My head is spinning!

LindaLinda

I am 55 and want to down on my pension. I live in Spain and have no income so this is the only option open to me.

I have been in contact with various companies, DeVere, Black Tower, Abbey Financial Solutions, some of whom promise the earth in terms of benefits and returns (not pointing fingers).

I am not into risky investments I just want a normal monthly income. I don't understand QROPS, I know I can draw down 25%, I have three pensions, one of about 8,000 pounds and the other two just under 100,000 pounds. These are with different providers.

What is my best option?

All companies will have their neysayers, however Financial Advisors are registered in the UK, is there a body in Spain/Europe to which financial advisers have to answer to?

Thanks

Stevie_Palimo

If your pensions are with UK providers then it would be better to deal with a FA also, If they are in the Spain then you need to look at the following sites below.

Spain:
Investment sector regulator - Spanish Securities Market Commission (Comisi!n Nacional del Mercado de Valores, CNMV) [MiFID]
Insurance sector regulator (life and general) - Direccion General de Seguros (DGS)[IMD]
Banking sector regulator - Banco de España (BdE)


http://www.cnmv.es/portal/home.aspx

xylophone

A regulated Independent Financial Adviser with the necessary qualifications would seem to be your best bet?

Googling throws up Black Tower

http://www.finance-spain.com/


http://www.pensurefinancial.co.uk/spanish-clients/

http://www.financialadvice.net/spain_financial_advice_expat/zone/1114

I am not quite sure what you mean by "offering the earth" - what you need is for your adviser to consider your needs, look at your pensions, and advise the optimum solution for your circumstances.

Have you obtained a new state pension statement?

https://www.gov.uk/check-state-pension

LindaLinda

My pensions are with Standard Life in the UK

Thanks

jamesd

The first thing to know is that you do not need to transfer to any Spanish company if you don't want to. It's entirely possible to take pension benefits in the UK from a UK pension provider and have them sent to Spain.

Standard Life will only allow payments to be made from their accounts to certain countries and I don't know if Spain is one of those. If it isn't, you can transfer to a UK pension provider that will make payments to those in Spain. one of those is AJ Bell.

HMRC maintains a Digest of Double Taxation treaties. According to that document pension income entitles you to full UK tax relief for tax paid to the Spanish authorities provided the income is remitted to Spain.

Assuming that you are a British citizen you will have a UK personal allowance for income tax in addition to anything provided for in the double taxation treaty with Spain. That doesn't provide for a personal allowance.

Under the UK Flexible Drawdown rules you are no longer restricted to taking just 25%. You can take 100% of all of the pension pots if you wish. Under UK law the 75% portion is taxable and will be treated as normal taxable income in the tax year in which it is taken. You can spread it out among as many tax years as you like. However, while the income is taxable, under UK law you are due to pay income tax in the country of your tax residence and that will presumably be Spain, meaning no liability to UK income tax.

I don't know how the tax treatment in Spain will work.

While you say you just want a monthly income, don't be tempted to buy an annuity. That effectively throws away half or more of the value of your pension pot when it's judged by income produced per Pound available to you. You'd be hard-pressed to find any other retirement income option that guarantees a loss of so much of your money.

If you just want fund suggestions to consider you might go for 30% Vanguard global equity tracker and 70% Invesco Perpetual Distribution. You should expect that the first will have capital value drops of up to 45% occasionally and 20% or so more often, while on average longer term increasing by 5-6% a year plus inflation. The second is unlikely to drop by more than 20% and 10% from time to time is more likely. It's likely to grow or pay out about 4-5%. You can reasonably take about 4% of the starting pot value after taking any lump sums per year as income and not expect the money to run out during your lifetime. You can actually take more than that, this is the level that assumes you end up living through the worst investment performance seen in the last hundred years. Since you don't know whether you will or won't see that you have to start out cautious and can adjust later, say reviewing once every five years.

But you don't need it for your whole life. You will presumably have UK state and perhaps other pensions available eventually. So part of your need is simply to replace that income or part of it until it's payable. It's not quite certain whether the pensions are one of 8k and two of 100k each or one of 8k and two totalling 100k between them. If it is 108k total and ignoring investment growth you could take about £8.3k a year until age 68. If it's 208k total you could both take that or more and have some left to top up the UK state pension. If you do draw at these higher rates the money will not last your lifetime, you'd be deliberately spending a large part of it at an unsustainable rate because you are using that portion just to bridge the gap.

You'll need to know your UK state pension situation and that of any work defined benefit pension - like final or average salary - to work out your guaranteed income from those sources. If those are not high enough for you long term you'll need to reserve some money for long term top up of that. Given your age it's probably easy for you to get at least £8k a year from the UK state pension by buying years if necessary.

