Small pot

srcandas

My wife is 57 and has a SIPP pot of £15200 with HL. Due to various circumstances unexpectedly she will be a spanish resident and tax payer after April so we'd like to wrap this up. She has no (and never had) other pensions of any type.

This tax year in the uk she will have earned the minimum to qualify for a state pension year - £6000 more or less I think. And she has a tax code of 810.

Am I right that she can cash this in and will get more or less:

25% tax free -- £3800.
tax free up to Personal allowance -- £2100.
taxed at basic rate (20%) -- £9300 so tax of £1860.

She may have to be self employed in Spain next year (to do with getting access to state health) so even if she spread it into next year she'd still pay tax and we'd like to simplify the change from uk tax to spanish tax as much as we can.

And a second point: she has 28 pension qualifying years in spain prior to 2002. She may need as many as 38 for a full pension in Spain. Between 2004 and 2008 she had no income and was off the tax radar. Between 2008 and 2014 she has acrued 6 qualifying years here in the UK.

Can she buy more years before we leave in April?

Any thoughts would be very gratefully received. :beer:

jamesd

What you have described is what she can do from 6 April onwards.

Until then it is 25% tax free lump sum then about 6% of the remaining 75% under capped income drawdown.

It appears that she cannot buy any more years here before April because she seems to already have all of the past six years.

She should check how the UK and Spanish state pension systems interact, years for one might count towards the other. She also needs to watch out for the new minimum of ten years to get any UK state pension. She can voluntarily buy NI while abroad and probably should do that until she gets to ten years.

srcandas

Many tx James.

jamesd wrote: »

What you have described is what she can do from 6 April onwards.

Until then it is 25% tax free lump sum then about 6% of the remaining 75% under capped income drawdown.

Ahhhh ok so maybe best top it up with another £5000 (thus her entire salary for the year paid in) then take the 25% before April and then leave the pot to grow until she stops working in Spain. I'll have to check HL charges on a drawdown when taking nothing out after the 25%. Hopefully that'll work.

jamesd wrote: »

It appears that she cannot buy any more years here before April because she seems to already have all of the past six years.

She should check how the UK and Spanish state pension systems interact, years for one might count towards the other. She also needs to watch out for the new minimum of ten years to get any UK state pension. She can voluntarily buy NI while abroad and probably should do that until she gets to ten years.

All the documentation says the final country will pull it all together and in the examples even one year lumps get accrued. But for the sake of buying four years as time goes by that would be good. Just hope paying for and qualifying for two state pensions in the same year is not an issue.

Cheers

xylophone

http://europa.eu/youreurope/citizens/work/retire-abroad/state-pensions-abroad/index_en.htm

https://www.gov.uk/living-in-spain

http://www.advoco.es/advice/14-health-a-social-security/78-spanish-pension-benefits.html

https://www.gov.uk/new-state-pension/eligibility

might be worth a look.

srcandas

Many tx xylophone for the links. It confirms my wife doesn't need to worry about the ten year rule that James mentioned:

In such cases, the pension authority has to take into account all the periods you've worked in other EU countries, as if you'd been working in that country all along, to assess whether you're entitled to a pension

So we will build years for my wife in Spain by one means or another (maybe you can even buy years there but Spain is a very odd place for this stuff). Or we'll dummy some self employed years. But as long as we get my wife up to 38 years she will be ok staying in our home if I die and that is all that matters.

My own position is different. I already will be entitled to a full UK state pension (circa £205 a week predicted) in 2.5 years so not sure what if anything 2 or 3 years built up in Spain will add.

I say wife but after 13 years hanging out together we will get married this February. I assume she will be able to benefit from my SIPP drawdown when I kick it. But will she get a some benefit from my state pension, being my recent wife but a spaniard resident in Spain? Any thoughts very welcome.

But thanks for the help so far guys and seasons greeting to you both :beer:

xylophone

I say wife but after 13 years hanging out together we will get married this February. I assume she will be able to benefit from my SIPP drawdown when I kick it. But will she get a some benefit from my state pension, being my recent wife but a spaniard resident in Spain? Any thoughts very welcome.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181235/derived-inherited-entitlement.pdf

page 15?

srcandas

xylophone wrote: »

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181235/derived-inherited-entitlement.pdf

page 15?

That looks tricky. Having read it three times I think my wife may get something but it remains foggy to me.

She will however have a very small UK pension of 6 qualifying years against a spanish pension based on 32 qualifying years. Not sure what impact that will have if any.

Guess I better keep living to avoid the problem

But again many thanks especially for the page number I'll try reading it again tomorrow. :beer:

FatherAbraham

srcandas wrote: »

All the documentation says the final country will pull it all together and in the examples even one year lumps get accrued. But for the sake of buying four years as time goes by that would be good. Just hope paying for and qualifying for two state pensions in the same year is not an issue.

The final country (usually the one in which one retires, but sometimes the one in which one last worked) definitely does not pull it all together.

That country's responsibility is to accept the initial claim for a state pension on behalf of all EU countries where a pension is due.

This works spectacularly badly in cases where the country where the claim is made has a higher pension age than another country were a pension is due -- for example, the UK won't remind people to make a claim until six months before the UK state pension age, which could be six-and-a-half years after one's French state pension age. Even worse, there are some EU countries where no retrospective claim can be made for a pension (for example, Denmark), so claiming late is a massive loss (fortunately the Danish state pension age is about 94 these days, so some way after the UK's).

The claim is forwarded on to each country where pension rights have been earned, and each of those countries is responsible for computing the amount of pension it will pay. Payment arrangements are individual between each country and the pensioner -- there is no "pulling it all together" here.

All that is pulled together is the initial claim, and even that doesn't work very well, given the differing state pension ages.

Warmest regards,
FA

FatherAbraham

srcandas wrote: »

All the documentation says the final country will pull it all together and in the examples even one year lumps get accrued. But for the sake of buying four years as time goes by that would be good. Just hope paying for and qualifying for two state pensions in the same year is not an issue.

And another thing -- under the intra-EU social-security rules for pensions, if I recall correctly, one may only make voluntary extra contributions in one member state. So it's worth doing one's sums before committing to a national pension system.

Warmest regards,
FA

srcandas

FatherAbraham wrote: »

The final country (usually the one in which one retires, but sometimes the one in which one last worked) definitely does not pull it all together.

I guess that "pull it all together" might be miss interpreted but according to the eu:

You'll have to apply to the pension authority in the country where you're living or you last worked. If you've never worked in the country where you're living, your host country will forward your claim to the one you last worked in.

That country is then responsible for processing your claim and bringing together records of your contributions from all the countries you worked in.

They would have to bring it all together to assess how much they should pay as for example the ten year rule in my wife's UK case would be broken but when looking at the overall picture it is not.

For sure each will pay their dues and as you say the differing age for starting state pension just adds to the burden.

But thanks for highlighting the need for application alarm clocks. Luckily we are only dealing with two countries.

:beer:

srcandas

FatherAbraham wrote: »

And another thing -- under the intra-EU social-security rules for pensions, if I recall correctly, one may only make voluntary extra contributions in one member state. So it's worth doing one's sums before committing to a national pension system.

Warmest regards,
FA

Tx for that warning. As I said we could even go further and end up buying in two countries for the same year. But I smell a rat there. As it happens in the end I think creating a self employed income is the better route and with my UK company that is simple enough and wifey will get to her 38 years.

And warmest festive greetings to your good self. :beer: