# Are Working British Expats better off moving to Spain to get the higher State Pension



## Williams2 (Sep 15, 2013)

Quote from the Skipper:
My Spanish neighbour, a retired road construction foreman, told me that he has a State pension of €1,600 a month. Another Spanish friend, a retired chef, told me that his State pension is about the same. I have 40 years contributions into the UK NI system and was a higher rate taxpayer for most of my working life but will be lucky to receive anywhere near half of this when I reach 65.

What Gov.UK has to say about the matter:

Living in Spain - Entitlement to a Spanish State Pension for those who spent the final part of their Working Life in Spain

I'm sure there are lots of 'ins and outs' as well as 'ifs and buts'
But with all the Final Salary Pension Schemes gone in the UK and the
rest of the Company & Private Pension plans dependent on the vagaries of
the Stock Market. More and more people are falling back on the State
Pension to make up the short fall.

All that the working British Expats are told about the matter is:

Entitlement to a Spanish retirement pension

After working in more than one European Economic Area country, it is
possible for your contributions from each one to be taken into account
when calculating your pension or benefit.

If you have worked in Spain for at least one year you may be entitled
to a Spanish retirement pension, provided you meet other entitlement
conditions. For information on how and when to claim your Spanish
retirement pension or how your contributions in the UK can contribute
toward your entitlement to a Spanish retirement pension, contact
your local office of the Instituto Nacional de Seguridad Social (INSS).

When applying you must give as much information as possible about
your working life.

Anyway - I'm sure we will all be interested to hear from other working
Expats who have retired on a Spanish State Pension and whether
they were better off or worst off, than if they retired on a UK Pension
paid in Spain. Which will all boil down to the cost of living in Spain
compared to UK, area you live in and exchange rates, etc, etc.
not to mention any changes in UK or Spanish Govt policy concerning
the State Pension before you retire.


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## Lynn R (Feb 21, 2014)

I couldn't begin to answer your actual question, far too complicated for me!

However, I found this information regarding Spanish pensions quite enlightening.


ExpatBriefing.com | Pensions for Expats in Spain

So, to achieve a 100% state pension in Spain one currently has to have made 35 years of SS contributions, rising to 37 years fromm 2027. It goes on to say that anyone who has got a full contribution record can expect their pension to be around 80% of their final earnings.

Now, to contrast that with someone receiving a "gold plated" UK public sector pension scheme (who would have joined the scheme many years ago so is still entitled to the pension on a final salary basis rather than career average as they are now for more recent entrants). To achieve the maximum pension of half final salary, one would need to have been a member of the scheme for 40 years, paying (apart from the Civil Service which used to be non contributory, but isn't now) typically 6% of salary in employee's contributions. Plus a Basic State Pension, currently just under 6K I think. Doesn't amount to anywhere near 80% of final earnings, does it? 

Those who haven't yet retired will not receive the new Single Tier Pension at the full rate if they spent all or part of their working life contracted out of the State Second Pension because they were in an employer's pension scheme as well. They will have been paying 1.5% less in NI contributions but the reduction in their State Pension will be much more than 1.5%.

Of course, the difficulty in Spain would have been that far fewer people would have had the chance to remain in stable employment on reasonable wages, with the historically much higher unemployment rate here, even before the last recession.


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## alborino (Dec 13, 2014)

Williams2 hope I've understood you but where your pension is paid has nothing to do with it. If you have say 7years UK qualifying years and then 25 years spanish you would claim your pension at least 6 months prior to your UK retirement date. You would do this through the Spanish authorities who would pass it on to the UK. The reason you contact the Spanish is that it was your last country where you had qualifying years or where you currently work.

The UK would calculate their contrribution to your pension based on UK rules. They would ignore the 10 year rule as although you have less than 10 years they have to take into account the spanish years (as number of years - they ignore the contribitions). (This protects people who have wandered Europe doing a few years here then moving on). You'd then get a small UK pension. 

Normally a few years later (you normally have to work longer in Spain to get to pension age) you would apply to the Spanish authorities again. They would calculate your spanish pension. Remember however Spain has some weird rules here. You can find the latter years working has more weight than earlier years. If you have been unemployed (possible due to you wanting to take it easy leading up to retirement, or because you were made redundant) this can seriously impact your pension amount.

While in spain there is, as was in the UK, a voluntary contribution aspect many receive small pensions while some receive large pensions.

You also have to take into account pension protection (My spanish mother-in-law has just had her pension cut) and inflation protection (the three tier lock in the UK).

So basically you cannot pick and choose. And if in Spain be very careful about your options. As an autonomo you can pay in little but that will have the obvious consequences. Best always to take advice on this as it is complex and rules are continuousy changing.

Here a EU view with some examples of people working in more than one country
EU Pension claims


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## Williams2 (Sep 15, 2013)

alborino said:


> Williams2 hope I've understood you but where your pension is paid has nothing to do with it. If you have say 7years UK qualifying years and then 25 years spanish you would claim your pension at least 6 months prior to your UK retirement date. You would do this through the Spanish authorities who would pass it on to the UK. The reason you contact the Spanish is that it was your last country where you had qualifying years or where you currently work.
> 
> The UK would calculate their contrribution to your pension based on UK rules. They would ignore the 10 year rule as although you have less than 10 years they have to take into account the spanish years (as number of years - they ignore the contribitions). (This protects people who have wandered Europe doing a few years here then moving on). You'd then get a small UK pension.
> 
> ...



H'm as I said before - there are lot's of ins and outs, ifs and buts. But to put
it in a nutshell - if you worked in the UK long enough to qualify for the full UK
State Pension and then spent the remaining 10 to 15 years of your working life,
working in Spain.
Would you qualify for the full Spanish State Pension ( upon retiring in Spain )

Obviously this clause in your useful link, makes me wonder:

How your pension is calculated:

Pension authorities in each EU country you've worked in will look at the
contributions you've paid into their system, how much you've paid in other
countries, and for how long you've worked in different countries.
The EU-equivalent rate:
Each pension authority will calculate the part of the pension it should pay
taking into account periods completed in all EU countries.
To do so, it will add together the periods you completed in all EU countries
and work out how much pension you would get had you contributed into
its own scheme over the entire time (called the theoretical amount).

To put things in perspective - the basic State Pension in the UK is £113.10
a week.
Finally - please I'm looking at Working British Expats who are paid employees
in this example - not the Self Employed, etc.


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## Williams2 (Sep 15, 2013)

Lynn R said:


> I couldn't begin to answer your actual question, far too complicated for me!
> 
> However, I found this information regarding Spanish pensions quite enlightening.
> 
> ...



Lynn - thanks for the link - happy days are here again, if what is quoted is true
for most working Expats in Spain.

Quote:
Typically, your pension income is 80% of your final salary levels if you get the full rate. Even after the pension reform, Spanish replacement rates will remain high by international standards.

The case for not moving to Spain - has been well and truly shattered to smithereens, for certain
types of Expat.
In fact I have no doubt that this will be get 'top marks' in Expats retirement plans for Spain.


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## Lynn R (Feb 21, 2014)

Williams2 said:


> Lynn - thanks for the link - happy days are here again, if what is quoted is true
> for most working Expats in Spain.
> 
> Quote:
> ...


I think "certain types of Expat" are the operative words here, though. Most of the ones I've met of working age, if they haven't been self-employed, have been working without a contract and on very low pay, so they wouldn't get a bean by way of a Spanish pension, of course.

I'm sure that's not the case in the major cities though, where people may be employed by large international companies.


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## Williams2 (Sep 15, 2013)

Lynn R said:


> I think "certain types of Expat" are the operative words here, though. Most of the ones I've met of working age, if they haven't been self-employed, have been working without a contract and on very low pay, so they wouldn't get a bean by way of a Spanish pension, of course.
> 
> I'm sure that's not the case in the major cities though, where people may be employed by large international companies.


Of course I'm talking about British Expats in the UK who ( particularly if they have
Spanish as a second language ) could pull off the 'two card trick' having enjoyed
the career opportunities of 'employment rich UK' to spend the last 10 to 15 years
in Spain, to qualify ( or could qualify ) for the full - 80 per cent of Final Salary - Spanish State Pension.
Not that many ( if any British Expat's ) have considered these benefit's before
- for let's face it. For most of us - it's that new New Dream Home in the Sun.

I can think of many people who have been made redundant in the UK, in their
40's or 50's and struggled to find work, where Spain could be the answer.
Depending on their background experience and skill sets of course.

Now we can present 'Sound Economic Reasons' for retiring to Spain - provided
your last working years were spent, working for a Spanish employer.

Of course Expats from other EU nations might also find the Spanish Pension
benefits advantageous - by spending the last 10 to 15 years of their working life
here.

Spain is number one in the Worldwide Pensions league


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## xabiaxica (Jun 23, 2009)

Williams2 said:


> Of course I'm talking about British Expats in the UK who ( particularly if they have
> Spanish as a second language ) could pull off the 'two card trick' having enjoyed
> the career opportunities of 'employment rich UK' to spend the last 10 to 15 years
> in Spain, to qualify ( or could qualify ) for the full - 80 per cent of Final Salary - Spanish State Pension.
> ...


yes - _as long as they are actually working_..... & with the unemployment rate as it is, what realistic chance is there of that?


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## Williams2 (Sep 15, 2013)

xabiachica said:


> yes - _as long as they are actually working_..... & with the unemployment rate as it is, what realistic chance is there of that?


Well there's always IT, mobile phone technology, ISP Networking, Cisco router and switching engineers, to name but a few -
although I feel sorry for those members of IT who jumped at the chance to work for PartyPoker.com - as the Gib State
Pension leaves a lot to be desired - compared to the Spanish one.


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## Lynn R (Feb 21, 2014)

Williams2 said:


> Of course I'm talking about British Expats in the UK who ( particularly if they have
> Spanish as a second language ) could pull off the 'two card trick' having enjoyed
> the career opportunities of 'employment rich UK' to spend the last 10 to 15 years
> in Spain, to qualify ( or could qualify ) for the full - 80 per cent of Final Salary - Spanish State Pension.
> ...


Unless I'm reading the information in the links wrong, though, someone would have had to have paid the full 35 years' SS contributions in Spain (to be 37 years from 2027) in order to get the pension at the full 80% of final earnings. I believe you do get a Spanish state pension after working in Spain for at least 15 years, but not the full monte, I'm afraid. As I understand it, if you'd worked for 30 years in the UK (or 35 years as it will be from 2016) then you'd get a State Pension from the UK, plus a Spanish one based on however many years' contributions you paid here. I've met a few Spanish people who've spent years working abroad in France, the Netherlands, Germany or Switzerland, and it's the same for them. They get a state pension from whatever country they worked in, plus a Spanish one as well if applicable.


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## alborino (Dec 13, 2014)

William first you cannot transfer rights from one system to the other. Please read the links.