For those who are in normal good health at their UK state pension age the most effective way to "purchase" guaranteed inflation-linked income for life is to defer claiming their state pension. This currently causes it to increase by 5.8% per year of deferral, which is more than twice the level of annuity income that can be purchased for the same spending.

If there is any prospect of you returning to the UK in the next five years and if the taxable portion of your pension pots is worth more than £100,000 there are rules intended to prevent people from temporarily leaving the UK. If you have lived in Spain for many UK tax years already those won't apply to you. The rules provide for treating the income portion (the taxable 75%, whether it's taken regularly or as lumps) as UK income in the year of return to the UK.

Another major issue for your planning is exchange rate moves. It's possible to use investments that are valued in Euros instead of Pounds and to pick investments with more Euro-based than UK based investments and those can help to reduce this risk.

D_Woods

I wouldn't select Blacktower or deVere or Abbey.

I have seen how the three above invest pension benefits. Commission paying bonds (6-8% of your pension) and expensive funds. Some of the investment made are extremely unsuitable.

You could leave your pensions in the UK or transfer to a QROPS. Leaving your pensions in the UK would be cheaper with regards to set-up and ongoing costs. Your tax liability would remain the same as any tax due in Spain would be offset by what you have paid in the UK. If you left your pensions in the UK you would be exposed to currency fluctuations unless you manage to invest in Euro denominated investments. A sudden devaluation of the pound against the Euro could hit your pension - conversely if the pound gains in value you would be quids in.

If you can find a decent IFA who will assist with a transfer to a Malta QROPS, invest you via an investment platform into efficient euro denominated funds (ETFs, Vanguard or Dimensional for preference) then you should be fine. Any mention of the benefits of a life bond should cause you to put the phone down.

D_Woods

Another point is that Spain does not recognise the 25% tax-free PCLS and so if you selected to take this, it would likely be taxed as income.

Bratch1

I am looking for advice on how to claim double taxation relief from HMRC. Living outside of the U.K., but as a beneficiary of a uk trust, the trust income is taxed and I am also taxed in my taxation jurisdiction on this income. I have tried several times to approach HMRC but with no success as they keep saying I need to fill out a self assessment online, I don't earn in the Uk, live in the U.K. Or pay tax in the Uk other than what is deducted by the trust mangers.
Applying for double taxation used to be much more simple.
How should I progress with this?

p00hsticks

Bratch1 wrote: »

I am looking for advice on how to claim double taxation relief from HMRC. Living outside of the U.K., but as a beneficiary of a uk trust, the trust income is taxed and I am also taxed in my taxation jurisdiction on this income. I have tried several times to approach HMRC but with no success as they keep saying I need to fill out a self assessment online, I don't earn in the Uk, live in the U.K. Or pay tax in the Uk other than what is deducted by the trust mangers.
Applying for double taxation used to be much more simple.
How should I progress with this?

Best to start by creating a new thread of your own rather than piggybacking on someone elses (which has a less than meaningful title). If you go back to the Pensions board when logged in you should see a button which says 'new thread' somewhere - in my view it's on the top left but I'm using the 'old' display format of the boards.

xylophone

It is normally the case that the Trustees will make payments to beneficiaries net of tax but give the beneficiary a certificate of tax deducted which enables him to apply for a tax refund if appropriate.

https://www.gov.uk/trusts-taxes/beneficiaries-paying-and-reclaiming-tax-on-trusts

https://www.gov.uk/tax-uk-income-live-abroad/overview

Sending a Self Assessment tax return
You can’t use HMRC’s online services to tell them about your income if you’re non-resident. Instead, you need to:

send your tax return by post
use software
get help from a professional, like an accountant
Fill in the ‘residence’ section (form SA109 if you’re sending it by post) to tell HMRC you’re non-resident. Fill in any sections relating to your type of income.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/615549/SA150-2017.pdf

https://www.gov.uk/government/publications/self-assessment-residence-remittance-basis-etc-sa109


https://www.accountingweb.co.uk/any-answers/non-resident-receiving-uk-trust-income may be of interest.

FatherAbraham

jamesd wrote: »

While you say you just want a monthly income, don't be tempted to buy an annuity. That effectively throws away half or more of the value of your pension pot when it's judged by income produced per Pound available to you. You'd be hard-pressed to find any other retirement income option that guarantees a loss of so much of your money.

Wow. I had no idea that you hated annuities so much that you would advise someone, whose needs and financial situation you have no real idea of, never to buy an annuity.

Are you some sort of lunatic zealot?

Do you feel no responsibility towards those whom you might well be misadvising?

Warmest regards,
FA