Friday, 29 October 2010

October Summary

As we approach the last day of the calendar month, I thought I would reflect on the main issues and topics on ‘Financial Pages in Spain’ during October

  • New Zealand Foreign Trust (NZFT)

  • QROPS

  • QNUPS


The most feedback in terms of readers contacting me was without doubt, people seeking a second opinion. I’m very pleased and flattered that readers, of a relatively new blog, are bringing their issues to me. I’m always pleased to receive emails

Using the statistics provided by my service contractor, I can also indicate the most popular posts in terms of the number of people who visited the pages. They were, in order;

  1. New Zealand Foreign Trust (NZFT)



  1. QROPS – Questions & Answers



3.   QNUPS (Qualifying Non-UK Pension Schemes)



If you need advice please email me for connection to an authorised and regulated adviser.

The blog is also being read far and wide. So far, according to my statistics, it has been read in 26 countries. Not surprisingly, the furthest away being New Zealand.

The top three in order;

  • Spain
  • United Kingdom
  • USA

It is great to be able to give you the feedback and readership popularity but I thought I’d also tell you what I enjoyed most of all.

Most of my writing comes from personal experience as an adviser, from my first hand knowledge in Spain and lots of reading to keep up to date with trends and changes. This month I was able to write about a completely new product – Pension Reciprocation Plan (PRP). This appeared on my Website

The PRP appears on;


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I would also like your ideas. If any reader thinks that there is a subject that I should cover, please drop me an email

Wednesday, 27 October 2010

Your chance for a ‘second opinion’

I am finding, recently that many people come to me for a ‘second opinion’ For QROPS, QNUPS, UK Pensions, Investments, they are unhappy with the advice they have been given and send me examples.

  • ‘ It  looked like a mass produced report with just my name and personal details changed’

  • ‘ They wanted an up front fee even to talk to me’

  • ‘ I wasn’t convinced the advice was correct’


Those sadly are just a few of the comments I have heard in the last two months. Even though ‘Financial Pages in Spain’ only started in August 2010, I am receiving comments which show a great deal of respect.

In the next few days I intend to hit the question of commissions, fees and charges head on. There are malpractices but sometimes it is difficult to distinguish the good from the bad. I’ll try to help. Email me

Can you help me to help you?

  • Please send me both good and bad examples of reports you have received, from financial advisers, I’ll respect your privacy
  • Tell me the names of Advisers who refuse to disclose commissions
  • If the fees, charges and commissions are hidden in a report and not openly disclosed, please send examples

This sort of information will help everyone and help eradicate some of the greedy practices.

I may not have intended it when I started out but it seems that Financial Pages in Spain is becoming the respected second opinion.


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Whatever your query, please write to me. My email is on this link

Friday, 22 October 2010

Isle of Man QROPS (update)

  • Change in taxation rules

  • No Double Taxation Agreement (DTA)

  • Look at NZ, Guernsey and Malta


This article is written to an audience, primarily, of British and Irish expats in Spain. I would also like to welcome my new regular reader in Malta.

The Island Government in IOM (Tynwald) has changed the laws so that the Isle of Man can compete in the QROPS market. Income can now be paid gross, without the deduction of tax.

I still don’t recommend IOM. As I wrote during QROPS Week ( see September) the following is still true;


Isle of Man
The Isle of Man is a stable place for financial planning because it is a low tax environment, has expertise in tax planning and is mainly served by UK trained advisers, lawyers and accountants.

For Spanish residents and people planning to live in Spain, the Isle of Man is not a good place for your QROPS. The Isle of Man does not have a Double Taxation Treaty with Spain.


If you are reading this from a country that has a DTA with IOM then I would recommend it, but only after you have considered NZFT (below). Please email me if you need clarification.


New Zealand Foreign Trust (NZFT)
Please refer to my article on this new innovative arrangement



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You can write to me with your personal experiences, ask me a question or to be put in touch with my recommended adviser by sending me an email




Wednesday, 20 October 2010

QROPS - Issues

Please come back to the Blog later this week, as I am working on information about an alternative to QROPS. For now I will deal with some issues thrown up by QROPS

  • Beware of long ‘lock-ins’

  • Access to cash

  • In Specie transfers

  • Only get regulated Advice


Avoid Long term lock-ins
Times change, investment conditions change and an individual investment group may not always be as good as you first thought. This suggests that you need flexibility to change as circumstances change. Personally I had an investment in my pension which went from Quartile 1 (the best) to Quartile 4 (the worst), which measure investment performance, within a year – I moved the investment!