Secondly even your man who gets a higher pension in Spain has certainly made additional contributions and will work three years longer than me. Many do this in the UK and get just as much. The difference is they didn't have to earn their highest salary at the end of their careers. If you work out the figures you'll see that even if his pension is 20% plus that of the UK equivalent which it isn't then he'd have to live beyond 83 years of age to make a gain, not allowing for the interest on the money and inflation.

Finally in the UK all higher earners can benefit from a SIPP where there get tax free feed into a pension. Can you point to the Spanish equivalent of that?

And if you do not want in the UK your money tied up till the age of 55 can you point to the equivalent spain offers to ISAs ?

I think your rose tinted glasses need to be removed.


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## Williams2 (Sep 15, 2013)

alborino said:


> William first you cannot transfer rights from one system to the other. Please read the links.
> 
> Secondly even your man who gets a higher pension in Spain has certainly made additional contributions and will work three years longer than me. Many do this in the UK and get just as much. The difference is they didn't have to earn their highest salary at the end of their careers. If you work out the figures you'll see that even if his pension is 20% plus that of the UK equivalent which it isn't then he'd have to live beyond 83 years of age to make a gain, not allowing for the interest on the money and inflation.
> 
> ...


You raise a good point about the SIPP, for those British Expats who opened a
SIPP before moving abroad - no doubt by consolidating their various pension
plans. They can retain and even continue to contribute upto a maximum of
£3,600 pa into their SIPP with tax relief, while resident abroad for upto 5 years.
So they still have the benefit of the SIPP when they retire.

As for the rest - I have no doubt that as regards eligibility for Pension rights
after working in one EU country, only to move and contribute into another
countries State Pension is fraught with if's and but's - as to how it all tally's
up, to determine your Final Annual Spanish State Pension but on the face value:

Typically, your pension income is 80% of your final salary levels if you get the full rate.

That's a pretty good deal - correct me if I'm wrong - but the best that the
old UK company Final Salary Pension scheme's offered was 2/3rds Final Salary
or 66 per cent of your Final Salary on retirement. Am I correct ?

Finally most if not all the British company pension schemes and SIPP's are
linked to the stock market and so long as the Stock Market and the individual
shares the Pension funds managers are invested in - continue to go up, then
everything's Rosy. But if the Stock Market reels from one economic crisis
to an Oil Crisis and back to another Economic crisis - then the fund is
under performing and you have to contribute more and more money in
voluntary contributions or whatever - to get back on track.

I've even known friends who've been tempted into Stocks & Shares
ISA's and Self Select SIPPS and lost money, thinking they can play the stock
market, putting their money into what looked like 'dead certs' only for
them to lose half their money, thanks to a 'turn around of events' a
good example being the dramatic fall in Oil prices - that can have unforeseen
knock on effects on their investments, inducing panic selling.
To me the Stock Market and Stocks and Shares has always looked like
a roller coaster - so any company or country that offers a Pension based
on Final Salary is offering a refreshing degree of certainty, in a world
fraught with uncertainty.


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## alborino (Dec 13, 2014)

Williams2 said:


> .................as to how it all tally's
> up, to determine your Final Annual Spanish State Pension but on the face value:
> ..............


William you're missing some very fundamental points here. 

There is no process of tallying up. 

As for the rest you are confusing state pensions with private and occupational pensions. 

Investments in stocks, bonds and the many other investment options; and guaranteed pensions have no direct relationship for the individual. If someone is on 80% final pay how does the investment policy of the pension company impact them? But there are very few final salary schemes now.

You might if your private pension scheme allowed it invest your private pension funds in Spanish debt. But as it is rated by Moodies as Baa2 I wouldn't recommend too much as a percentage. Sadly that is where in effect the Spanish government invests the countries pension fund. Thus the fear, as muted by spanish politicians that the retirement age will be increased at a much greater rate than other EU countries, that the base amount used to calculate the pensions of individuals will be cut, that the number of qualifying years will increase, and that the latter years requirement will be strengthened (from 15 to 20 years is one suggestion). To be fair to the Spanish government someone has to pay the debt and the 25% unemployed.

People who invest short term in one share often get bitten. However investment in a good stock index such as the FTSE, DJ, DAX over the long term (minimum 10 years which would be nothing for a pension fund) has given great returns for as long as pensions as we understand them today have been important. But you are wrong to say "Finally most if not all the British company pension schemes and SIPP's are linked to the stock market". I very much suspect more than half of such funds are in the bond, fixed interest and currency markets. And that ignores commodities and property.

As for your friends they clearly didn't know the difference between a shortterm gamble and an longterm investment. If you ignore stocks as long term investments (a pension fund being a great example) here is what happened over 50 years to £1000:

Asset	Value after 50 years
Equities	£15,752
Gilts	£3,218
Cash	£2,692

As I said before please take professional advise before doing anything. An error can be very costly.


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## Williams2 (Sep 15, 2013)

alborino said:


> William you're missing some very fundamental points here.
> 
> There is no process of tallying up.
> 
> ...



Yes - I'm sure many investors in the 'good old days' before the advent of push
button trading and Internet trading, did well. No doubt all good shares performed 
well, following the end of the Second World War and the Macmillan years of 
'you've never had it so good' of the 1960's.
But times have changed, if things were turning bad in the past - you had a 
modicum of good time to extricate your investments, from those shares most
at risk. These days 'bad news comes swiftly and filters everywhere at once, thanks
to the Internet' by the time you even got wind of it - it's too late, the damage
is done.

Sorry but I'd rather invest in property - good old bricks and mortar, than trust
myself or any third party ( no matter how good they are ) to investing my
money on the Stock Market. Its a mugs game and how the British government
can have the gall to entice others into what I would call, a Bad Habit is
beyond me. They are 'so blinded by tax free profit's - they forget that
in today's game - the Stock market dices are firmly loaded against the
private investor, particularly when you see the likes of so called 'shorters' 
and Hedge Funds, who add to other peoples misery by gleefully shorting
any affected stocks, down even further.


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## alborino (Dec 13, 2014)

ok fair enough. You have obviously researched well to be able to risk your entire pension fund in one asset type. That takes great nerve.

I will stick to my pension fund being distributed across all asset types, accross the globe. I feel that gives greater security and has lower costs. My problem with too much property is anything beyond your first residense starts to attract taxes that are out of your control, is difficult to liquidate in a hurry, and has maintenance and insurancce costs. Plus there is no tax relief. But if you've factored all that in no problem.

Enjoy


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## Williams2 (Sep 15, 2013)

alborino said:


> ok fair enough. You have obviously researched well to be able to risk your entire pension fund in one asset type. That takes great nerve.
> 
> I will stick to my pension fund being distributed across all asset types, accross the globe. I feel that gives greater security and has lower costs. My problem with too much property is anything beyond your first residense starts to attract taxes that are out of your control, is difficult to liquidate in a hurry, and has maintenance and insurancce costs. Plus there is no tax relief. But if you've factored all that in no problem.
> 
> Enjoy


No never risked a bean on the Stock Market - yes I've done some research, as
any good investor would and - as you so rightfully pointed out - found it was not
for me. Simple as that.
Of course I've read plenty of 'hard luck stories' of fools who went in over their
heads and of course met many friends and so called 'sensible investors' who
felt they couldn't go wrong with blue chip stocks.
Of course - at the end of the day it's down to personal choice and people's
perception of risk.

Anyway - we beg to differ, you prefer your portfolio of shares, gilt's and cash.
I'll stick to property.


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## Williams2 (Sep 15, 2013)

Ok enough about Stocks and Shares, ISA's and SIPP's lets get back to the matter in hand and the
subject of my original post.

*Calling all Working Expat's* - British or otherwise, who have retired or about to retire on
a Spanish Pension - now is the time for you to 'tell all' to relate your own experiences and
personal anecdotes on claiming your Spanish pension.
How did it work out, were you 'better off' or 'worst off' as a result. How many years did you
work in the UK and then in Spain before claiming you Spanish pension.
I'm sure many will be fascinated and interested to find out - on this forum.


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## xabiaxica (Jun 23, 2009)

Williams2 said:


> Ok enough about Stocks and Shares, ISA's and SIPP's lets get back to the matter in hand and the
> subject of my original post.
> 
> *Calling all Working Expat's* - British or otherwise, who have retired or about to retire on
> ...


can you wait 12 years?

I'll have some data for you then.........


I do know some people who worked most of their working life in the UK & who have worked here for a few years before finally retiring

none of them have ever commented that they are either better or worse off than if they had stayed in the UK


although I do know someone who because of bad advice from a so-called professional is having trouble getting any kind of pension at all

they still work here, part time - but have been trying to get their UK pension.... trouble is, because their last place of work is Spain, the application has to be via Spain - & Spain won't activate it because they are still working......

they'd almost certainly be better off financially, retiring completely, since the part time income is very low, but are scared to stop working in case anything goes wrong & they have no income in the waiting time - a bit of a catch 22 for them


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## mrypg9 (Apr 26, 2008)

Williams2 said:


> .
> I'll stick to property.


Then you will lose out. Property is like any other asset...it's a commodity . Its value rises and falls and if you retire and sell when property assets are on a downturn your profit will not necessarily be that impressive. If you have bought your property with a loan/mortgage then the total costs of your loan, interest added, has to be set against any profit you make. Then of course you will be liable for tax on your profit assuming you are liquidating an asset and not selling to purchase another property for your own residence.
You could rent your property, yes...but then there are many risks and costs involved in renting and again profits are liable to be taxed.
All indices show that wise investing in stocks and shares will give the greater yield over a long period of time, as alborino has pointed out. We've done both those things: had rental properties and SIPP and other investments. I know which has given us the greater income - and peace of mind.

As for whether Brits would be better off pension-wise by working in Spain....no way would I have earned the salary I got in the UK in Spain, with the associated FSS pension. I am much better off than even the highest Spanish pensioner could be. If you can command a good income in the UK, say above £40k, well within the earnings of most qualified professionals, no way would you be better off working in Spain.

As for investments...a good, well-spread portfolio properly managed will give a yield of a minimum 5%. I know someone who got 14% - yes, 14% - from a portfolio last year. Not for me as I'm too risk averse but it's there for those with strong nerves -and money they don't mind losing.

But property.....you need to have a very large portfolio of good properties to have that as your retirement asset. And if you have such a portfolio you won't be losing much sleep worrying about your retirement income.


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## Horlics (Sep 27, 2011)

Are we comparing the same thing? A state pension has nothing to do with a gold plated public sector pension. Everybody who makes contributions gets a state pension, and public sector pension then comes on top for those who have worked in the Civil Service.




Lynn R said:


> So, to achieve a 100% state pension in Spain one currently has to have made 35 years of SS contributions, rising to 37 years fromm 2027. It goes on to say that anyone who has got a full contribution record can expect their pension to be around 80% of their final earnings.
> 
> Now, to contrast that with someone receiving a "gold plated" UK public sector pension scheme (who would have joined the scheme many years ago so is still entitled to the pension on a final salary basis rather than career average as they are now for more recent entrants).


