Increasingly, people are planning to retire overseas. They may already have a holiday home abroad, which will become their retirement home, or the plan may be to buy somewhere at the time.
Whatever the circumstances, additional planning will be needed if problems are to be avoided. Many people have retired abroad and been relying on their pension income, only to see exchange rate fluctuations seriously reduce the value of their pension, sometimes to the point of no longer being able to maintain lifestyle.
Pre-planning can take advantage of investments in the relevant currency which will remove or reduce the currency risk. Furthermore, the type of investment will need to be considered, as plans which are tax efficient in the UK, may not be efficient in the new country of residence.
For example, tax free income from ISAs or tax free lump sums from pension funds in the UK may well be taxable in your new country of residence – it is too late to find this out once you have become tax resident too. Advance planning not only ensures you avoid these traps, it will also help to identify investments appropriate to your intended location, whilst taking advantage of any remaining options prior to your departure.
For some, there is also the prospect of returning to the UK at some time in the future and planning for this in advance can ensure you avoid nasty surprises later.
There are a number of needs that expats may have in relation to retirement planning :
Maintain a Pension - Contributing to a retirement plan once you have moved abroad click here for more information on expat schemes.
Transfer a Pension - It is possible for expats to transfer their UK pension overseas, and potentialy benefit from increased flexibility, and reduced tax liability. QROPS Info Here
UK State Pension - It is possible to have your UK state pension paid overseas, however their are currency risks. Click here for more on currency transfers & here for UK state pension info
According to a recent Mercer quality of life survey, Spain is in the top 50 of places to live in the world, however they have slipped from the top half to the bottom half in recent years.
Some of the reasons people choose to retire in Spain, include :1. Ease of obtaining UK pension – your pension can be paid directly into your Spanish bank account so you can easily get at your money.2. Cost of living – Historically Spain has been considered cheap, although recent exchange rate fluctuations make that less so these days.3. Cheaper property – With the recent economic collapse, it is possible to find some bargains in the Spanish property market, however it is important to do thorough research in what is still a tough market.4. It's not far – If you are British, friends and relatives will be within easy reach. The UK is only a 1-3 hour flight away.5. Health – According to the World Health Organization, the Costa Blanca has the best climate in Europe and the second best climate in the world. The mild, dry winters and the salt lagoons in the region make it a great destination for sufferers of asthma, arthritis and rheumatism. Murcia region has the cleanest air in Europe so is also a good region to consider.6. Healthcare system – If you are a pensioner from the UK, you will be able to register for free healthcare in Spain. The healthcare system in Spain is the seventh best in the world. Hospitals are clean, efficient and well-equipped, and waiting lists for operations and procedures are much shorter than in many countries.7. Transport – Public transport is cheap and efficient and driving in Spain is a joy. Roads and motorways are generally in a good condition and are empty when you compare them to roads in other countries.8. Outdoor life – Retiring in Spain in the Costa Blanca, Costa Calida or in Southern Spain, can enable you to sunbathe all year round, enjoy golf most days of the year and barbecue throughout the year. If you have a garden, you will be able to make full use of it and enjoy sitting out on your terrace with a glass of wine in the evening.9. Culture and history – Local fiestas, Saints' Days, flamenco dancing and historical Roman and Moorish sites are just a few examples. Spain is a great country for those who love archaeological remains, museums, art and galleries
Tarjeta de Residente Comunitario
If you intend to live in Spain‚ it is a legal requirement to apply for‚ and be issued with‚ a Community Residence Card. This card entitles you to equal treatment with Spanish citizens. Details must be obtained from your nearest Spanish Consulate before departure and application should be made to that office. If there is not one locally‚ contact the Spanish Embassy in London for the address of the nearest Consulate.
Tax and inheritance law
Tax and inheritance laws are different from those in the UK and professional legal and financial advice should be sought. The British Consul‚ in the area in which you intend to live‚ will have a list of English-speaking lawyers.
Medical facilities and hospitalisation
As a general rule‚ medical facilities in Spain are excellent. Many doctors and nurses speak English and most hospitals and clinics in tourist areas provide interpreters. However‚ availability of services varies from locality to locality. If facilities are not available to meet your specific needs‚ you may have to travel to another area for treatment. In Spain it is customary for a family member to provide basic nursing care (feeding and personal hygiene) unlike the system in the UK where it would be provided by nursing staff. However‚ in most areas where British expatriates live‚ there are privately-run nursing agencies which charge commercial rates for services similar to those you would find in the UK. These charges are not normally covered by private medical insurance.
Spanish Council-provided Social Services
These are only available to people who register with their local Town Hall‚ as residents‚ and who hold a Tarjeta de Residente Comunitario (Community Residence Card). These services vary from one council (Ayuntamiento) to another. In planning for the future‚ it is important to consider what is available in the area you have chosen.
If you have any enquiries in regards to retirement in Spain or pension planning, simply send us a question below and we will do our best to respond, or a carefully selected advisory firm will try and give you an informative response.
- How do I plan for different taxation laws ?
- What should I do with my pension when I move ?
- Can I recieve a UK pension abroad ?
- What is the best way to manage inheritance tax ?
Response to questions do not constitute advice, and no financial decision should be based on feedback alone. Always seek professional financial planning when making retirement decisions.