Page 24 - Spanish Insight - August 2019

Pensions advice in Spain:

Six tips for getting it right, first time

that provide better tax benefits for Spanish 5. Research other peoples’ experience
By Steven Langford, Partner, Blevins Franks
residents, so make sure you explore the Even amongst regulated providers, check for
alternative options. quality. Testimonials, particularly word-of-
With so many options for UK pensions, mouth recommendations from people you
it can be difficult to know what to do to 3. Don’t overlook cross-border tax issues trust, can provide reassurance and indicate
achieve a financially secure retirement. The The Spanish income tax treatment of that your provider is meeting the needs
ongoing uncertainty surrounding Brexit pensions differs to the UK and is highly and expectations of their clients. Look for
and political volatility in the UK also raises complex, with rates varying regionally consumer reviews, ask around your local
questions about how long we can expect between 19% and 48%. community and follow up references where
today’s opportunities for expatriates to last. possible. Be mindful, however, that other
While UK-based pension advisers may have peoples’ situations might be quite different
Any financial transaction brings a degree some understanding of Spanish taxation, to yours – what works for them may not
of risk, but as pensions are often especially they are unlikely to have the full expertise to necessarily work for you.
valuable and critical in providing a navigate issues such as Spanish succession,
comfortable retirement, making the wrong wealth and income tax mitigation in the 6. Look at the whole picture
decision here can be disastrous. This is context of your overall situation. This can Pensions should form just part of your
therefore an area where quality, expert advice lead to a much higher tax bill than necessary, overall financial plan. Your adviser should
is vital. for you and your heirs. look at your pensions in the context of your
unique circumstances, risk appetite and
These six tips can help you avoid costly A locally-based, UK-regulated adviser is best wider situation – including residency, your
mistakes and establish the right pensions placed to establish the most tax-efficient other assets, tax and estate planning – to help
approach for you. approach for your particular circumstances secure the best outcome for you and your
and goals. family.
1. Check your pension adviser is regulated
by the UK Financial Conduct Authority 4. Beware of pension scams and Deciding what to do with your pension
(FCA) unregulated investments could be one of the most important financial
Regulated financial companies must meet Be extremely cautious of advice from a decisions you make. While you should take
certain standards and act in the best interests company that has cold-called you, and the time to get it right, keep the Brexit
of their clients. While taking regulated never sign anything under pressure. Be countdown in mind. With many predicting
advice is compulsory for people looking especially wary of claims of unusually high that the UK could introduce tax penalties on
to transfer ‘final-salary’ pension benefits or guaranteed returns, and opportunities to overseas transfers and limit how expatriates in
worth £30,000+ a year, the FCA strongly access your pension before the age of 55. the EU can access their UK pensions post-
recommends it for anyone considering their Once you transfer your pension, it is too late; Brexit, now is the time to review how you
pension options. A simple online search of you could end up losing some or even all of can best secure a prosperous retirement in
a provider’s full name plus ‘FCA’ should your pension funds, and face a large UK tax Spain.
reveal more about their relationship with bill as well as penalty fees.
the regulator and link to their record in the Tax rates, scope and reliefs may change. Any
Financial Services Register. Also, take note that many companies statements concerning taxation are based upon
offering pension services are unregulated. our understanding of current taxation laws
2. Consider all the available options Whether they aim to defraud you or not, and practices which are subject to change. Tax
Many expatriates transfer UK pension funds these are unprotected investments that risk information has been summarised; individuals
to a Qualifying Recognised Overseas Pension losing your money with no opportunity for should seek personalised advice.
Scheme (QROPS) to unlock benefits such compensation if things go wrong.
as flexibility to withdraw euros or sterling Keep up to date on the financial issues that
and more freedom to pass benefits to heirs Protect your pension benefits by checking may affect you on the Blevins Franks news
other than your spouse. However, a QROPS your provider’s credentials, including their page at www.blevinsfranks.com
will not suit everyone and is not always the understanding of Spanish taxation and its
most tax-efficient solution. Pension funds can interaction with UK rules.
potentially be restructured in arrangements

24 Spanish Insight September 2019