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## Horlics (Sep 27, 2011)

Good for you. 100 UKP invested 15 years ago would be worth a staggering..... 100 UKP as of last week. Which in real terms is probably around 60 UKP. And people wonder why property speculation takes place.




Williams2 said:


> No never risked a bean on the Stock Market - yes I've done some research, as
> any good investor would and - as you so rightfully pointed out - found it was not
> for me.


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## Lynn R (Feb 21, 2014)

Horlics said:


> Are we comparing the same thing? A state pension has nothing to do with a gold plated public sector pension. Everybody who makes contributions gets a state pension, and public sector pension then comes on top for those who have worked in the Civil Service.


The point I was attempting to make (and obviously can't have been doing it very clearly) is that it appears that providing a Spanish worker can maintain a 100% Social Security contribution record for the full 35 years (no mean feat in this country) then they will apparently retire on a state pension equal to 80% of their final earnings. It doesn't matter whether they are employed in the public or private sector, except that in the past their job security was probably higher in the public sector. 

This seems to me, on the face of it, to beat the 50% of final earnings even a public sector worker in a final salary scheme could achieve by working for 40 years in the UK, even when one adds to it the 6K per year they would receive on top of that in a State Pension (the SP being a flat rate no matter how much they'd paid in NI contributions). Workers in the UK who are not fortunate enough to be in a final salary scheme will have a much smaller pension (if contracted in they will get the State Second Pension but it certainly won't give them 80% of final earnings).

The OP in this thread said in the earlier one that he'd been shocked to discover that Spanish employers didn't offer company pension schemes, and I was trying, no doubt ineffectively, to show that because of the way the Spanish state scheme operates there isn't the same need for them here. Of course Spanish workers are able to pay into personal pension schemes in addition, if they wish and can afford to, and get tax relief on the contributions they make, up to a limit. Every Spanish bank I pass seems to be emblazoned with posters trying to induce customers to set up or transfer pension plans to them.


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## Alcalaina (Aug 6, 2010)

It is pensioners who are keeping this country going at the moment. Many of them are supporting their unemployed children and grandchildren. 

My neighbour's 8-year-old daughter came round yesterday to see what Papa Noel had brought us (nothing, as it happens). I asked her whether she thought Papa Noel or los Reyes brought the best presents. Neither, was the reply - the best presents come from her grandmother because she has more money than either of them!


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## mrypg9 (Apr 26, 2008)

Lynn R said:


> This seems to me, on the face of it, to beat the 50% of final earnings even a public sector worker in a final salary scheme could achieve by working for 40 years in the UK, even when one adds to it the 6K per year they would receive on top of that in a State Pension (the SP being a flat rate no matter how much they'd paid in NI contributions). .


Depends entirely on your UK earnings which are invariably higher than Spanish....if you are in a FSS. A teacher, Head or Head of Department retiring on £50k p.a. or in many cases more and who has completed sufficient years at the chalk face would receive £25k p.a. pension plus a one-off tax free lump sum three times the annual pension plus any AVCs plus the £6k SRP. Many Civil Servants in high grade positions earn more than that. We are talking about extreme cases for Spain and the UK aren't we, as the average local government pension is less than £10k p.a. ad Spanish wages are lower.
Otherwise, you may be right, but as very few immigrant workers would complete the number of years needed to get their 80% it's of academic interest, really.


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## mrypg9 (Apr 26, 2008)

Duplicate post. Sorry.


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## mrypg9 (Apr 26, 2008)

Horlics said:


> Good for you. 100 UKP invested 15 years ago would be worth a staggering..... 100 UKP as of last week. Which in real terms is probably around 60 UKP. And people wonder why property speculation takes place.


Depends entirely on what you had invested in. And the more you have to invest, the greater your yield in both senses, income and interest rate.

You are assuming that property throughout the UK has increased in value regardless of inflation....it hasn't. 
If you are a Russian Billionaire buying in Central London, you're on to a sure thing.
If you have a couple of back-to backs in S****horpe, don't put the champagne on ice......


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## mrypg9 (Apr 26, 2008)

Stocks v Bricks...

£100k invested in property in 1987 would have given you a return of £400k by 2007 (Nationwide House Price Index)

£100k invested in stocks in 1987 would have given you a return of £700k (FTSE All-Share Index).

Stocks have other advantages over bricks and mortar....stocks don't depreciate like property - houses need repairs and maintenance. Stocks are easier =faster and cheaper -to convert into liquidity than property. Stocks don't have the same degree of volatility overall as the property market.


Re Spanish v British pensions: lower-income pensioners in the UK get Housing Benefit, WFA ( every retired person gets that plus free tv licence, bus pass), free prescriptions and reduced Council Tax.


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## Lynn R (Feb 21, 2014)

mrypg9;6053305
Re Spanish v British pensions: lower-income pensioners in the UK get Housing Benefit said:


> I made the point earlier in the other thread which sparked this one off that those pensioners in the UK who would be entitled to just the basic State Pension are better provided for than those in Spain who haven't got enough SS contributions to qualify for a full state pension. There is the minimum income guarantee\Pension Credit for a start, plus all the other things you mentioned. My aunt is in that position and pays no Council Tax at all. People often refer to those in that position as having been feckless and spent all their money - the reason she was in that position is that she (as the unmarried daughter living at home) gave up her job to care for my grandfather who lost his sight shortly after he retired. In those days there was no such thing as a carer's allowance (which is scandalously low even today) and the two of them had to live on his pension. By the time he died she was only able to get a job for a couple of years before she reached retirement age herself, and at that time she didn't have the option to continue working beyond pension age, which is why she didn't have enough NI contributions to qualify for a State Pension.
> 
> In that respect, the British state pension\welfare system is much better now, but conversely doesn't seem to me to offer very good value to those who pay higher than average NI contributions throughout their working life (in addition to contributions to an occupational scheme and possibly AVCs, although I'm not sure how many take up that option, not many of my contemporaries did) as they only receive the same flat rate no matter how much they paid in.
> 
> It will be interesting to see how many of the "add-ons" survive after the new so-called Single Tier Pension (which is actually anything but) comes in in 2016. I am convinced that will be used as an excuse to scrap many of them for new pensioners so that they will gradually be phased out, and perhaps you will have noticed that the Government has started classing pensions as part of "welfare" spending so that they can keep drawing attention to how much it's all costing and soften people up for cuts to come. I can't see that whichever party wins the General Election will have much effect in that regard, either.


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## Williams2 (Sep 15, 2013)

mrypg9 said:


> Stocks v Bricks...
> 
> £100k invested in property in 1987 would have given you a return of £400k by 2007 (Nationwide House Price Index)
> 
> ...


Not necessarily - you have totally missed the Point that people 'buy low and sell
high' with Property, just as they try ( but in many cases fail to do ) with shares.
Also me and my partners in the house restoration and renovation side of the
business, have done quite well thank you very much.

Anyway I started doing this long before you saw it on TV.

Homes under the hammer


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## alborino (Dec 13, 2014)

OK William come clean. The best troll I've seen this year. First you demonstrate you know nothing about pensions, investments, assets, etc.. When this is pointed out you just ignore it and carry on. Then you come out with the magic formula of success .



Williams2 said:


> 'buy low and sell
> high'


What gave it away was your snub at Mary. A good pick as us here and you no doubt know she lives in rented accommodation. However lucky fotr you I know she has a sense of humour. 

You are obviously retired and thus don't mind sharing this secret with us all so thanks for that.

You had me going for a while. I thought you were real. Have a very happy new year and thanks for the laugh 

ps: Could fotr the benefit of all here let us know where you really invest you pension.


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## Horlics (Sep 27, 2011)

Of course it depends on what you invested in. It's hard to create even the simplest of examples, and I would normally choose to say....

A FTSE 100 tracker created 15 years ago would, as of last week, been worth exactly what it was 15 years ago.

The basis for that point of view is that the FTSE 100 index last week was the same as it was 15 years ago. Of course, some companies have gone from the 100, new ones have joined, so that makes it an imperfect equation. There are also dividends and management fees to take into account. But you get my drift.

As for making 14% last year, my cousin told me exactly the same thing. I pointed out that over the years her late father and I discussed investments many times, and over those years he took the rough with the smooth.

If she, and your 14% friend duck out next year and the stock market tumbles, and then they reinvest in 2016 and it rises 15%, they will have done well and will have massively outperformed a good % of professional traders. But most people don't do that, most people via their pension investments, etc. are in it for the long haul, and they therefore get the kind of returns that the FTSE Index points to, which over the past 15 years, for most people, have been ****.

I know you understand all this. And you know I know. We've done it all before.

But here's the point...... I was not assuming anything about property at all (you're putting words in my mouth). All I said was, with a stock market flat over 15 years, it is not surprising that some people look to property as an investment. 

I am well aware that in some parts of the UK property is worth the same now as i was more than 10 years ago, putting it on a par with the stock market. That does not mean some people haven't chosen to use it as an investment vehicle. Whether they have been successful or not is another matter. BTW, 10 year old apartments near my UK house sell for the same today as they did when they were first sold, and this is in an area of high employment and dense population. You don't have to look to ghost towns in the north to find such examples.






mrypg9 said:


> Depends entirely on what you had invested in. And the more you have to invest, the greater your yield in both senses, income and interest rate.
> 
> You are assuming that property throughout the UK has increased in value regardless of inflation....it hasn't.
> If you are a Russian Billionaire buying in Central London, you're on to a sure thing.
> If you have a couple of back-to backs in S****horpe, don't put the champagne on ice......


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## mrypg9 (Apr 26, 2008)

Williams2 said:


> Not necessarily - you have totally missed the Point that people 'buy low and sell
> high' with Property, just as they try ( but in many cases fail to do ) with shares.
> Also me and my partners in the house restoration and renovation side of the
> business, have done quite well thank you very much.
> ...


I started buying and restoring then selling property in 1975.
Your point about 'buying low and selling high', apart from being self-evident (who buys high and sells low?) ignores the fact that the market dictates and as I pointed out in a previous post, stocks can be traded much more easily than houses can be sold.
We've had experience of buying and selling -and renting out - residential and commercial properties stretching over decades. We've seen negative equity come and go and been lucky enough not to have needed to sell during the downturns. Plus I have never borrowed to buy property. 
I've also invested money earned. Choose a good broker/advisor, sit back and hope for a good yield. By the time you've factored in all the costs of renovating - labour, materials, tax on profit - the game often isn't worth the candle, as the old saying goes.
We didn't do too badly out of our various enterprises either....but then we did a mixture of things, owning/running businesses, free-lance work, a professional career, property buying/renovating/renting, investing. 
It's best not to put all your eggs in one basket if you can, to use another old and very true saying.