There is one company which locks you in for 10 years with very high penalty charges if you want to get out! But at least it guarantees not only their initial commission but the trail commission for at least 10 years. For an alternative adviser please email me

Access to Cash
The question of New Zealand QROPS is one of the most popular on these pages. It should also be noted that since Pensions Simplification in April 2006, the vast majority of schemes can pay, in the UK, 25% of the fund as tax free cash. This is an important option which should be borne in mind. If you are over 55 there is no need to transfer your tax free cash as part of your QROPS.

In-Specie transfers
In August, I had a conversation with an English guy now living and working in Spain who was telling me about his Self Invested Personal Pension (SIPP). Naturally, I asked if he had considered transferring to a QROPS. He told me that he was very happy with the investment returns in his SIPP and that his ‘adviser’ had told him that it wasn’t possible to transfer the assets in his SIPP to QROPS!

This advice is wrong

Such a transfer is possible and is known as an In-Specie transfer, this is perfectly possible and clearly good advice where the individual is pleased with his investment performance. He has ditched the ‘adviser’ and only the possibility of a return to the UK is holding up his in-specie transfer. Please don’t get the wrong ‘adviser’ email me

Some advisers seem unable to distinguish between the rules and their own business model.

Why not Spain?
Spain does not recognise a trust structure, which is necessary to accept a UK pension. Therefore any potential transfer to a QROPS by a Spanish resident would take assets currently in held in trust, out of trust, with negative taxation consequences.

It is much better for Spanish residents to have the capital sums outside Spain in a trust and then for any income to be taken and declared in Spain. By declaring that the income is an annuity, which Spanish law recognises, favourable tax treatment is given, even though an annuity need not be bought from a pension provider.

Which is the best QROPS jurisdiction?
The only honest answer is that it depends on personal circumstances and can also be determined by an individuals own preferences. I can say that for Spanish residents the worst jurisdiction would be Spain!

By being open and frank with an authorised and regulated adviser, a plan can emerge which has to be in the individuals best interests. If you email me, please give me a brief outline of your circumstances and what your immediate objectives might be. I will ensure that you get authorised and regulated advice.

Regulated advice
If you live in Spain and are considering a Pension Transfer (including QROPS), the only adviser that I would recommend will be regulated by one or more of the following;

CNMV
Comision Nacional del Mercado del Valores is the principal financial services regulator in Spain and responsible for authorising investment products.

DGS
Direccion General de Seguros y Fondos de Pensions is the Spanish regulator for insurance products which can be marketed in Spain.

FSA
The Financial Services Authority - the UK's financial services regulator.

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Feedback please!
If you have your own question, I’d be delighted to answer it. Those of you who live in Spain or intend to live in Spain should be very careful when choosing an adviser.

You can write to me with your personal experiences or to be put in touch with my recommended adviser by sending me an email


Tuesday, 12 October 2010

QROPS, QNUPS & UK Pensions

The question of where you invest your pension funds is often overlooked. Yet in most cases it’s key to your future income!
  
  • Understand your attitude to risk

  • Check where your funds are invested

  • Unhappy? Change your adviser


Whether you live in Spain, the UK or even if you live in both countries, I hope this page will be food for thought about pension planning.

Do you know where your funds are invested? Do you know the asset classes of the investment in your pension fund? What is your attitude to investment risk?

Are you surprised I have asked these questions about your pension funds?

Let me explain. I was watching an item on the BBC which, in my view, was both misleading and alarmist. With many employers closing their Schemes, the BBC presenter then explained the difference between

  • Final Salary Schemes where there may or may not be an employee contribution but where the employer is taking all the risk to base the future pension on the final salary

Good so far

  • Money Purchase schemes where there could be both employee and employer  contributions but the future pension is based on Stockmarket returns

Sorry BBC that is misleading

You don’t have to invest in stockmarket funds at all, or you may wish to limit equity investments. There are other asset classes where you may prefer to invest. If there is a particular asset class that worries you as pension plan holder tell your adviser and switch the investment. Asset Class did you ask? If your adviser never discussed asset classes get a new adviser! The most common asset classes are equities, property, gilts, bonds and cash. It is always a good time to review the asset classes in which you invest, but none more so than at a time of turbulent markets.

