’ face FCA enquiry”

You may also want to be proactive yourself. If you want any of the following please email me

  • Protect your savings from exchange rate fluctuations
  • Protect interest rates from taxation
  • Get good returns
  • Have a general review of your finances

After over 20 years as a financial adviser myself, I now specialise in writing about the subject. I have many, many contacts of advisers that I trust and know. I am happy to refer readers of ‘Financial Pages in Spain’ on a no obligation basis. Just email me a few details and I will get you the best advice possible.

Further reading from ‘Financial Pages in Spain

 Getting Professional Advice

Getting a Second Opinion

QNUPS – written under ‘pension rules’ but highly flexible to protect your assets from tax


David Goodall
Financial Pages in Spain


Wednesday, 14 August 2013

Spanish Inheritance Tax (ISD)

UPDATE

This complex issue needs careful planning and professional advice


Email me for a professional adviser

I cannot stress often enough that Spanish ISD and UK IHT are not in anyway similar and are not covered by a Double Taxation Treaty or Agreement. 

This complex issue is often ‘swept under the carpet’ but eventually everyone is affected. In particular, the prospect of a widow(er) paying inheritance tax on the death of their spouse can come as an enormous shock.

·         There are State rules and variations by the Autonomous Communities (AC)
·         State rules always apply to non-residents
·         Autonomous Region rules will apply ONLY to Spanish residents
·         There is no Double Taxation Agreement on inheritance Tax between Spain and the UK

Impuesto sobre Sucesiones y Donaciones (ISD) is also called Succession Tax or Inheritance Tax and is a tax on inheritance and gifts, paid by the recipient of the inheritance or gift. It is due only if the recipient is resident in Spain or the asset being inherited or gifted is an asset located in Spain such as real estate or moveable property situated in Spain. If the property is owned by a UK company ISD is not payable on the death of a shareholder of the company.

Allowances are available depending on the relationship with the deceased or donor. In the first instance the Spanish State rules apply but these can be varied by the different Autonomous Communities (ACs) providing conditions set by the relevant AC are met. The State rules always apply to non-residents owning assets in Spain.

There is currently no blanket exemption between a husband and wife under the State rules. Where a married couple are both residents in Spain and one spouse dies, the surviving spouse can be fully liable on the worldwide assets inherited from the deceased spouse, subject to the allowances and reliefs available.

The worldwide estate of British expatriates who are UK domiciles on death will also be liable to UK inheritance tax, as well as to Spanish succession tax on chargeable Spanish assets. Any succession tax paid in Spain can be deducted from any UK inheritance tax liability on the same asset. There is such a fundamental difference between the inheritance tax in the two countries that no double taxation agreement exists on this issue. Please Email if you need referral to a professional advisor.
State Rules
Beneficiaries are divided into the following four groups depending on the closeness of relationship to the donor or the deceased:
  • Group 1: Natural and adopted children and other descendants (such as grandchildren, great-grandchildren) under 21
  • Group 2: Natural and adopted children and other descendants aged 21 and over; parents and other ascendants (such as grandparents, great-grandparents), and spouses
  • Group 3: In-laws and their ascendants/descendants, step-children, brothers and sisters, cousins, nieces and nephews, aunts and uncles
  • Group 4: All others including friends or unmarried partners
State Allowances
There are tax-free State allowances on inheritances (not life-time gifts) for members of the different groups as follows:
  • Groups 1 and 2: €15,957
  • Group 3: €7, 993
  • Group 4: nil
Group 1 inheritors under the age of 21 can have an additional deduction of about €4,000 for each year they are under 21, restricted in total to €47,858 per recipient.
There are further reductions where the recipient is physically or mentally disabled depending on the recognised degree of disability.

Relief for main home

There is a 95% allowance against the inherited value of the main home of the deceased up to €122,600 per inheritor, provided that the beneficiary belongs to Group 1 or 2 or is a remoter relative over the age of 65 who lived with the deceased during the two years prior to their death. The property must be retained by the beneficiary for 10 years following the death, but it does not need to be the beneficiary's main home.
Succession tax rates vary from 7.65% to 34%. The tax liability is subject to multipliers based on the pre-existing wealth of the recipient, which can take the highest effective rate of tax to about 80%.