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## Williams2 (Sep 15, 2013)

mrypg9 said:


> I started buying and restoring then selling property in 1975.
> Your point about 'buying low and selling high', apart from being self-evident (who buys high and sells low?) ignores the fact that the market dictates and as I pointed out in a previous post, stocks can be traded much more easily than houses can be sold.
> We've had experience of buying and selling -and renting out - residential and commercial properties stretching over decades. We've seen negative equity come and go and been lucky enough not to have needed to sell during the downturns. Plus I have never borrowed to buy property.
> I've also invested money earned. Choose a good broker/advisor, sit back and hope for a good yield. By the time you've factored in all the costs of renovating - labour, materials, tax on profit - the game often isn't worth the candle, as the old saying goes.
> ...



What the blazes, has this to do with the Spanish Pension ???


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## Horlics (Sep 27, 2011)

It's easy to invest in property without actually buying a property. The number of companies offering this service has increased hugely over the last 5 years or so.

One example: UK Residential Property Fund Manager | Hearthstone Property Investments




mrypg9 said:


> ... stocks can be traded much more easily than houses can be sold.


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## Horlics (Sep 27, 2011)

The fact that you have to keep trying to guide people back to that topic probably means nobody gives a ......



Williams2 said:


> What the blazes, has this to do with the Spanish Pension ???


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## Williams2 (Sep 15, 2013)

Horlics said:


> The fact that you have to keep trying to guide people back to that topic probably means nobody gives a ......


Except the Skipper of course - how could you forget to mention the Skipper ? tut, tut.

:focus:


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## Chopera (Apr 22, 2013)

Haven't read the full thread, but...

Regarding state pensions:

I believe the gist of what Williams2 was saying is correct. You can work say 30 years in the UK and then work your last 5 years in Spain and then those 30 years in the UK will count as if you've been paying the full amount into the Spanish system. i.e. you will get a much bigger state pension. This is funded by the EU and is an attempt to get round the problem that workers who move around the EU might never pay enough into any particular state pension system to get much out of it at the end. For example, you now need to pay 15 years into the Spanish system to qualify for their state pension, so those who come to Spain and work anything less than that pay into the system, but get nothing out. So the EU basically overules this and funds cases where people have paid various amounts into different EU systems. But it gets complicated because state pensions systems in different EU countries work in different ways, so they just go by the country where you last worked and count up all the years worked in other EU countries and calculate your pension as if you had been contributing the maximum amount into that system for all the years you were working in other countries.

This is very attractive to those who have worked in the UK because in the UK you get a lot more tax breaks for running your own private pension in return for having a dire state pension. But if you work your last few years in an EU country that has a large state pension you can get the best of both worlds: a (hopefully) large private pension and a large state pension.


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## Chopera (Apr 22, 2013)

Lynn R said:


> The point I was attempting to make (and obviously can't have been doing it very clearly) is that it appears that providing a Spanish worker can maintain a 100% Social Security contribution record for the full 35 years (no mean feat in this country) then they will apparently retire on a state pension equal to 80% of their final earnings. It doesn't matter whether they are employed in the public or private sector, except that in the past their job security was probably higher in the public sector.
> 
> This seems to me, on the face of it, to beat the 50% of final earnings even a public sector worker in a final salary scheme could achieve by working for 40 years in the UK, even when one adds to it the 6K per year they would receive on top of that in a State Pension (the SP being a flat rate no matter how much they'd paid in NI contributions). Workers in the UK who are not fortunate enough to be in a final salary scheme will have a much smaller pension (if contracted in they will get the State Second Pension but it certainly won't give them 80% of final earnings).
> 
> The OP in this thread said in the earlier one that he'd been shocked to discover that Spanish employers didn't offer company pension schemes, and I was trying, no doubt ineffectively, to show that because of the way the Spanish state scheme operates there isn't the same need for them here. Of course Spanish workers are able to pay into personal pension schemes in addition, if they wish and can afford to, and get tax relief on the contributions they make, up to a limit. Every Spanish bank I pass seems to be emblazoned with posters trying to induce customers to set up or transfer pension plans to them.


What gets missed out in the figures is that many Spanish salaries get split into a "base salary" and various forms of "additional payments". So someone earning say €2000/month gross will often have a base salary of €1000/month and it's that €1000/month which is used to work out both the state pension contributions made by the employer and the state pension eventually received by the employee.

It still works out better than the UK state pension but it's not as good as it sounds. However as I mentioned above, there appears to be a "loophole" if you have made contributions in other EU countries since they are treated as if you were paying in the full amount.


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## CapnBilly (Jun 7, 2011)

Chopera said:


> Haven't read the full thread, but...
> 
> Regarding state pensions:
> 
> ...


No, it doesn't work like that, the EU does not pay the pension, the individual countries pay a proportion.

Essentially what happens is each country :

- calculates the national pension, taking into account the actual contributions you have made.

- then, calculates the theoretical pension after adding together the contributions from both which determines the theoretical pension they would receive if the contributions had all been in one country. It then works out the adjusted amount of pension based on the actual number of years contributions in the country. 

So if its 35 contribution years in total and you have paid 5 years in Spain, then the adjusted pension is just over 14% of the theoretical pension amount. In the UK it would be just over 85% of the full pension (from 2016)

- pays the larger of the national pension and the adjusted pension and grants the larger amount.


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## Chopera (Apr 22, 2013)

CapnBilly said:


> No, it doesn't work like that, the EU does not pay the pension, the individual countries pay a proportion.
> 
> Essentially what happens is each country :
> 
> ...


Where did you find out that the theoretical pension is based on the actual contributions in the other countries?

I am considering this link:

EU - Pension claims and calculation of EU pensions-Your Europe

They say they consider the total time spent in all the countries and use that as a basis for calculating the theoretical amount in each country, which I follow, but the way they work out the theoretical contributions during those periods spent in the other countries is left rather open.


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## CapnBilly (Jun 7, 2011)

Chopera said:


> Where did you find out that the theoretical pension is based on the actual contributions in the other countries?
> 
> I am considering this link:
> 
> ...


Well my information is from another source, but as far as I can see this information from the link you gave says exactly the same, except I used the word adjusted as I didn't like pro-rata.

"How your pension is calculated
Pension authorities in each EU country you've worked in will look at the contributions you've paid into their system, how much you've paid in other countries, and for how long you've worked in different countries.

The EU-equivalent rate

Each pension authority will calculate the part of the pension it should pay taking into account periods completed in all EU countries.

To do so, it will add together the periods you completed in all EU countries and work out how much pension you would get had you contributed into its own scheme over the entire time (called the theoretical amount).

This amount will then be adjusted to reflect the actual time you were covered in that country (called the pro-rata benefit).

The national rate

If you meet the conditions for entitlement to a national pension irrespective of any periods completed in other countries, the pension authority will also calculate the national pension (known as independent benefit).

Result

The national authority will then compare the pro-rata benefit and the independent benefit; you will receive whichever is higher from that EU country.


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## alborino (Dec 13, 2014)

Chopera said:


> They say they consider the total time spent in all the countries and use that as a basis for calculating the theoretical amount in each country, which I follow, but the way they work out the theoretical contributions during those periods spent in the other countries is left rather open.





Chopera said:


> They say they consider the total time spent in all the countries and use that as a basis for calculating the theoretical amount in each country, which I follow, but the way they work out the theoretical contributions during those periods spent in the other countries is left rather open.


I think the confusion here is because the number of qualifying years is one thing and the contributions are another. It really is very straightforward. Just look at the examples in the EU link.

If you worked 5 years in the UK and 35 in Spain the first calculation is qualification. The UK could argue that the ten year minimum has not been achieved as you only have 5years and pay nothing. But the EU agreement says they must take into account the 35 qualifying years in Spain. Nothing to do with contributions but to do with qualification. They then calculate your pension as a proportion based on 40 years but divide this by 8. (I've simplified that but it will do for clarity).

A few years later the spanish authorities say we are going to pay a lower rate of pension as we require say 38 years and you've only worked 35. But they cannot do that as you have 5 UK years making 40 in all. So they pay you their percentage of the full Spanish pension.

All of course academic as no one works in one country or another because they might get more state pension. So the original post was pretty meaningless and based on a total misunderstanding of how pensions work.


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## alborino (Dec 13, 2014)

Chopera said:


> They say they consider the total time spent in all the countries and use that as a basis for calculating the theoretical amount in each country, which I follow, but the way they work out the theoretical contributions during those periods spent in the other countries is left rather open.


I think the confusion here is because the number of qualifying years is one thing and the contributions are another. It really is very straightforward. Just look at the examples in the EU link.

If you worked 5 years in the UK and 35 in Spain the first calculation is qualification. The UK could argue that the ten year minimum has not been achieved as you only have 5years and pay nothing. But the EU agreement says they must take into account the 35 qualifying years in Spain. Nothing to do with contributions but to do with qualification. They then calculate your pension as a proportion based on 40 years but divide this by 8. (I've simplified that but it will do for clarity).

A few years later the spanish authorities say we are going to pay a lower rate of pension as we require say 38 years and you've only worked 35. But they cannot do that as you have 5 UK years making 40 in all. So they pay you their percentage of the full Spanish pension.

All of course academic as no one works in one country or another because they might get more state pension. So the original post was pretty meaningless and based on a total misunderstanding of how pensions work.


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## Lynn R (Feb 21, 2014)

Horlics said:


> A FTSE 100 tracker created 15 years ago would, as of last week, been worth exactly what it was 15 years ago.
> 
> The basis for that point of view is that the FTSE 100 index last week was the same as it was 15 years ago. Of course, some companies have gone from the 100, new ones have joined, so that makes it an imperfect equation. There are also dividends and management fees to take into account. But you get my drift.
> 
> ...


I've only had my SIPP pension a couple of months, after transferring the funds from an old free standing AVC scheme where the performance was less than stellar to say the least. In the space of that time the market has suffered losses due to the oil price fall, then recovered a bit, now today it's down again because of the Greek Elections. I thank God it's just an "extra" for me, and not something I'll have to rely on for my living expenses. The only saving grace is that I'll no longer be forced to buy a crap annuity which would pay me about three ha'pence a week with it.

It could have been worse, I suppose. I could have chosen to set up an AVC with my main pension scheme's allied provider at the time -Equitable Life. Don't know what stopped me really.


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## alborino (Dec 13, 2014)

Lynn R said:


> I've only had my SIPP pension a couple of months, after transferring the funds from an old free standing AVC scheme where the performance was less than stellar to say the least. In the space of that time the market has suffered losses due to the oil price fall, then recovered a bit, now today it's down again because of the Greek Elections. I thank God it's just an "extra" for me, and not something I'll have to rely on for my living expenses. The only saving grace is that I'll no longer be forced to buy a crap annuity which would pay me about three ha'pence a week with it.


But a couple of months is nothing in terms of the investment. I assume you hope to live for another 25 years. In that time your funds may go up and down 25 waves of decline and increase. But the average will be a gain.

My brother got caught out with the Fidelity Special Chinese Opportunities Fund. He shoved in his money day one. It fell to 70% after I think 4 years. Many sold taking the loss. He said no, this is a ling term investment. After 6 years it is now at 130%.

If you are investing you must be in for the long haul. If you want a short term gamble try share trading where you buy and sell every month. If you can't wait that long try Ladbrokes.

