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Viewing posts categorised under: EU Pension Transfer

State Pension Benefits

By John Lansley - Topics: EU Pension Transfer, France, Pensions, Retirement, State Pensions After BREXIT, UK Pensions
This article is published on: 22nd May 2020

22.05.20

If you have moved from one country to another, while it may be comparatively easy to obtain tax advice in order to help you plan your finances, it can be very difficult to find out how your State Retirement Pension will be affected, and this has become more uncertain as a result of Brexit.

This article aims to shed some light on the issue.

I retired in the UK and moved abroad
Let’s start with something easy – if you have already retired and moved to France, Spain or another EU country, the chances are you will only have a State Pension from the UK. With Brexit in mind, as long as you are legally resident in your new home country by the end of 2020, nothing will change and you will be entitled to the annual pension uplift indefinitely.

Coupled to this is your entitlement to healthcare, in that you will have a form S1 from the UK, which ensures you benefit from full care on an ongoing basis, and which in effect will be paid for by the UK Government.

If you have already left the UK but have not yet reached formal retirement age, as long as you are ‘legal’ in your adopted home before the end of 2020, you will receive the UK State Pension at retirement age and qualify for annual increases. You will also be entitled to a form S1.

Note that, if you have not regularised your situation in your adopted home by the end of 2020, the situation is uncertain, to say the least. You will be entitled to claim the UK State Pension when you reach retirement age, but the uplifts are only due for 3 years and, most importantly, form S1 will not be available; but the situation may change – the Brexit negotiations seem to have stalled due to the Coronavirus Pandemic and no one knows what the final agreement will look like, especially when it comes to freedom of movement and the rights of third country nationals.

defined-benefit-pensions

I left the UK 5 years ago at the age of 55 and have been self-employed in France for the last 5 years

Have you been making voluntary contributions to the UK scheme? Are you making contributions in France?

If you haven’t already done so, obtain a pension forecast from HMRC – use the gov.uk website, sign up for the Government Gateway access service, and check your National Insurance Contribution records, as well as your UK tax records. You’ll have to apply to contribute, using form CF83 attached to the booklet NI38, Social Security Abroad.

You will then be told what pension you can expect at your retirement age, and you can also see how many incomplete contribution years you have. It is generally good advice to continue to make voluntary contributions after leaving the UK (currently £795.60pa), but if you are currently self-employed, you will only have to pay at the Class 2 rate, £158.60pa for the current year.

You’ll receive details of how to make up the shortfall, by bank transfer or cheque for past years, and by direct debit for the future if you wish to see payments taken automatically. Importantly, you can also call to obtain advice concerning whether it would be worthwhile doing this, and how additional payments will increase your pension entitlement – it might take a while to get through, especially due to the current Coronavirus lockdown, but you should find the staff helpful when you do.

Also make sure you understand what your French contributions entitle you to and try to obtain a projection of your future pension in France. This might prove difficult at present, with offices closed or providing limited services.

Having worked in the UK, Italy and now in Spain, I want to claim my State Pension
The first thing to understand is that you should retire formally in the country you are currently living in, unless you haven’t made any pension contributions there – in which case you apply to the last country in which you contributed.

So, in this case, you approach the Spanish authorities and will have to provide details of all your employment and self-employment history. Spain will then check with each country concerned (the EU-wide scheme ensures this is possible – work history outside the EU means you may have to apply individually to those countries) and will calculate your entitlement.

They will do this by adding together the contribution years of each country and then applying this to their own pension rules. Don’t forget, official retirement age can vary in different countries, and some state pensions are more generous than others. A second calculation is made, whereby all the individual pension entitlements are worked out, and the totals added together. Then they will award you the higher of the two figures, and will handle payments to your bank account, obtaining reimbursements from the other countries involved, according to your previous contribution records.

So, you do not have to have the minimum contributions in each country you have worked in. Having said this, if you have done so, the chances are you will benefit from minimum pensions from each country, which will produce a higher figure than otherwise. But this system means it may well not be necessary to continue to make voluntary contributions as your combined contribution history is more than sufficient.