Gifts

Gifts made by the same donor to the same person within a period of three years, taken from the date each gift is made and on the value at the time it was made, are aggregated and treated as one transaction for gifts tax. To determine the tax rate applicable, the value of all previous gifts made to the same person within the last three years plus the current gift are added together. The average rate of tax on the theoretical total is then calculated and applied to the latest gift.
Autonomous Communities (AC)
The Autonomous Communities (ACs) can vary the State rules in the taxpayer's favour. The State allowances and reductions apply in the first instance provided that the relevant conditions have been fulfilled. Any enhancement to the State allowances and reductions granted by the AC will then replace the State deductions, again providing any additional conditions imposed by the AC are fulfilled.

Please note, however, In the case of real estate in Spain owned by a non-Spanish resident, the State rules will always apply on the death of the non-resident owner. The beneficial exceptions from the various Communities (AC), never apply to Spanish non-residents.

In some ACs, spouses and children can receive a 99% reduction in the inheritance tax payable on death. This reduction currently applies in the Canary Islands, Balearics, Murcia Region and Madrid. Others have a fixed sum reduction.

In AndalucĂ­a, spouses and children are exempt from inheritance tax where the taxable value of the inheritance received is no more than €175,000, and the wealth of the recipient does not exceed €402,678.

In Cataluña, personal allowances increased significantly from 1 July 2011.

In many ACs, unmarried couples registered as a pareja de hecho are recognised as spouses.
It is important to look closely at the rules relating to a specific AC’s to obtain full details of the range of allowances and exemptions available. I can put you in contact with professional advisors in most regions, if you email

Succession tax is paid under the AC's rules if the deceased was habitually resident there, in the case of an inheritance; or, in the case of a gift of real estate, if the real estate is located in that AC; or, in the case of a gift of any other assets, in the AC where the recipient is habitually resident.

To be habitually resident in a particular AC, you must have been resident there for five continuous tax years. So, the deceased or donee (as the case may be) must have been continuously resident in an AC for the past five years for that particular AC's rules to apply, otherwise the State rules will apply.

Summary

These complex rules and arrangements indicate that careful planning is required. 

This subject will continue to remain high on my agenda, as the vast majority of expats in Spain are affected. Non-resident property owners may not think they are affected – unfortunately they are! UK residents with Spanish property could be affected in both countries and careful planning is vital. Please Email me for a link to a professional adviser.

You can feel free to email me on any of these issues.


This complex issue has been researched using information available on web pages, consulting contacts and the writers own knowledge. It cannot constitute advice and professional guidance is required.



David Goodall
Financial Pages in Spain
davidgoodall.spain@gmail.com




Thursday, 18 July 2013

Explaining Pensions Terms and Expressions


This is an alphabetical list which helps to cut through the jargon often used when discussing pensions.

Incorporates changes made from 6 April 2013


·       UK pension plans / schemes applicable to expats

·       ALWAYS Get a professional Adviser

·       Understanding QROPS & QNUPS



A Day
6 April 2006 was the day the UK Government pension simplification rules came into effect.


ASP - Alternatively secured pensions
At the age of 75 an alternatively secured pension would allow an individual withdrawal of income, similar to an unsecured pension fund such as income drawdown

Since 6 April 2011, no new ASP can be commenced but existing ones can continue until the next review date. The existing ASP fund can be transferred to Income Drawdown (Unsecured Pension) plan or an annuity commenced.

AVCs – Additional Voluntary Contributions
A pension top-up for an occupational pension scheme. The scheme members pay contributions into an arrangement run by the employer to boost the main pension.


FCA - The Financial Conduct Authority
The FCA has taken on the role previouslyundertaken by the FSA - the UK's financial services regulator. The FCA also ‘passports’ authorised advisers to operate in other countries. For a recommended adviser click here.

FSAVCs – Free-Standing Additional Voluntary Contributions
A pension top-up policy for an occupational pension, but separate from the employer’s pension scheme and normally run by an insurance firm.


FSA
The Financial Services Authority - was replaced by the Financial Conduct Authority (FCA) in April 2013


Group Personal Pension
A type of personal pension offered by some employers but not classified as occupational (see money purchase pension).


Lifetime allowance
This is a limit on the value of retirement benefits that you can draw from approved pension schemes before tax penalties apply. The Lifetime Allowance was £1.5m in the 2012/13 tax year but reduced to £1.25 million in 2013/14, from 6th April 2013. Anyone whose fund is approaching or is already above these figures needs to act soon! Please email me


Lifetime annuity
A lifetime annuity converts money from a pension fund into pension income, which is taxable. There are different types to suit different circumstances and often treated more favourably for tax purposes in other countries.