If your risk threshold is low (sorry appreciate too late for yourself) you should leave cash in the SIPP and move it into funds say 25% every three months and that way you even out the highs and lows to some degree. Although over 10 years plus it makes little difference.


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## Chopera (Apr 22, 2013)

CapnBilly said:


> Well my information is from another source, but as far as I can see this information from the link you gave says exactly the same, except I used the word adjusted as I didn't like pro-rata.
> 
> "How your pension is calculated
> Pension authorities in each EU country you've worked in will look at the contributions you've paid into their system, how much you've paid in other countries, and for how long you've worked in different countries.
> ...


I'm obviously reading it in a different way because phrases like this...



> To do so, it will add together the periods you completed in all EU countries and work out how much pension you would get had you contributed into its own scheme over the entire time (called the theoretical amount).


...give the impression each country looks at the time spent in other countries but not the contributions actually made. 

They then give a case study:



> Sample story
> 
> Rosa worked 20 years in France and 10 years in Spain.
> 
> ...


The above implies that the theoretical amounts for a certain country are somehow calculated by extrapolating from the actual amounts paid into that country's system to cover the entire period worked (30 years), rather than looking at what was paid into the others country's system.


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## mrypg9 (Apr 26, 2008)

Williams2 said:


> What the blazes, has this to do with the Spanish Pension ???


As little as your post, to which I'm responding


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## alborino (Dec 13, 2014)

Chopera said:


> The above implies that the theoretical amounts for a certain country are somehow calculated by extrapolating from the actual amounts paid into that country's system to cover the entire period worked (30 years), rather than looking at what was paid into the others country's system.


Yes but not additional payments obviously.


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## mrypg9 (Apr 26, 2008)

alborino said:


> But a couple of months is nothing in terms of the investment. I assume you hope to live for another 25 years. In that time your funds may go up and down 25 waves of decline and increase. But the average will be a gain.
> 
> My brother got caught out with the Fidelity Special Chinese Opportunities Fund. He shoved in his money day one. It fell to 70% after I think 4 years. Many sold taking the loss. He said no, this is a ling term investment. After 6 years it is now at 130%.
> 
> ...


This is bringing back memories of Black Monday....was it in 1987? 
I got a call at work from my broker suggesting I allowed him to use £10k of the money he was handling for me to buy some shares or other as , he said, he could double it for me within forty-eight hours. 
Having heard on the radio that share prices were tumbling and being an ultra-prudent risk averse type, I declined. Later that day I heard that Robert Maxwell had been buying up the shares my broker had suggested as they were plunging downwards. I began to ponder.
And sure 'nuff, I would indeed have doubled my money. But then Maxwell could afford the risk, I couldn't.

Looking at real-life examples rather than abstract principles, thinking about professional salary levels in the UK compared to Spain, I can't see how the majority would be better off working towards a Spanish pension. Besides, Spanish pensions may be comparatively generous now but there's no guarantee they will continue to be so.

In the long and medium-term, all the evidence shows that investing wisely in the market will give you a better return than property or any other asset. One reason for the growing gap between the well-off and the rest in the UK is that invested wealth is growing at a rate exceeding earned incomes per annum.
The real problem in the UK as in most countries is that few people earn sufficient to enable them to save for retirement in any shape or form. With an increasing number of older people, even with the increased retirement age, it's hard to see how the state's Ponzi pension scheme is sustainable in the medium term let alone the long term.


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## Chopera (Apr 22, 2013)

alborino said:


> I think the confusion here is because the number of qualifying years is one thing and the contributions are another. It really is very straightforward. Just look at the examples in the EU link.
> 
> If you worked 5 years in the UK and 35 in Spain the first calculation is qualification. The UK could argue that the ten year minimum has not been achieved as you only have 5years and pay nothing. But the EU agreement says they must take into account the 35 qualifying years in Spain. Nothing to do with contributions but to do with qualification. They then calculate your pension as a proportion based on 40 years but divide this by 8. (I've simplified that but it will do for clarity).
> 
> ...


Yes the qualification period is an issue they are trying to get round with this (I also mentioned this in another post), what's still not clear to me is how they do the calculation for the theoretical amount.

Also there is quite a lot of migration around the EU, with lots of people paying into different systems, and the way their state pension is calculated can influence where they work their final years before retirement. Indeed if became apparent that by spending a couple of years before retirement as an autonomo in Spain for example, paying the maximum possible into the Spanish system for those years, you might greatly increase your state pension, then you might find a few more people doing precisely that.


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## Chopera (Apr 22, 2013)

alborino said:


> Yes but not additional payments obviously.


Yes I understand that - in fact with my AVCs to the UK, it's posible I'll end up paying 35 years into the UK system and 32 years into the Spanish system, but I doubt they'll give me the equivalent of 67 years contributions! They'll cap it somehow.


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## alborino (Dec 13, 2014)

Chopera said:


> Yes the qualification period is an issue they are trying to get round with this (I also mentioned this in another post), what's still not clear to me is how they do the calculation for the theoretical amount.
> 
> Also there is quite a lot of migration around the EU, with lots of people paying into different systems, and the way their state pension is calculated can influence where they work their final years before retirement. Indeed if became apparent that by spending a couple of years before retirement as an autonomo in Spain for example, paying the maximum possible into the Spanish system, you might greatly increase your state pension, then you might find a few more people doing precisely that.


It would make virtually no difference even if you moved from the worst state pension to the best. Say it is 20% more. You would get in Spain 2/37ths of 20% = 1.08%. OK one percent but then work out the delay in receiving it (spain's delayed retirement) and the cost of autonomo (an arm and a leg. I mean the last thing Spain needs is people working ).

In the UK you can earn say £7200 a year tax free. You can put it all into a SIPP. The government throws in 20% for free (£1440).

Say you do that for 2 years so £14400 now has without interest a value of £18000. You can then take 25% tax free = £4500. You can then take the rest (as of 6/4/15) using up the next years personal allowance so you pay very little tax. And remember that is cash in the bank, not cash tied up in a government system that is close to collapse where the thought of lowering pensions is already happening.

NOTE: Never take financial advise off the net. I may be talking rubbish and I am not an IFA abiding by FSA rules. (the FSA being another small UK benefit may I add ).


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## CapnBilly (Jun 7, 2011)

Chopera said:


> Yes the qualification period is an issue they are trying to get round with this (I also mentioned this in another post), what's still not clear to me is how they do the calculation for the theoretical amount.
> .


In the UK the calculation is simple because there is (or will be from 2016) a fixed amount for everyone. 

Spain is much more complicated, because there are a number of different schemes, including autonomo, general and special schemes. Each scheme has different contribution bases, and this is what drives the pension calculation. In addition the age at which your pension can be drawn is increasing (as it is in the UK) and the contribution bases are also changing over this time, depending upon your age.

So, for example, from 2022, the pension base will be the quotient resulting from dividing the worker's contribution bases by 350 during the 300 months immediately preceding the month before the causal event of the pension.

Prior to this change then the base pension will be quotient produced by dividing the worker's contribution bases during the 180 months immediately preceding the month prior to the causal event, by 210.

So, there is no simple answer to your question, but as I understand the system where you use contribution years from another country then the theoretical pension will be calculated using the actual contribution base for the years immediately prior to the payment of the last contribution to the Spanish Social Security


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## Chopera (Apr 22, 2013)

alborino said:


> It would make virtually no difference even if you moved from the worst state pension to the best. Say it is 20% more. You would get in Spain 2/37ths of 20% = 1.08%. OK one percent but then work out the delay in receiving it (spain's delayed retirement) and the cost of autonomo (an arm and a leg. I mean the last thing Spain needs is people working ).


I think the bulk of the cost of the autonomo payments are taken up by the state pension contributions anyway. However I agree the pro-rata rate will eliminate most of the benefits over such a short period. I believe the maximum Spanish state pension next year will be about €2500/month whereas the proposed UK flat rate pension is about €800/month, so there is quite a large difference there - 200% rather than 20%. So I guess that 1.08% becomes 10.8%.



alborino said:


> In the UK you can earn say £7200 a year tax free. You can put it all into a SIPP. The government throws in 20% for free (£1440).
> 
> Say you do that for 2 years so £14400 now has without interest a value of £18000. You can then take 25% tax free = £4500. You can then take the rest (as of 6/4/15) using up the next years personal allowance so you pay very little tax. And remember that is cash in the bank, not cash tied up in a government system that is close to collapse where the thought of lowering pensions is already happening.
> 
> NOTE: Never take financial advise off the net. I may be talking rubbish and I am not an IFA abiding by FSA rules. (the FSA being another small UK benefit may I add ).


This relates to the point I made earlier that in the UK the tax benefits are related to private pension contributions while in Spain the benefits relate to the state pension. So there might be a way of getting the best of both worlds: start off working in the UK and use the tax breaks to build up a private pension, and then increase the low UK state pension by working in Spain for a few years before retirement. Of course the devil is probably in the details somewhere - it's just that I can't find the details!


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## mrypg9 (Apr 26, 2008)

Chopera said:


> I think the bulk of the cost of the autonomo payments are taken up by the state pension contributions anyway. However I agree the pro-rata rate will eliminate most of the benefits over such a short period. I believe the maximum Spanish state pension next year will be about €2500/month whereas the proposed UK flat rate pension is about €800/month, so there is quite a large difference there - 200% rather than 20%. So I guess that 1.08% becomes 10.8%.
> 
> 
> 
> This relates to the point I made earlier that in the UK the tax benefits are related to private pension contributions while in Spain the benefits relate to the state pension. So there might be a way of getting the best of both worlds: start off working in the UK and use the tax breaks to build up a private pension, and then increase the low UK state pension by working in Spain for a few years before retirement. Of course the devil is probably in the details somewhere - it's just that I can't find the details!


Assuming of course that at that advanced age you'll find work in Spain when millions of Spaniards can't! And is it possible that the oncosts of moving to Spain to get a few 000 extra euros might cancel that out?

Seems like an awful lot of effort for comparatively small gain.


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## alborino (Dec 13, 2014)

Chopera said:


> I think the bulk of the cost of the autonomo payments are taken up by the state pension contributions anyway. However I agree the pro-rata rate will eliminate most of the benefits over such a short period. I believe the maximum Spanish state pension next year will be about €2500/month whereas the proposed UK flat rate pension is about €800/month, so there is quite a large difference there - 200% rather than 20%. So I guess that 1.08% becomes 10.8%.


Chopera I don't get this idea that retired Spaniards are living like kings on state pensions and poor brits are starving. None of my retired spanish family get anything like 2500 Es a month. My mother-in-law due to some weird calculation relating to her husband dying prior to retirement) gets 1100 Es and everyone says that she is one of the lucky few. But it is worth noting that in recent years Spanish pensions have not increased with inflation and no one expects that trend to change so we are seeing a real devaluation over time. Back in blightie I just went to HMRC for a pension statement and mine is guranteed at 13400 Euros per year (I haven't finished my stint yet but already have sufficient years). Yet I've only ever paid higher rate tax for one year in my life. I know many who have much more.