The last time you talked to your adviser did you discuss ‘attitude to investment risk’? If you didn’t, again I say get a new adviser! I am always prepared to recommend good professional advisers, who are fully authorised and regulated. Email if you want a referral.

It is my personal view that pension plans, including QROPS and QNUPS should be reviewed regularly. Be sure you get regular reviews from your adviser.


The closer you get to retirement the more the need to consider the form in which you will receive your income.  The initial investment of your QROPS or QNUPS funds should equally be reviewed regularly.

If you need to get a new adviser please email me.


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You can write to me with your personal experiences or to be put in touch with my recommended adviser by sending me an email I’m very keen to get your feedback


Monday, 11 October 2010

QNUPS – Qualifying Non-UK Pension Schemes

  • Get appropriate professional advice

  • Remember that QNUPS is a Pension Scheme

  • Ideal for ‘In-Specie’ Transfers


I have recently read an article by a leading International Financial Adviser (that’s their description not mine) which contains inaccurate information. So very much like QROPS, with QNUPS you need advice from the right source. I can provide you access to a professional adviser, if you email me.

 I think the technical description is necessary. The Inheritance Tax (Qualifying Non-UK Pension Schemes) Regulations 2010 [S1 2010/0511] have introduced this acronym ‘QNUPS’. Weblink gets you to the precise Statutory Instrument (SI).

In short, earlier this year HMRC confirmed that contributions to a Qualifying Non-UK Pension Scheme, would be exempt from UK IHT. What this means is that as long as the QNUPS walks and talks like a pension, then the assets held in it will be protected from UK IHT.

This is not meant to be an exhaustive list, but I believe there are four categories of individuals who will most benefit from or should consider a QNUPS;

    1. Any UK resident who from 6th April 2010 will be restricted on their UK pension contributions to basic rate tax relief.
    2. UK domiciled persons (that includes many UK citizens who have become Spanish residents), and UK residents who want to make pension contributions beyond the UK maximum limits.
    3. UK non-residents, including Spanish residents who already have a QROPS but want to add to their pension funds. A classic transfer would be UK savings receiving very little interest, including PEPs and ISA’s. Email me for more information or to speak to an adviser
    4. Any UK resident or domiciled individual who wishes to build up a pension fund in excess of the current lifetime limit

QNUPS provides an excellent opportunity for in-specie transfers. Investments you have built up, properties you own and other revenue producing assets that can just as easily be a pension contribution. The investment does not have to be cash but cash is not excluded. Remember that the QNUPS has to be a Pension Scheme but it is also a plan to defend assets from Inheritance Tax (IHT).

If any adviser suggests selling your assets and buying another financial structure beware. In-Specie Transfers offer a much more cost effective route, normally, and also selling assets can lead to a tax charge (eg Capital Gains Tax). To avoid this pitfall please speak to a recommended adviser. Please email me for details.

In this respect the points I have previously made about QROPS are equally applicable to QNUPS. What I said in QROPS – Questions and Answers was

I’m happy with the investment in my SIPP, why can’t I transfer it to QROPS?
If an adviser indicates that you cannot transfer your existing pension investment to QROPS they are wrong. This type of transfer is known as an ‘In-Specie transfer’. It is acceptable in QROPS because to meet the rules in the UK the investment has to be approved. If the investment is acceptable in the UK then it is perfectly satisfactory.’

If you have assets that you want to transfer to QNUPS without cashing them in, then transfer In-Specie.



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If you have your own question, I’d be delighted to answer it. Those of you who live in Spain or intend to live in Spain should be very careful when choosing an adviser.

You can write to me with your personal experiences or to be put in touch with my recommended adviser by sending me an email



Thursday, 7 October 2010

QROPS – Questions and Answers

I have published a question and answer post before, but this is updated to include queries raised by readers

·        Is there a minimum amount for QROPS?
·        How much does QROPS cost?
·        Who can advise me?

So let’s start with a definition. Qualifying Recognised Overseas Pension Schemes (QROPS) were introduced in April 2006, by the UK Government, as part of a process called Pensions Simplification (that’s not what I called it!).

The ‘Question and Answer’ format here which should cover the main issues for those of you who live in Spain or indeed those who intend to live in Spain.

