Tuesday, 5 February 2013

UK Pension Scheme or Plan but you live in Spain?


Hardly a year goes by when the UK Government fails to alter pension laws or regulations and many changes affect EVERYONE, whether we know it or not! Financial Pages in Spain is concerned that many expats, of all ages, are unaware of how they are affected.

This article is relevant if you INTEND to live in Spain. If fact anyone who INTENDS to become Non -UK Resident

Just to complicate matters there are still many arrangements which have different names!

You may like, for reference, to look at my website article ‘Explaining Pensions terms’;

It helps to cut through the jargon! Here are a list (and it probably isn’t exhaustive) of the titles sometimes used for pension plans. If you have one but don’t understand what it is, please email me.

PPP – Personal Pension Plan
SIPP – Self Invested Personal Pension
GPP – Group Personal Pension Plan
S32 – Section 32 Pension Transfer Plan
ShP - Stakeholder Pensions
PPTP – Personal Pension Transfer Plan
UP – Unsecured Pension
ID – Income Drawdown
ASP – Alternatively secured pension     
AVC – Additional Voluntary Contributions
FSAVC – Free Standing Additional Voluntary Contributions
COMPS – Contracted Out Money Purchase Scheme
CIMPS – Contracted In Money Purchase Scheme
EPP – Executive Pension Plan
RAC – Retirement Annuity Contract
Section 226 Annuities
Superannuation Schemes
SSAS – Small Self Administered Scheme
OPS – Occupational Pension Scheme
DBS – Defined Benefits Scheme
FSP – Final Salary Scheme (DBS & FSP are the same – different names)
S2P – State Second Pension
GPS – Graduated Pension Scheme
SERPS – State Earnings Related Pension Scheme
BSP - Basic State Pension
SRP – State Retirement Pension (BSP & SRP are the same)

I haven't even mentioned QROPS, QNUPS and Section 615 as these are International Pensions!

The whole pension plan or scheme scenario is so complex it certainly causes people to ‘turn off’. It might also explain why only 42% of working men and 46% of working women, in the UK, have entitlements above the Basic State Pension. Please email me if you want anything explained!

Even when you have understood the plan or scheme you have, there could be a whole variety of rules and regulations that you don’t understand. I have, therefore produced a table of comments and questions, with my responses.

This Q & A section covers many issues raised by readers;

Comment / Question
My company scheme won’t let me take my pension until I’m 65 and I’m only 57 now.
If the scheme rules say 65 then that cannot be changed although most schemes allow for early retirement due to ill-health. You could talk to a suitably qualified adviser (email me) about a pension transfer, which, if the circumstances are suitable, might be arranged.

I’ve got two pension plans but I seem to have lost the paperwork in my move to Spain.
I can put you in touch with a tracing service which will hunt for your plans. You need to give as much information as possible but they can be traced.

I am a 59 year old widow but I don’t draw my company pension until I’m 62 and half. I won’t need a widow’s pension.
The provision of a widow’s pension within a scheme can reduce the amount of initial pension you receive. The answer to your query is complex and you need to get advice from one of a limited number of specialists who deal with these issues. I can put you in touch if you email me.

I’m only 45 years old and have a pension fund worth £33,500. I’ve been told that I can’t cash it in even though it’s in the UK and I’ve lived in Spain for 7 years.
If you have no intention of moving back to the UK, it is worth considering transferring your existing fund to a recognised alternative, approved by the UK tax authorities (HMRC). There will be a number of alternatives so your current and future circumstances need to be considered. Can you please complete the attached very brief fact find and a qualified adviser will contact you?

I have a frozen pension in the UK with a former employer. I’d rather have control myself so can I have a SIPP?
A SIPP is a possibility but not the only one. You need to have the full range of options available. The Financial Services Authority in the UK (FSA) requires pension transfers to be handled by a transfer specialist specifically authorised through their qualifications. Please email me for a referral

I’m 63 years old and live in Spain just drawing my private pension which is paid into my UK bank account, changed to euros and sent to me in Spain.

How can I find out what State Pension I will receive?

This is often the arrangement people make. You might benefit from comparing the rate the bank gives you with an alternative. Try La Torre Fx –Foreign Exchange which is fully licensed and regulated.

You can get a forecast of your State Pension using a Form BR19. Either seek one on the Dept. of Work and Pensions (DWP) website or I will email you a blank form for you to complete.

It’s complex isn’t it? I will help if I can EMail

I'd also like to draw your attention to other posts on my Blog

Getting Professional Advice

Expressions & Terms used in Pensions

You might also benefit from looking at 'UK Overseas Pensions for Expats'

David Goodall
Financial Pages in Spain