Yes the system is moving to a fixed state pension but that is in parallel to pressing most people into private schemes where their employer contributes (the so called free money). No one as far as I know will lose any additional benefit already accrued.

So saying in Spain it is A and UK is B means little when making comparisons but I think we all agree with that.

Don't get me wrong I know some in the UK who have made no provision and that living on the minimum UK state pension is very tough. Hopefully the flat rate will help here but I'd still like to see enforcement of the living wage as opposed to the minimum wage, the £12000 personal allowance (though I'm not a liberal ), and free school lunches that do not contain pizza and chips - but nothings perfect ound:

As for me first I take most of my salary as dividends from my company so will only go autonomo if I cannot get Spanish state health any other way but with a spanish wife that looks unlikely. The main reason being I want to claim via the UK and not Spain as Spain can screw it up due to the delayed retirement date and simply because if it can be screwed up you can count ..................... 

But good luck with which ever way you go.


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## alborino (Dec 13, 2014)

CapnBilly said:


> In the UK the calculation is simple because there is (or will be from 2016) a fixed amount for everyone.


But accrued benefit from additional contributions is still there so this will take years to roll out as I understand it. So fixed amount is in reality minimum amount. Maybe that does leave a small loop hole for those contributing after 2016 but I'd beware the calculation if you have too many qualifying year.

If you have 38 years in Spain and 10 years UK will the Spanish argue your pension should be reduced as the UK is paying you some?


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## Isobella (Oct 16, 2014)

the thing with averages is they are plumped up with the high pensions of Public Sector, bank workers etc. there are many who only receive around €500 pm. The average for Andalucia is only €728 and there are no top ups like in the UK where pension credit tops up to £214 for a couple plus rent paid if you don't own.


La pensión media de jubilación en Galicia sigue como la más baja de España | Galicia | EL PAÃ�S

Wrong link, it should be this one.

http://www.europapress.es/galicia/n...s-segunda-mas-baja-estado-20141223105743.html


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## Chopera (Apr 22, 2013)

alborino said:


> Chopera I don't get this idea that retired Spaniards are living like kings on state pensions and poor brits are starving. None of my retired spanish family get anything like 2500 Es a month. My mother-in-law due to some weird calculation relating to her husband dying prior to retirement) gets 1100 Es and everyone says that she is one of the lucky few. But it is worth noting that in recent years Spanish pensions have not increased with inflation and no one expects that trend to change so we are seeing a real devaluation over time. Back in blightie I just went to HMRC for a pension statement and mine is guranteed at 13400 Euros per year (I haven't finished my stint yet but already have sufficient years). Yet I've only ever paid higher rate tax for one year in my life. I know many who have much more.
> 
> Yes the system is moving to a fixed state pension but that is in parallel to pressing most people into private schemes where their employer contributes (the so called free money). No one as far as I know will lose any additional benefit already accrued.
> 
> ...


I'm not saying one system is better than the other - to get the €2500 you or your employer needs to have paid in a lot for a long time. Very few people receive that much, most retired Spaniards I know get around €1000/month, but after having retired at about 55 and having done very average jobs. Their children will now have to work longer to pay for this luxury.

I think the UK pension system gifts too much money to private fund managers: the bigger the tax break the bigger their commissions (I know they are trying to cap this, but the fund managers will try to get round it). So I'd like to see a slightly bigger UK state pension, while Spain needs to do the reverse, i.e. encourage more private investment and less reliance on a state pension system that still looks remarkably like a ponzi scheme.

Personally I'm hedging my bets - I probably won't retire for another 20 years so I'm not pinning my hopes on there being an EU when I come to draw my pension anyway. I hope to get the full flat rate from the UK, maybe €1000/month from Spain, along with income from other investments.


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## Lynn R (Feb 21, 2014)

alborino said:


> But accrued benefit from additional contributions is still there so this will take years to roll out as I understand it. So fixed amount is in reality minimum amount. ?


Except that the new "fixed amount" won't apply to anyone who spent all or part of their working life contracted out of SERPS. How much they will get will depend on how many of their qualifying years they spent contracted out, but all they are guaranteed to get is an amount equal to the Basic State Pension at the moment, ie 113pw. They will have paid 1.5% less in NI contributions for any year they were contracted out, but the reduction in their State Pension will amount to much more than 1.5%.

I won't reach my revised state retirement age of 66 (if there's anything left by then!) for another 7.5 years and it's not possible to get a pension forecast under the new scheme as far ahead as that, at the moment. I wonder why they don't want to tell people how much they'll be entitled to?

I struggle to see how anybody who would currently only be entitled to the basic state pension will be better off under the new arrangements, when they can already have their income raised to the minimum of 148pw for a single person by way of Pension Credit anyway (with Pension Credit being the gateway to many other benefits).


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## CapnBilly (Jun 7, 2011)

Lynn R said:


> I won't reach my revised state retirement age of 66 (if there's anything left by then!) for another 7.5 years and it's not possible to get a pension forecast under the new scheme as far ahead as that, at the moment. I wonder why they don't want to tell people how much they'll be entitled to?
> 
> I struggle to see how anybody who would currently only be entitled to the basic state pension will be better off under the new arrangements, when they can already have their income raised to the minimum of 148pw for a single person by way of Pension Credit anyway (with Pension Credit being the gateway to many other benefits).


You can get a quote although it's an estimate based upon the estimated flat rate pension of £148. If you have been contracted out for any period you will just receive the current basic.

I have 37 years and have been contracted out for about 35 of them. I am due to collect in 2020. My estimate under the new rules was about £32, so I will receive the current basic. Although they don't tell you how they work it out this is my understanding

– For contribution years between 1978 – 1997: there was a guaranteed minimum pension for those who contracted out. This is paid by your private pension provider. Your GMP will be calculated and used as the contracted out deduction for these years.

– For contribution years between 1997 – 2002. Additional State Pension was not added so there is no contracted out deduction for time contracted out during these five years.

– From 2002 onwards – there is a flat rate, so there is a similar calculation to the 1978-1997 calculation to work out a contracted out deduction.


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## Williams2 (Sep 15, 2013)

Chopera said:


> Haven't read the full thread, but...
> 
> Regarding state pensions:
> 
> ...


Precisely you've got my drift of the 'typical enterprising' working Brit who spent enough years in the UK to
be 'fully paid up in NI contributions' to get the UK State Pension and ( just to satisfy those Posters who
keep rabbiting on about ISA's, SIPPS and other investments in the UK ) lets say the same Brit also
did 'all those things as well' and then spends the last 10 to 15 years of he's working life in Spain - as a salaried employee, maybe in a managerial position before retiring and taking the Spanish state pension.

Will he be better off - of course he would, particularly as the State will ( amongst all the other
calculations ) have to take into account he's or her Final Salary in Spain.


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## alborino (Dec 13, 2014)

So aged 22 I start my career. After 30 years, I'm 52, I have successfully saved in ISAs and SIPPs. I become fluent in Spanish by some method before the move. I go to Spain and apply for managerial positions. I work till I'm 67 to get a better state pension.

I guess you could marry a Spaniard and solve the language problem but suddenly becoming a spanish manager aged 52?? For that to work you'd have to have managerial experience, with a very good record, in the UK. In which case your company pension in the UK would dwarf the Spanish state pension by miles.

I can't see a scenario where that is very likely based on your assumptions. Yes a theoretical being meeting all your criteria might get a higher state pension but would have to allow this objective to totally dominate their life. 

I wouldn't call such a person "an enterprising brit". I also certainly wouldn't employ them along I think with many others so they would need to keep their plan very quiet.

Seems an odd ambition. Also all plans carry risk. With this plan you could end up with a very much reduced state pension. However if your plan was to extend your managerial career for 5 years more in the UK you could probably retire very comfortably in Spain aged 57. Now I can see that being attractive.

There is also of course more to life than money so even if there was even a 5% chance this scenario might lead to a greater state pension I doubt anyone would pursue it.

But in theory, if rules don't change, the pound doesn't strengthen against the Euro, with a lot of luck, you might get a higher pension some years later which would give you benefit when aged about 74. It might happen for one person somewhere. There are 7 billion of us.


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## mrypg9 (Apr 26, 2008)

alborino said:


> So aged 22 I start my career. After 30 years, I'm 52, I have successfully saved in ISAs and SIPPs. I become fluent in Spanish by some method before the move. I go to Spain and apply for managerial positions. I work till I'm 67 to get a better state pension.
> 
> I guess you could marry a Spaniard and solve the language problem but suddenly becoming a spanish manager aged 52?? For that to work you'd have to have managerial experience, with a very good record, in the UK. In which case your company pension in the UK would dwarf the Spanish state pension by miles.
> 
> ...


Realistic and sensible. Anyone working in the professional public or private sector, earning over £40k, with FSS plus AVC plus SRP plus savings/investments plus house to sell can retire to Spain with a retirement income most Spaniards can only dream of.


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## Chopera (Apr 22, 2013)

Take early retirement inthe UK, at say 55, move to Madrid and spend 5 years working part-time as a business English teacher (no Spanish required and I know people who have done this). As an autonomo you can choose how much social security you pay - most people pay the minimum which is around €260/month I think, but you can opt to pay more provided your various income is high enough, which will count towards a higher state pension when they come to do the calculation. Of course you need to compare the cost of the additional social security payments with the benefits of receiving a bigger state pension after the age of 67. It used to be the case that autonomos in Spain increased their contributions in the last 5 years of work because they carried extra weighting in the pension calculation, but now I think they're drawing this period out to the last 25 years so the weighting is more spread out. And there are other factors to consider, such as you'll probably get your pension paid in euros rather than pounds, but even so, it might be worth looking into if you like the idea of spending a few years working part-time in Spain before full retirement.


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## alborino (Dec 13, 2014)

Chopera that might work if you think there are enough suckers around to pay you presumably a minimum of 1000 Es a month. Less than that you may as well just pay the spanish government money. 

When you say part-time say 20 hours a week for which you need 5 hours preparation you'd thus need to be charging 14.50 Euros an hour including being paid for prep. And that assumes you are working for a language school who consistently generate the work you require.

You'd need to cover the time and costs of getting your teaching qualifications as well. 

But I'll leave this to a regular contributor here who works teaching English in Madrid. Personally I think anyone doing this would be a con artist but that's just me.


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## Chopera (Apr 22, 2013)

alborino said:


> Chopera that might work if you think there are enough suckers around to pay you presumably a minimum of 1000 Es a month. Less than that you may as well just pay the spanish government money.
> 
> When you say part-time say 20 hours a week for which you need 5 hours preparation you'd thus need to be charging 14.50 Euros an hour including being paid for prep. And that assumes you are working for a language school who consistently generate the work you require.
> 
> ...


The autonomos I know with a bit of experience get paid between €20/hour and up to €35/hour, but that's not really the point. It could be renting out properties on the coast, selling your own fruit and veg, etc. The point is that having taken early retirement in the UK you have other income anyway, which would total more than €1000/month. The teaching English bit (or whatever) is just a mechanism to become an autonomo and get you paying Spanish social security and potentially boosting your state pension.