Money purchase pensions
Some occupational pensions and all personal, group personal, stakeholder, FSAVCs and some AVCs are money purchase pensions. The contributions are invested in, for example, the stockmarket or bonds. The size of the fund depends on the contributions and how well the investments perform. At retirement, there is a choice of options to provide you with a retirement income.


Occupational pension
These are only available through employers and run by pension scheme trustees. There are two types – salary-related (defined benefit) and money purchase (defined contribution).


Pension Commencement Lump Sum (PCLS)
Though often referred to as ‘Tax-Free Lump Sum (see below), PCLS is more accurate as it MUST be taken as the first benefit.

Pension Liberation
Increasing numbers of pension savers are being targeted by unscrupulous companies encouraging them to access their pension savings early. This is commonly known as 'pension liberation' and has significant tax consequences. This is from HMRC Website

Personal pension
A pension policy taken out by an individual from an insurance company or another financial institution and into which personal contributions are made. It may also be offered by employers.


Protected rights pension
This is the part of a pension fund which was used to contract out of the UK State Second Pension (SERPS or S2P) that must be used to buy a protected rights annuity.


QNUPS -  Qualifying Non UK Pension Scheme, which means it meets the criteria set by the regulations the UK government brought out in February of 2010. This means that or a UK or non-UK resident, there is an opportunity to make contributions to overseas schemes, established as QNUPS, with the knowledge that those funds will be sheltered from UK IHT. Individual advice should be taken in all circumstances from a regulated and authorised adviser. Please email for a recommendation.

Q - Day
6th April 2012 is the day on which fundamental changes to QROPS became effective.

QROPS - Qualifying Recognised Overseas Pension Schemes
These became available from A-Day. It is a pension scheme set up outside the UK that is regulated and recognised for tax purposes as a pension scheme in the country in which it is located. The QROPS planholder and the QROPS policy don’t have to be in the same country and this is almost always an advantage. QROPS have been established in various countries across the world, many in jurisdictions with beneficial tax rules. QROPS can now also be established with similar rules to SIPP (please see below). For specialist advice click here

Salary-related pension scheme (final salary or defined benefit)
A type of occupational pension. The amount of pension you get is worked out on your salary at or near retirement, or when you left employment, and your pensionable service.


Self invested Personal Pension (SIPP)
Essentially the same as a Personal Pension described above. However, with a SIPP the individual can exercise discretion over the investment policy, subject to the rules of the SIPP provider. This should always be done with professional guidance and if you want access to a specialist, please Email me

Stakeholder pension
A type of personal pension that has to meet certain standards set by the UK Government. An individual can take one out or it may be available through an employer, but is not classified as occupational. 


State Pension
The UK Pension Service (part of the Department for Work and Pensions) will pay the basic State Pension based on an individual’s National Insurance contribution record. In addition, individuals may also qualify for the State Second Pension based on their own earnings and National Insurance contributions.


State Second Pension
The State Second Pension is an additional State pension paid on top of your basic State Pension. This was called SERPS. Self-employed people cannot build up a State Second Pension.


Tax-free lump sum
An amount of cash set by tax law which you can take at retirement free of tax. Salary-related occupational pension schemes may have different rules on the amount of tax free cash you can take. This is only tax-free to UK residents. Tax-free cash should correctly be called ‘Pension Commencement Lump Sum’ (PCLS) since it can only be taken as the first benefit from a pension Plan


Unsecured Pension (Income Drawdown)
This is an alternative to buying an annuity but provides an income whilst the pension is still invested. At age 75, the unsecured pension must cease and be replaced by either a Lifetime Annuity or ASP. For non UK residents or those intending to become non-resident, QROPS could be another alternative.


Pensions Advisers, including the ones that I recommend, will be happy to cut through the jargon. Email me for a recommendation

Additional Posts

QNUPS
http://expatsfrombritain.blogspot.co.uk/2012/07/qnups-qualifying-non-uk-pension-schemes.html

QROPS
http://expatsfrombritain.blogspot.co.uk/2013/06/qrops-comparing-jurisdictions.html

UK Pension Plan but you live in Spain
http://expatsfrombritain.blogspot.co.uk/2011/08/uk-pension-scheme-or-plan-but-you-live.html



David Goodall
Financial Pages in Spain