How is healthcare affected? Any other advantages?
The good news is that receiving your pension locally will mean that your access to the local healthcare system comes with it – no need for a form S1. So, any attempts by the UK to remove themselves from the S1 scheme will not affect you.

Receiving your total State Pension entitlement in Euros has to be a distinct advantage, as it removes exchange rate risk from your retirement income. So, although a pension from a former UK employer will have to be paid in Sterling (but see below), and is therefore at risk from a weakening Pound, at least your State Pension will be paid in the currency you spend.

10 TIPS FOR MANAGING YOUR FINANCES

Other financial planning tips?
Despite the UK government’s attempts to water down the ability to ‘export’ your UK private pensions using the QROPS arrangements, this is still

possible – but perhaps won’t be for much longer. So, obtain advice about whether such a move would be beneficial, as soon as possible.

Any savings or capital you have should be invested tax-efficiently and with the aim of protecting it against both inflation and exchange rate fluctuations. Stock Markets can fluctuate too, sometimes dramatically as we have seen, so be careful you understand the amount of risk your investments are exposed to, and seek help from a suitably qualified professional who will be able to help you over the long term.

The Spectrum IFA Group specialises in financial and retirement planning for English speaking expatriates in France, Spain and across Europe. Please feel free to contact me with any questions or comments.

Pension Transfer from the EU Institutions

By Emeka Ajogbe - Topics: Belgium, EU Pension Transfer
This article is published on: 31st August 2019

31.08.19

The EU Pension Scheme is what is known as a defined benefit/final salary scheme. This means that when you retire, the organisation guarantees you a monthly payment (defined benefit) until you die. When you pass away, your partner will receive a reduced monthly payment, known as a Survivor’s Pension, until they die. It is an extremely good scheme, however, you only qualify for it if you have worked at the institutions for at least ten years (not necessarily continuously).

If you are coming or have come to the end of your contract, have worked there for less than ten years, then you will be entitled to transfer out your accumulated EU Pension Rights, or what is known as a severance grant. There are two very important reasons why you should take this with you when you leave:

1. You Will Lose It, Eventually
Let’s say that you have worked at the EU Institutions for about eight years and accumulated ap-proximately €200,000 in EU Pension Rights. The day you leave, that accumulated money will re-main there, only rising in line with inflation to keep the present value. You cannot add to it or in-vest it in funds that could possibly attract stronger growth. If you do leave it until your pension-able age (66 or more), in a strategy of ‘safekeeping’, then you will lose it completely. This is even more important to consider if you are not far from your pensionable age when you leave and do not have much time to protect your retirement. Therefore, it makes sense to transfer it as soon as you can, to maximise potential growth and protect your financial future.

An added benefit to this is that if you decide to return to the EU Institutions at some point, you can transfer your pension back in and (if you are there long enough), make up the ten years.

2. No Death Benefits
All pensions come with death benefits. This ensures that in the event of your passing, your bene-ficiaries, be they your spouse, children, or your extended family, will be provided with an income. In some cases, this sum can be greatly reduced, yet it will still be something. Unless you have worked for the qualifying ten years, your acquired EU Pension Rights is not a pension; it is a pot of money that you have accumulated through working at the EU Institutions. Therefore, it has no death benefits. In the event of your passing, your family will not benefit from what you have ac-cumulated and it will be absorbed back into the EU. By transferring it out, you ensure that the full amount of what is left (you may or may not have taken an income) is passed onto your beneficiar-ies to provide them with an income, and that the money is not lost.

What Are The Next Steps?
If this is something that you wish to consider, we will conduct an evaluation of your situation and the value of your pension rights at the EU. Once we have agreed and confirmed with you that transferring out is the right option, we will work with an approved provider who complies with the transfer out requirements, and who will help set up your new pension. Then, as part of our ongo-ing service, we will review your pension and personal circumstances every quarter to ensure that you are always updated with the latest information. Even if you move countries, our service will continue.

So, if you have come to the end of your contract at the EU Institutions, have less than 10 years of service and you don’t like losing large sums of money, wish to protect your financial future and potentially provide for your dependents/beneficiaries, then contact me either by email: emeka.ajogbe@spectrum-ifa.com or phone: +32 494 90 71 72.