Think of it like this: 

You spend 5 years paying say €400/month Spanish social security (i.e. €24k in total) but this entitles you to maybe an extra €200/month state pension, which is usually inflation linked. After 10 years of retirement you've got your money back and are "in profit". Depending on the exact figures, this may be attractive to some people.


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## alborino (Dec 13, 2014)

Lynn R said:


> Except that the new "fixed amount" won't apply to anyone who spent all or part of their working life contracted out of SERPS. How much they will get will depend on how many of their qualifying years they spent contracted out, but all they are guaranteed to get is an amount equal to the Basic State Pension at the moment, ie 113pw. They will have paid 1.5% less in NI contributions for any year they were contracted out, but the reduction in their State Pension will amount to much more than 1.5%.
> 
> I won't reach my revised state retirement age of 66 (if there's anything left by then!) for another 7.5 years and it's not possible to get a pension forecast under the new scheme as far ahead as that, at the moment. I wonder why they don't want to tell people how much they'll be entitled to?
> 
> I struggle to see how anybody who would currently only be entitled to the basic state pension will be better off under the new arrangements, when they can already have their income raised to the minimum of 148pw for a single person by way of Pension Credit anyway (with Pension Credit being the gateway to many other benefits).





Chopera said:


> The autonomos I know with a bit of experience get paid between €20/hour and up to €35/hour, but that's not really the point. It could be renting out properties on the coast, selling your own fruit and veg, etc. The point is that having taken early retirement in the UK you have other income anyway, which would total more than €1000/month. The teaching English bit (or whatever) is just a mechanism to become an autonomo and get you paying Spanish social security and potentially boosting your state pension.
> 
> Think of it like this:
> 
> You spend 5 years paying say €400/month Spanish social security (i.e. €24k in total) but this entitles you to maybe an extra €200/month state pension, which is usually inflation linked. After 10 years of retirement you've got your money back and are "in profit". Depending on the exact figures, this may be attractive to some people.


I see where you are coming from but if you paid that 24000 Es into a SIPP you'd still get more even assuming zero growth. So one more year in blightie and then early retirement seems a more certain route. And if you go the SIPP route you could pass that on to your wife and from April your children tax free. Or have access to nearly all of it in an emergency. Or in the case of terminal illness 100% of it.

Agreed if you need to work or can only get state healthcare by being an autonomo then your scenario becomes more attractive. But of course depends on finding work.

All I'm saying is that promoting some Spanish advantage has to be weighed against all the alternatives. And in the end we are talking about minmal amounts even if we ignore the risk. However if you live to be 100 you may be on to something (but that is not my plan).


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## Chopera (Apr 22, 2013)

alborino said:


> I see where you are coming from but if you paid that 24000 Es into a SIPP you'd still get more even assuming zero growth. So one more year in blightie and then early retirement seems a more certain route. And if you go the SIPP route you could pass that on to your wife and from April your children tax free. Or have access to nearly all of it in an emergency. Or in the case of terminal illness 100% of it.
> 
> Agreed if you need to work or can only get state healthcare by being an autonomo then your scenario becomes more attractive. But of course depends on finding work.
> 
> All I'm saying is that promoting some Spanish advantage has to be weighed against all the alternatives. And in the end we are talking about minmal amounts even if we ignore the risk. However if you live to be 100 you may be on to something (but that is not my plan).


As ever it depends, with a Spanish state pension you diversify into a low rsik income in a different currecny, with a SIPP you might have the opportunity to save a bigger lump sum over those 5 years but then you have to buy either an annuity or some other vehicle that generates an income during your retirement, and you might get taxed more on that. :juggle: Now where did I put that crystal ball? I knew it ¡t'd come in handy some day!


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## Lynn R (Feb 21, 2014)

Chopera said:


> with a SIPP you might have the opportunity to save a bigger lump sum over those 5 years but then you have to buy either an annuity or some other vehicle that generates an income during your retirement, and you might get taxed more on that.


Not any more - after April 2015 anyone over 55 will be able to take whatever amount they like out of their SIPP (like flexible drawdown but without the current restrictions) except that if they withdraw more than 25% of the value of the fund they will pay UK tax on anything over that at that their marginal rate. This is why I recently transferred my old freestanding AVC into one, because the previous provider said they would not provide that facility with that particular product, despite the Government's new rules.


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## Chopera (Apr 22, 2013)

Lynn R said:


> Not any more - after April 2015 anyone over 55 will be able to take whatever amount they like out of their SIPP (like flexible drawdown but without the current restrictions) except that if they withdraw more than 25% of the value of the fund they will pay UK tax on anything over that at that their marginal rate. This is why I recently transferred my old freestanding AVC into one, because the previous provider said they would not provide that facility with that particular product, despite the Government's new rules.


Thanks - I was aware of this change, but didn't realise it was from the age of 55. Might be worth making sure you are a UK resident if you decide to drawdown though. It might be tax free in the UK but probably not in Spain.


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## alborino (Dec 13, 2014)

Chopera said:


> Thanks - I was aware of this change, but didn't realise it was from the age of 55. Might be worth making sure you are a UK resident if you decide to drawdown though. It might be tax free in the UK but probably not in Spain.


Yes when you take the 25% but not when you draw down - that is subject to UK tax. But the big advantage for many is they can calculate an exact amount they have remaining tax free each year and just take that amount thus making sure they use all their tax free allowance.

But of course you lose nothing as you were given the tax upon entry and you've already had 25% of the pot tax free.

And if you are a higher rate tax payer then you really can be a winner


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## Lynn R (Feb 21, 2014)

Chopera said:


> Thanks - I was aware of this change, but didn't realise it was from the age of 55. Might be worth making sure you are a UK resident if you decide to drawdown though. It might be tax free in the UK but probably not in Spain.


The 25% isn't tax free in Spain, no - just like any other kind of pension lump sum. I don't plan to take one from my SIPP, just an annual drawdown payment (probably around 5% of the fund value per year) which will be a lot more than I was projected to get if I'd had to buy an annuity. Of course the annual drawdown payment will be taxable, just like any other pension income. By only taking 5% per year hopefully the capital value of the fund will be maintained and even possibly have the chance to grow a bit (if all you good people who have faith in the long term performance of the stock market are right) and if I really need it at any time I can take a larger amount out.

I'll have a largish tax bill to pay in 2016 on the final salary pension lump sum which is due to land in my bank account on Friday (only 4 more sleeps to go) but I did know that before I moved here, and wasn't prepared to mess about by declaring myself non-resident for next year and spending 6 months in the UK, or anywhere else.


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## alborino (Dec 13, 2014)

Lynn R said:


> ......... and wasn't prepared to mess about by declaring myself non-resident for next year and spending 6 months in the UK, or anywhere else.


That is a real pain. We are thinking of living just over the border in Portugal for a few months so remain UK tax payers next year. And also possibly returning to New Zealand which was going to happen one day so we may as well take advantage .

Of course if the Spanish government had half a brain it would say tax free in UK is already tax paid (or charge a negligible amount). Then we would shift more of our economy to Spain much sooner. Instead we will keep me and my wife's economy/income out of spain for one more year and our costs out of Spain for just over 6 months.

I'd love to meet Rajoy and try to understand just how stupid spanish politicians are (if stupidity is the problem ) but I'll never get the chance. Sorry I should be over that by now and just except it in my stride but it is a pain - which is where I came in


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## Chopera (Apr 22, 2013)

alborino said:


> That is a real pain. We are thinking of living just over the border in Portugal for a few months so remain UK tax payers next year. And also possibly returning to New Zealand which was going to happen one day so we may as well take advantage .
> 
> Of course if the Spanish government had half a brain it would say tax free in UK is already tax paid (or charge a negligible amount). Then we would shift more of our economy to Spain much sooner. Instead we will keep me and my wife's economy/income out of spain for one more year and our costs out of Spain for just over 6 months.
> 
> I'd love to meet Rajoy and try to understand just how stupid spanish politicians are (if stupidity is the problem ) but I'll never get the chance. Sorry I should be over that by now and just except it in my stride but it is a pain - which is where I came in


Much as I agree with your sentiments about Rajoy (well, all of them in fact) Spain has enough trouble as it is with money held overseas by tax cheats to start creating tax free allowances for certain cases. Before you know it, half of Spain will be trying to transfer all their black money into SIPPs in order to get it out tax free when they retire!


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## Williams2 (Sep 15, 2013)

Chopera said:


> Much as I agree with your sentiments about Rajoy (well, all of them in fact) Spain has enough trouble as it is with money held overseas by tax cheats to start creating tax free allowances for certain cases. Before you know it, half of Spain will be trying to transfer all their black money into SIPPs in order to get it out tax free when they retire!


:focus:

Yes - thanks for reminding me, my good man and here it is.

Why oh why other folks insist on banging on the ISA, SIPP & Tax allowance
drum - where the only facts and figures, we need in front of us are
the new British Flat Rate State pension, compared to the Spanish State
Pension is beyond me !!!

*The new British Flat Rate Pension* - note the words flat rate !!

The Government originally proposed that in April 2017 the Basic and Second State
Pensions should both be replaced by a single, flat-rate pension. A Green Paper
was issued in April 2011, followed by a White Paper in January 2013.
The amount of an individual's flat-rate pension would depend on the number of
qualifying years, with 35 qualifying years being needed for the maximum pension
and pro-rata amounts for fewer qualifying years, subject to a minimum of about
8 years. Rights already earned to a Second State Pension would not be lost.

In the 2013 budget it was announced that introduction of the single tier
pension will be brought forward by one year to 6 April 2016.

The new "single tier" State pension will be £144 a week (in 2012-13 terms).
Provided they have 35 qualifying years, individuals will actually receive
£144 a week, plus a "protected amount" if they have already earned
a second State pension greater than £37 a week (which is the difference
between the current Basic State Pension and the proposed flat-rate pension)
and minus a "rebate-derived amount" if they have paid smaller National Insurance
contributions because they were "contracted out" of the Second State Pension
Scheme (or its predecessor, the State Earnings Related Pension Scheme).

The new, single-tier State Pension would eventually remove the need for
Pension Credit. It is also proposed that various rules regarding marriage,
divorce and bereavement would be phased out. This would mean that
Category B pensions (see above) would be replaced by Category A pensions
for everyone, although any rights to a Category B pension that existed at
the implementation date would be preserved.

Crystal clear for you now - so the 'best case scenario' for a Brit who
has worked all their life in the UK, is that he or she will be awarded
the flat rate of £148.40 a week. This being the maximum a Single
Pensioner would get.
Obviously if he or she falls short on NI contributions ( eg contracted
out of SERPS ) or hasn't contributed enough NI contributions, it
will be less than £148.40 a week. So another thing to bear in mind.

