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Claiming a UK state pension when retiring to Spain
British citizens can still claim their government pension in Spain and the EU
Pension information in Spain can sometimes be confusing for expats. That’s why it helps to have an explainer. Here’s how pensions work for British expats receiving a pension from the UK while living in Spain.
Even after Brexit, UK citizens can continue to claim their UK state pension if they live anywhere in the EU, EEA or Switzerland.
This state pension from the UK will keep increasing each year in line with the rate paid in Britain, even if the recipient lives in the Spain or elsewhere in the EU.
It is also possible for relevant social security contributions made in EU countries to contribute towards the qualifying conditions for a UK state pension.
This applies both to those who lived in Spain before the withdrawal agreement deadline on December 31 2020 and to those who arrived in Spain after January 1 2021. Anyone who is eligible to benefit from a UK state pension, regardless of their nationality, can claim that pension while living in Spain.
For those who work in Spain and pay their social security payments, and who will be able to claim a Spanish pension when they retire, the monthly pension contributions will increase as of 2023.
Other aspects of transferring a pension from one country to another are slightly more complex, and it is advisable to seek the help of a professional financial advisor to facilitate the move.
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Financial Advice Issues for Expats in Spain
I have been a Qualified Financial Adviser for almost 35 years now. 25 years in the UK for major institutions such as Natwest, RBS and Royal London. I have been in Spain giving expats financial advice now for 10 years and it is quite remarkable the different approaches as well as advice that is required for an expat now living in Spain. Blacktower is a company that has specialised in providing the best solutions for its clients living outside the UK for 30 years also.
The currency issue is always high on the agenda and a discussion for the long term future has to be taken onto account. Questions like What will happen if one partner dies? Will the other remain in Spain? What about other family members? What Inheritance tax provisions do you have in place? The list goes on and on.
Existing portfolio’s and investments that were the mainstay of portfolios in the UK may now be obsolete. An example of this is quite often tax efficient products in the UK like ISA’s and previously held TESSA’s PEP’s actually have low growth rates and provide no tax advantage to a Spanish fiscal resident.
Existing Pension holdings either paid by the state or private pensions built up through working lifetimes are topics that have to be covered. Many expats have lots of small pensions from many ex employers and can be confused by the communications and administration in dealing with them. At Blacktower we specialise in advising on how to consolidate and bring all these pensions together in one place.
Bank accounts and investments in Spain always bring up lots of questions too. Quite often the small print associated with financial products in Spain is in Spanish this can make it very difficult even if you have a good grasp of the language. Understanding Jargon in English is sometime difficult enough. I provide clear easy to understand letters and documents in English so that you fully understand any terms and conditions before making a decision.
Advice on tax efficiency is just as important and offering good returns. There are products available exclusively for Spanish expats that can provide invaluable benefits. Having a good base knowledge of the tax implications both now and in the future is an essential ingredient to making a sound decision.
I will complete a thorough factfind, ask you the right questions, establish your individual needs, attitude to risk and capacity for loss and desired returns before providing you with a full written report of advice and my recommendations in plain English. You will then have time to read and consider all the information before contacting me with how you wish to proceed.
Click for more information about Keith Littlewood.
The above information was correct at the time of preparation and does not constitute investment advice and you should seek advice from a professional adviser before embarking on any financial planning activity.
Blacktower Financial Management (Int) Ltd is licensed in Gibraltar by the Financial Services Commission (FSC) and is registered with both the DGS and CNMV in Spain
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