The European Commission Pension Scheme

By Emeka Ajogbe - Topics: Belgium, EU Pension Transfer, european commission pension scheme, European Institutions Pension Scheme, European Union Pension Scheme
This article is published on: 8th February 2018

08.02.18

There are many benefits to working for European Institutions; the opportunity to be involved in policy making – changing the lives of millions, the opportunity to be integral in shaping the future of Europe and the opportunity to travel. This does not include the generous benefits; such as the good salaries (though those have been coming down in recent years), the opportunity to send your child or children to the European School of Brussels (either heavily subsidised, or free), and, of course, the opportunity to become a member of the gilt edged, well-funded, European Commission Pension Scheme.

The European Commission Pension Scheme is what is known as a defined benefit/final salary scheme. This means that when you retire, the organisation guarantees you a monthly payment (or defined benefit), every month of every year of your retirement, until you die. When you pass away, your partner will receive a reduced monthly payment, known as a Survivor’s Pension for every month, of every year that they are alive, until they die. As you can imagine, this is an extremely good scheme to be involved in, as when you retire, you will receive up to a maximum of 70% of your final basic salary, for the rest of your life, and your partner will receive up to a maximum of 60% of your final basic salary until they die.

The issue is, the European Commission Pension Scheme is not just given to anyone who works there; you have to qualify for it. This means that you must work there for at least ten years before you are eligible. The good thing is that this does not have to be consecutive. You can leave and return. Contributions are deducted from yourself and the EU, and a lump sum is collected that will form the basis for your eventual pension.

However, what happens if you leave before the ten years? Does the money just disappear? Well, no. You can take the lump sum with you and use it for whatever you like, as long as it is a pension. The pension must meet stringent EC guidelines before you can transfer it; see what I mean here: www.spectrum-ifa.com/eu-pension-transfer-eu-institutions-eur-money/

Having worked here for a number of years, I have accumulated knowledge and experience on this matter and can explain to you how your pension works, and help you transfer it should you need to. Contact me below for either query.

Brussels Presentation – Should I transfer my pension out of the UK, or not?

By Emeka Ajogbe - Topics: Belgium, BREXIT, EU Pension Transfer, United Kingdom
This article is published on: 16th January 2018

16.01.18

Brexit.
A word that exploded onto the British lexicon almost three years ago and has refused to dissipate. Indeed, instead of disappearing into the shadows and reappearing every time the ruling party wishes to dangle a carrot (or stick) in front of the populace, it has remained in full view without a day or week going by without it being mentioned on the news, by the watercooler, at home amongst family, or debated amongst friends and experts alike.

What does it mean? To some, it is wrenching back sovereignty from the EU Overlords, to others, it is an unmitigated mistake. To some, it is the taking back control of the British borders and stemming the tide of immigrants, to others, it is an unmitigated mistake. What is sure, is that it means that the UK voted to leave the EU next March and the EU28 will become EU27.

Whilst the politicians discuss the terms on which they will work together in the future and untangle the ties of the past, what does it mean for you?

If you have worked in the UK and have a pension (or more) there, then the lack of clarity and swirling uncertainty surrounding Brexit undoubtedly has you concerned about your money; fortunately, we at The Spectrum IFA Group have a solution for you.

On Wednesday 7th February, we have invited leading industry experts to discuss the potential implications of Brexit on your money and more specifically any pensions that you have in the UK. This is a must attend event for anyone who has worked and has a pension in the UK. Our experts will discuss likely scenarios and provide solutions for your pension concerns and we will also have a local Belgian Tax Expert who will talk about the tax treatment of UK Pensions here. The evening will end with finger food and drinks and an opportunity to meet and greet our experts, advisers, and attendees.

Click below to confirm your attendance, and we look forward to meeting you at the Renaissance Hotel.