Of course the actual amount will be set in the autumn of 2015,
although if past track records are anything to go by. Don't
expect more than an extra £7.00 a week - to make the likely
new flat rate of £155.00 a week.

Ok then using present figures 148.40 X 52 = £7,716.80 per year
Which would equate to £ 643.07 per month
For the Flat rate Pension in the UK.

In comparison to the Skippers anecdotal evidence posted on
this very forum:

_My Spanish neighbour, a retired road construction foreman, told me that he has a State pension of €1,600 a month. Another Spanish friend, a retired chef, told me that his State pension is about the same. I have 40 years contributions into the UK NI system and was a higher rate taxpayer for most of my working life but will be lucky to receive anywhere near half of this when I reach 65. _

Right then the UK Pensioner on £ 643.07 a month would be the equivalent
of 822.68 Euro's at today's exchange rate.

Whereas the Skippers neighbour & friends ( Final Salary ) Spanish State Pension
receive 1600 Euro's a month - which is equal to £1,251.06 a month.

Per year the British Pensioner gets £7,716.80 each year which is equal 
to 9,869.47 Euros.

Whereas Skips Spanish Pensioners receive 19,200 Euros a year which is
equivalent to £15,013.82 per year in pounds sterling.

So does anyone still believe that a British Pensioner is getting more money
from the new British Flat rate Pension than the Spanish pensioner on the
Spanish State Pension ?


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## Isobella (Oct 16, 2014)

That's just one pensioner as an example. Many have never had a decent job to accrue benefit and are getting around €500 pm. Remember working on the black was/is customary in Spain.


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## mrypg9 (Apr 26, 2008)

Williams2 said:


> :focus:
> 
> Yes - thanks for reminding me, my good man and here it is.
> 
> ...


Surely a British pensioner receiving only the basic pension would get Housing Benefit, free prescriptions, fuel allowance, council tax discount and a few other benefits not available in Spain?

You know, all this is theoretical because the situations of each person have to be viewed as a whole before a true comparison can be made. So you have to take into account the fact that very few retirees in the UK rely solely on their basic pension as their income. Incomes are very much lower in Spain and isn't it the case that most people have no FSS or occupational pension of any kind? You have to look at the overall picture before deciding who is better off.

If you are earning a good salary in the UK then you are likely to have a good additional source of income in retirement and your state pension is a small part of your income. You cannot make simple comparisons in the abstract. 
How many Spanish pensioners receive the full amount, I wonder?
I think any British person would have to be desperate for a few extra euros to plan consciously to do what has to be done in order to benefit from what you suggest.
Most Brits wouldn't need to.


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## Chopera (Apr 22, 2013)

Williams2 said:


> ...
> 
> So does anyone still believe that a British Pensioner is getting more money
> from the new British Flat rate Pension than the Spanish pensioner on the
> Spanish State Pension ?


I don't think anyone has doubted that? It's pretty common knowledge (and I've mentioned it twice on this thread) that in the UK the state pension is [email protected], but that doesn't necessarily mean that the overall UK pension system is worse. If you want to make comparisons and decisions as to where you work based on pension systems, then you need to compare all the potential tax breaks provided by each pension system. Not just the state pensions.


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## mrypg9 (Apr 26, 2008)

Chopera said:


> I don't think anyone has doubted that? It's pretty common knowledge (and I've mentioned it twice on this thread) that in the UK the state pension is [email protected], but that doesn't necessarily mean that the overall UK pension system is worse. If you want to make comparisons and decisions as to where you work based on pension systems, then you need to compare all the potential tax breaks provided by each pension system. Not just the state pensions.


Quite. Surely it's the overall income that counts. My neighbour lives on the Spanish pension period. No extras, she pays prescription charges, no WFA, no occupational pension scheme, no FSS. 
She cannot believe that many British retirees have such good incomes and would swap systems any day.


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## Williams2 (Sep 15, 2013)

Chopera said:


> I don't think anyone has doubted that? It's pretty common knowledge (and I've mentioned it twice on this thread) that in the UK the state pension is [email protected], but that doesn't necessarily mean that the overall UK pension system is worse. If you want to make comparisons and decisions as to where you work based on pension systems, then you need to compare all the potential tax breaks provided by each pension system. Not just the state pensions.


Thanks for acknowledging that the British State Pension is [email protected] - my argument
all along has been about a theoretical Brit who ticks all the boxes, as regards
he's UK NI record - built up a good UK company and UK private pension plan as
well and ( might - just might ) be able to put the icing on the cake, by working
the last 10 to 15 years in Spain. To retire here on a full Spanish State, Final Salary
Pension, as opposed to 'the laughable' British one.

Anyway here's a revealing survey of different Countries State Pensions
table carried out in 2013.

State Pensions table


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## Lynn R (Feb 21, 2014)

mrypg9 said:


> Quite. Surely it's the overall income that counts. My neighbour lives on the Spanish pension period. No extras, she pays prescription charges, no WFA, no occupational pension scheme, no FSS.
> She cannot believe that many British retirees have such good incomes and would swap systems any day.


I guess if she only meets the "professional classes" or ex-higher paid public sector workers who've been lucky enough to be in one of the generations where they could pay into final salary schemes and had enough spare disposable income to pay into AVCs as well (and I include myself in that) then she would, wouldn't she?

I think the pensioners who have it really hard in the UK are the ones who have only a small, defined contribution pension scheme which pays them an annuity in addition to their State Pension. They are over the income limit to qualify for Pension Credit, thus have to pay full Council Tax, don't get help with housing costs and if they have more than 23K in savings they have to pay the full cost of any care assistance they need, whether that be at home or in residential care. 

I wonder what proportion of UK pensioners fall into the first group?


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## Lynn R (Feb 21, 2014)

Average pensioner incomes in the UK:-

Retirement income almost 40% less than working wage for new pensioners | Money | The Guardian


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## CapnBilly (Jun 7, 2011)

Just to it into perspective the average pension in Spain in 2014 was €1,008.

"The average retirement pension reached 1.008 euro, a 2% more compared to the same period of last year. In terms of the average pension system, comprising different classes (retirement, permanent disability, widowhood, orphanhood and family), stood at 877 euros per month, representing an annual increase of 1.7%."


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## Lynn R (Feb 21, 2014)

CapnBilly said:


> Just to it into perspective the average pension in Spain in 2014 was €1,008.
> 
> "The average retirement pension reached 1.008 euro, a 2% more compared to the same period of last year. In terms of the average pension system, comprising different classes (retirement, permanent disability, widowhood, orphanhood and family), stood at 877 euros per month, representing an annual increase of 1.7%."


Our total household expenditure for everything excluding holidays (even whilst we've been paying for private medical insurance and full price public transport which Spanish pensioners wouldn't have to) comes to less than that for 2 of us.

Spanish pensioners have to pay prescription charges - capped at €8 per month for pension incomes of up to €18,000 and €18 per month over that level. They don't get free TV licences as British pensioners aged 75 or over do (but then again they don't need them as there is no TV licence in Spain). They don't get free bus travel in Spain (but my OH has just got his Sesentaycinco card and now pays the grand sum of €0.60 to get to our neareast coastal resort and €1.63 to Malaga, with a service which runs on all bank holidays including Xmas Day and New Year's Day). The amount Spanish pensioner homeowners are having to pay in IBI is likely to be substantially lower than British pensioners have to pay in Council Tax, unless they're on Pension Credit. Spanish pensioners can take advantage of very cheap, full board holidays in winter via the Imserso scheme, and lots of them do. Every town has it's Hogar de Pensionistas with a cafeteria (open to everybody, not just pensioners) where they can buy very cheap coffees, drinks and meals. Ours has a deal whereby they can get a 3 course Menu del Dia with a non-alcoholic drink every day for a month for €99.


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## VFR (Dec 23, 2009)

Williams2 said:


> Thanks for acknowledging that the British State Pension is [email protected] - my argument
> all along has been about a theoretical Brit who ticks all the boxes, as regards
> he's UK NI record - built up a good UK company and UK private pension plan as
> well and ( might - just might ) be able to put the icing on the cake, by working
> ...


Yes it will pay to work in Spain as long as its on a contract where you pay into the SS & it does not need to be for very long either as this will the mean that you get an enhanced EU pension.


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## gus-lopez (Jan 4, 2010)

Lynn R said:


> Spanish pensioners can take advantage of very cheap, full board holidays in winter via the Imserso scheme, and lots of them do. Every town has it's Hogar de Pensionistas with a cafeteria (open to everybody, not just pensioners) where they can buy very cheap coffees, drinks and meals. Ours has a deal whereby they can get a 3 course Menu del Dia with a non-alcoholic drink every day for a month for €99.


So can any permanent foreign residents.


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## Lynn R (Feb 21, 2014)

gus-lopez said:


> So can any permanent foreign residents.


Perhaps you missed the bit where I said the cafeterias are open to everybody.


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## Lynn R (Feb 21, 2014)

Oh, and the poorest pensioners who qualify for the Sesentaycinco Oro card get a 50% discount on those cafeteria prices.


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## mrypg9 (Apr 26, 2008)

We were talking about Brits retiring in Spain to receive pension top-ups as Williams reminded me. So in this context we're surely not discussing the situation of British pensioners in the UK versus Spanish pensioners in Spain. So we should be looking at what a retiree's TOTAL income could be when comparing British retirees who emigrate to Spain and TOTAL retirement income of the typical Spanish pensioner. There's no doubt that the Spanish pensioner gets the better deal and that U.K. pensions in comparison are crap. As Chopera said, no-one doubts that.
But looking at real people and not theoretical models, your average retired Brit immigrant does not come here solely reliant on the State pension S/he comes most likely with the basic SRP, yes, but also with some form of FSS or occupational pension plus investments from various kinds of savings plus in many cases income from rentals or company dividends. All this adds up to a TOTAL retirement income far greater than that of your average Spaniard. Many of us have retirement incomes way beyond the wage of your average working Spaniard, even a professional.

The question of the adequacy of retirement incomes for the less affluent UK pensioner, i.e. the majority, is another topic altogether and one that is surely a ticking time-bomb. The population is ageing, tax receipts from those in work are falling (due to low wages) and as the state pension, like FSS, is a Ponzi scheme, it's shortly going to become unsustainable. Of course one way to avoid or at least postpone this is to encourage immigration of young, fit, healthy people but this isn't a popular solution.
Parties of the Left all over Europe are promising 'nice' things that everybody wants but they avoid the issue of how they are to be delivered and paid for. Of course increased taxation of wealth will go someway to redistributive purposes but it can't pay for the vast sums needed to ensure everyone has a decent and adequate income in retirement, especially when you consider the percentage of 'working poor' whose inadequate incomes have to be topped up by tax credits.
I honestly have no idea how all that could be achieved. We can't rely on growth, average growth will be less than 1% in the coming years. I seem to remember that some years ago we were promised an all-Party Committee to discuss and come up with proposals but I don't recall it ever actually reporting.

The only reason I would like to have an after-life is so I would be able to find out how the world's many pressing problems will sort themselves out.
Or not.


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