What’s the minimum amount I can transfer into a QROPS?
Some advisers regard sums of under £100,000 as ‘small pots’ not worth transferring. However, with extremely low annuity rates and poor rates under the GAD rules, readers with less than £100,000 be transferred need and deserve advice. New Zealand QROPS, which I have dealt with before are certainly worth readers looking at. Let me recommend an adviser, click here. If your adviser says your fund is too small – seek a new adviser!

Is the transfer into a QROPS expensive?
The main cost associated with a QROPS is the preliminary registered scheme
transfer work that is required before your pension assets can pass into a QROPS. This is specialist work and I’ve never thought cheapest is best in professional advice. However, it must be reasonable. A really good financial adviser, who is properly authorised and regulated, will put the costs in writing, before expecting you to sign up to their scheme. I’m happy to recommend such an adviser if you contact me here. Beware advisers who don’t tell you the costs in an open and unambiguous way.

I’m happy with the investment in my SIPP, why can’t I transfer it to QROPS?
If an adviser indicates that you cannot transfer your existing pension investment to QROPS they are wrong. This type of transfer is known as an ‘In-Specie transfer’. It is acceptable in QROPS because to meet the rules in the UK the investment has to be approved. If the investment is acceptable in the UK then it is perfectly satisfactory.

Some advisers have difficulty in distinguishing between their own business model and the rules! To avoid such advisers, please email me

What can I invest my QROPS assets in?
There is a flexible choice open to you and part of a good adviser’s process is to determine and agree an investment strategy which closely matches your needs. Your attitude to investment risk is also key, since it will indicate the asset classes that you should use and those to avoid.

Will any benefits I take from QROPS be taxed?
QROPS income is generally not taxed at source. The tax treatment of what you receive is very favourably treated in Spain, though you need individual advice to explain how it affects you.

What will happen to my QROPS when I die?
Any funds remaining when you die will either be paid to those nominated by you as beneficiaries or those same beneficiaries may simply continue deriving the same tax free advantages you were enjoying in your lifetime.

Are there any circumstances in which I shouldn’t transfer to a QROPS?
If you want the certainty of income and are prepared to hand over your fund to a pension provider, then an annuity might suit you better than QROPS. I would not suggest you to transfer to QROPS if you intend to be expatriate for less than six years, but you need advice from an authorised and regulated adviser.

I’ve heard about unscrupulous QROPS providers and intermediaries, any
comment…?
In May 2008, Her Majesty’s Revenue and Customs (HMRC) withdrew status from all Singapore based QROPS. This action emphasises the importance of taking independent advice from industry experts who are in regular contact with HMRC to ensure that any transfers do not nor are likely to fall foul of HMRC regulations. The best advisers can also offer a choice of QROPS based in more than one jurisdiction. Ask to be introduced

Which is the best QROPS jurisdiction?
The only honest answer is that it depends on personal circumstances and can also be determined by an individuals own preferences. I can say that for Spanish residents the worst jurisdiction would be Spain!

By being open and frank with an authorised and regulated adviser, a plan can emerge which has to be in the individuals best interests. If you email me, please give me a brief outline of your circumstances and what your immediate objectives might be. I will ensure that you get authorised and regulated advice. If you live in Spain and are considering a Pension Transfer (including QROPS), the adviser that I recommend will regulated by one or more of the following;

CNMV
Comision Nacional del Mercado del Valores is the principal financial services regulator in Spain and responsible for authorising investment products.

DGS
Direccion General de Seguros y Fondos de Pensions is the Spanish regulator for insurance products which can be marketed in Spain.

FSA
The Financial Services Authority – the UK’s financial services regulator.

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If you have a further question, I’d be delighted to answer it. Those of you who live in Spain or intend to live in Spain should be very careful when choosing an adviser. You can write to me with your personal experiences or to be put in touch with a recommended adviser Email me here

From my own experience, I only ever recommend advisers that I know and even then I am happy to help my readers by ‘looking over their shoulder’. Whatever you decide to do please tread carefully.







Monday, 4 October 2010

Tax Planning in Spain

For tax planning read Tax saving

·        QROPS and QNUPS
·        Offshore Trusts
·        You need to be Spanish Tax Resident


It’s an odd fact, but true, that a country like Spain can be regarded as a tax haven with careful planning and expert advice. QROPS, QNUPS and establishing Offshore Trusts are just three examples of effective tax planning

When I was planning to move to Spain, a few years ago, I came to the conclusion that, in tax planning terms, the UK was a good place to accumulate wealth, including pensions and Spain was good for retiring and spending the accumulated wealth. The same is true to some extent, even though the UK Budget 2009 (Labour) and the 2010 version (Coalition) may have changed some pension rules.

