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Do you have a UK pension fund? How secure is it?
If at some stage in the past you have worked in the UK then the overwhelming probability is that the answer to the question, “do you have a UK pension fund?” is “yes.”However, it is likely, if past experience is anything to go by, that you have little or no idea about how much your UK pension rights are worth or indeed how they are invested (if at all).
If you worked in the public sector perhaps as a doctor, nurse, or teacher, then you will have a deferred pension (sometimes called a frozen pension) in one of the UK public sector pension schemes. No fund as such is associated with these schemes as the cost of providing benefits comes mainly from the UK taxpayer of today.
THE DAMAGE ON PENSION FUNDS OF A CHANGE FROM RPI TO CPI
You may have read that the attempts of the UK Government to reduce their long term liability by reducing the benefits from public sector pension schemes is being challenged by strike action which will see more public servants walk off the job than has been seen for a generation.
Even those with deferred pensions have been affected. UK pension rights are generally protected in order to preserve their purchasing power by increasing them to allow for inflation. This inflation linking has to date been provided by way of a link to inflation measured by the Retail Prices Index (RPI). Although it sounds innocuous, the inflation link is now against the Consumer Prices Index (CPI). As over time the CPI is less than RPI by up to 1.5% p.a. this does immense damage to the real value of deferred UK public sector pensions.
THE PROSPECT OF FURTHER ATTACKS ON UK PENSION FUNDS
The wishes of the UK Government to reduce the UK deficit will no doubt result in further attacks on UK pension funds. No wonder that many of those who have UK pension rights but no longer live and work there have already exercised their right to take a transfer value and have transferred to a non UK scheme known as a Qualifying Recognised Overseas Pension Scheme (QROPS).
Doing this gives peace of mind and the opportunity to have control over how the pension fund is invested. There is a large selection of QROPS available in various jurisdictions. Some (like those in New Zealand) may allow for the immediate availability of a lump sum of up to 100% of the fund irrespective of age. Others in jurisdictions like Guernsey and the Isle of Man offer tax free investment growth, and critically control over the timing and amount of the income you are able to take once you are over age 55.
PASS ON UNUSED FUNDS UPON DEATH TO LOVED ONES
The icing on the cake is the ability to pass on the entirety of your pension fund after your death without any tax charges. Leave your pension fund in the UK and following your death 55% of it may be taken by the UK taxman, regardless of how long you have been a non-UK resident.
For further information about QROPS and Pension Planning opportunities please contact us today by clicking the link Here and leaving a few basic details on the form at the foot of the page.
More Blogs By Robert Burns BA (Hons), FCCA , Cert PFS
- QROPS – All Change From April 2012
- QROPS : Stop press - major changes on their way!
- Quantitative Easing - good or bad (or both) for your UK Pension Fund?
- Did Your Pension Fund Fall By 15 Percent in August ?
- New Zealand QROPS : Only Available For A Further 12 Months ?
- QROPS Jurisdictions in Focus : New Zealand
- QROPS Jurisdiction in Focus : Guernsey
- QROPS - the realities of giving and receiving advice
- QROPs - Choice of adviser and choice of jurisdiction
- Why not spring clean your pension ?
- Benefits in Spain and 'La Ley de Dependencia'
- How can I claim my Winter Fuel Allowance ?
- What is a Funeral Plan and Why would I need one ?
- Claiming UK Benefits in Spain
- Transfering your UK National Insurance Contributions to Spain
- Repatriation : Moving Back to the UK
- How to Apply for Free State Healthcare in Spain
- Making a will in Spain
- Claiming Spanish Benefits in Spain
- NIE Number
- Should I Take Out Life Insurance ?
- Can I claim UK benefits if I am widowed in Spain ?
Blogs From Premier Pension Solutions SL
- QROPS – HMRC Introduces changes that create havoc in the market place
- The Economy : What can we look forward to in 2012 ?
- Beyond the tipping point - where next ?
- New Zealand QROPS - good news for all concerned
- Pensions and Politicians
- Changes re New Zealand QROPS - Things are becoming clearer
- QROPS Jurisdictions in Focus : A Round-Up
- QROPS Jurisdiction in Focus : Isle of Man
- QROPS for the UK Expat in Spain
- Could this happen to your UK pension fund?
- Maximising the outcome from your UK Pension fund
- UK Moves Towards Pension Flexibility - But QROPS Still The Expat Choice
- HM Treasury Propose Early Access To UK Pension Savings
- A Hidden Gem In The World Of Pensions
- QROPS - New Zealand in focus.