Pensions - Definitions, terms & Expressions

Includes QROPS Update

·         Cut through the jargon

·         Get a professional Adviser

·         Understanding QROPS & QNUPS

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

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^th 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.

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.

CNMV
Comision Nacional del Mercado del Valores is the principal financial services regulator in Spain and responsible for authorising investment products. A CNMV adviser can be recommended, please click here

DGS
Direccion General de Seguros y Fondos de Pensions is the Spanish regulator for insurance products which can be marketed in Spain. Email me to be referred to an authorised adviser

FSA
The Financial Services Authority - the UK's financial services regulator. The FSA also ‘passports’ authorised advisers to operate in Spain. For a recommended adviser click here

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 is £1.8m in the 2010/11 tax year.

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 generally treated favourably for tax purposes in Spain.

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).

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.

By definition, a QROPS is a QNUPS but the reverse cannot be said.

Q - Day
6^th 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. QROPS have been established in various countries across the world, many in jurisdictions with beneficial tax rules. 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.

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

The following further reading is also recommended;

QROPS (UPDATED) - Comparing Jurisdications

http://expatsfrombritain.blogspot.co.uk/2012/08/qrops-2012-comparing-jurisdictions.html

UK Pension but you Live in Spain
http://expatsfrombritain.blogspot.co.uk/2012/03/new-generation-qrops-2012.html

Getting Professional Advice
http://expatsfrombritain.blogspot.co.uk/2012/01/getting-professional-advice.html

David Goodall

Financial Pages in Spain

Email: davidgoodall.spain@gmail.com

Getting a Second Opinion

I have been finding for sometime 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.

Rather than guesswork people also ask me to recommend Accountants, Lawyers, Surveyors and other professionals.

Some of the things people have said to me:

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

• ‘ They wanted an up front fee even to talk to me, funny they never mention that in their adverts’

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

But they trust ‘Financial Pages in Spain’ and I am receiving comments which show a great deal of respect.

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

David Goodall

Financial Pages in Spain

davidgoodall.spain@gmail.com

Seeking professional advice

First anniversary week – Day one

This is the first of five posts on major issues affecting British and Irish expats and property owners in Spain. On first view it may not look like a major issue but I know from emails received that it certainly is.

No trick question but where do think is the best place to seek advice?

• A man in a pub. The classic quote I hear so often is ‘I heard somewhere………’
• An unauthorised, non regulated and unqualified person or company who calls themselves an ‘adviser’
• A properly trained, fully qualified, authorised and regulated, individual or company who not only give you the best advice, but as part of their professionalism carry PI (professional indemnity) cover in case things go wrong.

Is there really a choice?

Why would you not use a professional?

Apart from owning property in Spain for nine years and struggling to find professional advice, in the last year my Blog has lead me to many professionals. If you need advice, please email me.

My own connections included the following professionals;

• Regulated financial advisers( FSA, CNMV, DGS)
• Suitably qualified accountants
• Professional lawyers
• Chartered surveyors in Spain
• Members of the Association of Property Professionals
• Company formation for property ownership specialists

If you email please let me know your question and where you live. I may be able to answer myself, just point you in the right direction or refer you to a suitably qualified person.

For more detailed reading you may wish to look at previous posts to my Blog

http://expatsfrombritain.blogspot.com/2011/04/professional-connections.html

http://expatsfrombritain.blogspot.com/2010/11/unauthorised-advisers-about.html

Please remember that my Blog is about unbiased, factual financial information. You can look elsewhere for information but remember that an advert will certainly be biased towards the company who paid for it. I have no problem with that but remember it’s biased!

David Goodall

Financial Pages in Spain

davidgoodall.spain@gmail.com

Why won’t they disclose commission?

One of the scandals of (some) FSA authorised advisers in Spain

September Update

Three months on and they still won’t give a reason. Commission Disclosure in UK is MANDATORY under FSA rules. But many FSA advisers still refuse to disclose in Spain

Scandal

They pay for big adverts in the newspapers, they proudly say they’ve been around since the year dot, they are authorised by the Financial Services Authority (FSA) but they won’t tell you how much you have to pay them!

They can dress up commission anyway they like but it’s what you pay them! It’s your money.

 Anyone with a story to tell in confidence can contact me by email

·        FSA rules since 1993

·        Commission disclosed in UK but NOT Spain

·        What do they have to hide?

It continues to perplex me, I can’t understand this and quite frankly I think it is wrong!

They advertise in English speaking newspapers, they tell us they are authorised and regulated by the FSA in the UK but they don’t disclose commission which has been an FSA rule since 1993.

Why?

Well this is their chance to tell you. If any of the International Financial Advisers who are authorised and regulated by the Financial Services Authority (FSA) want to explain, I will republish their words without any alteration or redaction. So come on, you know who you are come and tell us!

But if no one takes up that option, I’ll also give that the oxygen of publicity too!

So come on guys tell us, why won’t you disclose commission?

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Anyone who has anything to tell me about this or any other issue can write to me with details by email. If you want anonymity I will guarantee it.

If you work for an International Financial Adviser or maybe you did in the past, with a whistleblowing story to tell, I will protect my source.