Many firms of advisers will offer a financial review based on all circumstances. It can be very misleading to deal with pensions, tax and even mortgages in total isolation from other financial issues. For example, I was recently told about a lady who had a problem with her mortgage and the solution was found by imaginative use of her pension. Email me for links to a professional adviser.

Effective tax planning has three key issues;

  • Residential status and domicile
  • Where your assets are held
  • The nature of your current and future income

I recently came across a financial adviser who could not even distinguish between residency and domicile, when I checked the advice he gave one of my readers I was horrified. There are still advisers giving misleading, bogus and poor advice.

It is imperative that you seek out a professional adviser. I can help if you need me to recommend the right advice. Email

Spain can even be a tax haven but you will only benefit through sound professional advice.


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You can write to me with your personal experiences or to be put in touch with my recommended adviser by sending me an email I’m very keen to get your feedback


Saturday, 2 October 2010

Isle of Man QROPS

My attention has been drawn to an article in a Spanish newspaper which specifically talks of the popularity of QROPS from Isle of Man.

  • Did you get the right advice?

  • Great offshore centre

  • Isle of Man QROPS – not in Spain

The Isle of Man is a stable place for financial planning because it is a low tax environment, has expertise in tax planning and is mainly served by UK trained advisers, lawyers and accountants.

For Spanish residents and people planning to live in Spain, the Isle of Man is not a good place for your QROPS. The Isle of Man does not have a Double Taxation Treaty with Spain. This means that tax collected in the Isle of Man cannot be offset in Spain or claimed back. In a worse case scenario, the tax could be levied twice.

However, I am aware that there are British and Irish citizens who are resident in Spain who have been mislead and potentially mis-sold Isle of Man QROPS. If you think that is you please contact me. I have a means of correcting your position, please email me.

It is the policy of the Isle of Man to apply a withholding tax from pension income including QROPS made by non-Isle of man residents. The Isle of Man is a good jurisdiction, for residents in a country that has a Double Taxation Treaty such as Norway, Sweden or Finland.

Do not fall into this trap. To be recommended to an adviser who knows these rules very well, please email me.


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I have a great deal of respect for the Isle of Man but your adviser may have been unaware of the tax position in respect of QROPS. They may not have given you any tax advice.

There are ways of putting things right.

Email me; I may be able to help

Friday, 1 October 2010

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.

·        Inflation back on the agenda

·        What interest rate are you getting?

·        Do you have a financial plan?


I make no apology for being controversial. Part of my make-up is to ‘tell it as I see it’. Something that is happening concerns me, whether you are in Britain, Ireland or Spain. However, I think a good financial plan can sort it out.

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!”

Maybe you should ‘do something’ and email to be introduced to a qualified regulated and authorised adviser.

Tuesday 14th September 2010 was the day that the latest set of inflation figures were announced in the UK. The Retail Prices Index (RPI) was the long standing measure of inflation and currently stands at 4.7%. Governments have tweaked the indices and more recently the Consumer Prices Index (CPI) has become more widely used. The CPI now stands at 3.1%, unchanged from the previous month.

CPI in future will be used to up-rate pensions. It must be a co-incidence that it’s lower than RPI.

I looked at the best savings rates. Easy access, no notice, Nat West at 2.89% was the best I could find, but even that includes a ‘bonus’ which lasts for 12 months. You can lock yourself in for longer but then you pay a penalty for withdrawing your own money!

So you get the best savings rates at lower than the rate of inflation and your cash is reducing in value as time goes by. That in summary is why you need a financial plan! To be introduced to an authorised adviser with knowledge of the UK and Spain, please contact me.

I will never introducer you to an adviser that charges an up front fee. Is it
time to stop the inertia and avoid your ‘Savings’ becoming ‘Losings’?


PS  I was nearly ready to publish when I received an email from a famous Supermarket advertising its Easy Saver Account 'Enjoy 2.6% AER Variable on your savings' Enjoy Savings at a lower rate than inflation? No thank you Mr.Sainsbury!