Private Pensions and Living in Spain
I have reached a certain age. Not quite the official age of retirement, but the age when, if you have some sort of private pension, you have the option to do something with it. Following changes in the pension system, as of April 2015, you can access your pension pot and decide what might suit you best as far as future investment is concerned.
I was reminded by a former employer that, come my 55th Birthday, I could get my hands on one of my little pension pots and go on a hey-day.
It then dawned on me that I had a number of small pension pots dotted around and it might be worth my trying to find out how much each was worth. I would say at this juncture that none of them is worth a fortune, and are hardly likely to keep me in the manner to which I have become accustomed when the time comes for me to down the tools of labour and retire gracefully. In fact, some time ago, I realised that I would probably have to keep on working for a crust until the day I wander off into the sunset. I am quite happy with that, as long as I am doing the work I enjoy. No longer, for me, days stuck in some godforsaken office, having to face a daily commute with thousands of sullen, silent fellow commuters, and then hours of monotony moving from meeting to computer screen and back again.
So, after making a few enquiries, I got a value for my pension pots and the total sum will come in handy as we start to equip the new house. I’d rather use the funds now to invest in our home than wait for another 10 years to see if I can live off the monthly income of £1.75 or somesuch. I am no Financial Services expert, but I knew that the best option for me was to cash in these paltry little policies and buy the appliances for the new kitchen.
I had three pots with three different providers. I used to have a Financial Services Advisor back in the UK who was always only too keen to get in touch when he thought he could earn a commission from my decisions. As far as Financial Services are concerned, for me, they are a way for everybody else but me to make money. I remember, years ago, being advised to take out a School Fees Plan as soon as my son was born, in order to provide us with the option to have him privately educated when the time came. Large monthly payments disappeared from my bank account which, at the time, was fairly well topped up, fortunately. However, in the late 1980s/early 1990s, the UK was hit by a recession, and mortgage interest rates went through the roof meaning that I could no longer contribute an arm and a leg to the school fees plan. With that plan, there was no maturity date; it only matured if and when you started paying school fees and provided the pot was sufficient. As it happened, the children went to a state school in rural Kent, but the money I had paid into the plan just disappeared; I didn't see a penny. So much for saving for that rainy day. I have paid good money into life insurance policies of different varieties, health insurance, redundancy protection etc etc, and in fairness, we can never tell what might lie around the corner, hence the need for such plans. I would add that our private health insurance here in Spain, with Sanitas, seems to be excellent value and the service we have, so far, enjoyed has been extremely good.
Anyway, I turned to my UK-based Financial Advisor to enquire about these pensions pots. As I now live in Spain, I was told that he can no longer help me. I received a one-line email to that effect; no further information or help other than ‘we can no longer help you.’
The name of a company based in Gibraltar was eventually provided. I was told that, before I could decide what to do with my money, I had to seek professional advice. In fact, when I received the various forms from the pension providers that you need to complete in order to get hold of your money, the forms all had sections that had to be completed by an Authorised Financial Services Advisor. If these sections were not completed, then the application would be null and void……the application to get hold of my money in my pensions pot.
I got in touch with the company in Gibraltar, and was told that I would have to meet with a consultant. After some correspondence during which I made it clear that all I wanted to do was cash in my pension pots, I was told that I would have to become a client of the company before I could get the advice that I needed in order to complete the forms. This client fee was a percentage of the funds in question which would, in normal circumstances, have turned out to be no small amount. Bear in mind that, if you do cash in your pension pots, only 25% of the total amount will avoid tax, so gradually all sorts of people start to get their hands on the monies you have supposedly set aside for another rainy day.
After several frustrating weeks, it dawned on me that I had no option but to become a client of the Gibraltar-based company if I wanted to actually do anything at all with my pension pots. I was offered a discounted fee, but this was still a sum large enough to buy a rather lovely new oven and hob for the kitchen. All I needed was for the advisor to sign two forms and send them off. However, I had to go through the rigmarole of meeting the advisor (one and a half hours drive from home) to be talked through all the options that I had already read about in the various documents provided with the forms. I signed the forms, arranged to pay the client fee and scuttled off back home.
This might sound like a bit of a rant but it is worth bearing all this in mind if you do decide to come and live here in Spain shortly before you reach the age of 55. In the scheme of things, it is not complex, but it is annoying, frustrating and costly to try to get sensible advice from the right people. I know that my advisor here was doing his job; he was extremely helpful, and it is the pension providers who have put in place these stipulations so that (I assume) they cannot be sued when someone takes their funds at age 55 and runs out of money by the time they are 56 and decide that they were misinformed. I do grumble that there are undoubtedly many financial services advisors who are making a tidy sum from signing the forms required by the pensions providers.
My forms have now been duly signed, birth certificate copies, residency information and bank statements provided; I have been given the necessary advice and the forms have been sent to the respective pensions companies. I have been told that it can take up to 5 months for the funds to be released, although no one has been able to explain why it should take so long. I think that is the aspect of Financial Services that I dislike so much: all these providers are very keen to accept your payments for insurance, assurance, savings, pots, pensions, you name it, but when it actually comes to paying out they do everything possible to make it as tricky as they can.
So, top tip:
If you are thinking of leaving the UK before you reach the age of 55, get advice from your existing Financial Services provider before you leave. As soon as you leave the UK, it seems that none of them will want to speak to you.
There aren’t really any other tips I can provide, as the Financial Services industry does seem to have you over a barrel as far as your private pension is concerned. In my case, it seemed that I had to pay up and put up with the procedure.