Yes, I would like to attend the presentation on Wednesday 7th February/

EU Pension Transfer from the EU Institutions – It is EUr money

By Emeka Ajogbe - Topics: Belgium, EU Pension Transfer, France, Luxembourg, pension transfer, Retirement, Switzerland
This article is published on: 15th August 2017

15.08.17

Have you ever worked for any of the below institutions for less than 10 years? Go ahead, and have a look:

• European Commission
• European Council
• European Parliament
• EEAS
• European Court of Justice
• Eurocontrol

If yes, then carrying on reading this article, as an EU Pension Transfer will definitely be of interest to you. If not, then you’ll probably want to stop reading, unless you know someone in the aforementioned position.

To Whom It May Concern, if you have worked for less than 10 years at the EU Institutions (and have left), you will not have qualified for the gold plated, much coveted, EU Pension. I say much coveted, as no one is really making pensions like them anymore; as they are very, very expensive for the employer to maintain. Yet, they can be very, very good for you, the employee. Anyway, I digress. That is for another article.

As you will know by now, you have to work at the EU Institutions for at least 10 years (this can be interrupted, as long as the total is 10 years) before you qualify for the pension. If you leave before that time, then you are eligible for a severance grant which you can transfer into a scheme that has been approved by the EU. As it states in the EU Staff Regulations handbook:

“An official aged less than the pensionable age whose service terminates otherwise than by reason of death or invalidity and who is not entitled to an immediate or deferred retirement pension shall be entitled on leaving the service:

a. where he has completed less than one year’s service and has not made use of the arrangement laid down in Article 11(2), to payment of a severance grant equal to three times the amounts withheld from his basic salary in respect of his pension contributions, after deduction of any amounts paid under Articles 42 and 112 of the Conditions of Employment of Other Servants;

b. in other cases, to the benefits provided under Article 11(1) or to the payment of the actuarial equivalent of such benefits to a private insurance company or pension fund of his choice, on condition that such company or fund guarantees that:

I. the capital will not be repaid;
II. a monthly income will be paid from age 60 at the earliest and age 66 at the latest;
III. provisions are included for reversion or survivors’ pensions;
IV. transfer to another insurance company or other fund will be authorised only if such fund fulfils the conditions laid down in points I, II and III.”

The last 4 points are the most important to note as your money will not be transferred unless the approved receiving organisation adheres to those criteria.

WHY WOULD I TRANSFER?
Essentially, you have to, unless you like losing large sums of money. If you have not transferred by the time you have reached pensionable age, then your money disappears and is absorbed by the EU. If you die before you claim your money, then it is also lost. It will not be transferred to any beneficiaries as it is not a pension. When you leave, the amount that you leave behind is frozen and only increases at a very low interest rate; no further contributions are made on your behalf. So moving it when you leave allows you the opportunity to invest it into funds that could grow your money substantially over the years (depending on how close you are to retirement). For example, if you left the institutions at 40 years old, you would have at least 25 more years to grow your money. If you leave earlier, then you would have longer.

Moving it would also allow you better protect your financial future, make provisions for your partner or dependents/beneficiaries. It can be of benefit even if you decide to return to the EU Institutions.

There may be circumstances where it is not appropriate for you to transfer the money at that time, your particular situation will be evaluated by our pension specialist who will compile a report detailing the appropriateness of the potential transfer.

SOUNDS GREAT! WHAT NEXT?
We will conduct an evaluation of your situation and also the accumulation of your money at the EU. Once we have confirmed and agreed with you that transferring out is the right option for you, we will work with an approved provider to who complies with the requirements as stated above who will help set up your new pension. Then, as part of our ongoing service, we will review your pension and personal circumstances every quarter to ensure that you are always updated with the latest information. Even if you move countries, our service will continue.

We have established contacts with case handlers in the Office for the Administration and Payment of Individual Entitlements (the department responsible for calculating and transferring your money), and have developed the knowledge and expertise to ensure a smooth transfer, putting you in control of your money and helping you make the right decisions, as and when they are needed.

So, if you have no longer work for the EU Institutions and have less than 10 years’ service, you don’t like losing large sums of money, wish to protect your financial future, and potentially provide for your dependents/beneficiaries, then contact me either by email: emeka.ajogbe@spectrum-ifa.com or phone: +32 494 90 71 72 to see whether an EU Pension Transfer is suitable for you.