Contact

News & Insights

Best Income for Expats – Update

Deposit Accounts – If you are lucky enough to be an existing customer or have an address in the UK you can have a bank account that offers interest. 

Currently the best providers are Hanley Economic Building Society which is offering a whopping 2.85% on between £100 and £33,000.  This is some way out in front of other providers, but take note; it is a VARIABLE rate so they could reduce the interest at any time. The strange thing about this account is that you must apply online but can only manage your account via post or in branch – this will be very awkward for many. 

The best of the rest now is the Newbury Building Society offering 1.6% on up to £1,000,000 – again this is a variable rate. 

If you want a fixed return and can forgo access, National Savings Guaranteed Growth Bond is paying 2.2% for three years.  The providers are typically similar and can be compared to suit your needs, this information from Comparethemarket .com.

If you are currently limited to a Spanish provider you will not even be able to get 1% now, unless you are willing to tie your money up for 18 months.  I saw one client recently who has just had their interest reduced after the 18-month period at 0.5% to 0.01%.  Yes 0.01% which means you will get the princely sum of €1 interest after one year if you invest €10,000.

In the current climate, deposit accounts should be used for emergency money only because the rates offered often don’t even match inflation.  One way to combat inflation is to put money away for some sort of term.  I would be wary of fixing for a long term too as there is a possibility that interest rates could soon rise and you might find yourself locked into a poor rate.

Spanish Compliant Bonds – Rates vary and depend on the size of investment.  Prudential offer a Cautious Fund that is currently paying growth rates of 4.8% for Investments in Euros and 5.5% for investments in Sterling.  This type of investment is great for people wanting medium to long term income or growth.  5% of capital is allowed to be withdrawn each year penalty free.  These offer very good tax benefits but are only available if you are a Spanish Fiscal resident.

Shares – These are a bit of a gamble but do offer an attractive longer term approach.  Dividends are paid to give you income (which in the FTSE 100 for example can get you an average of 2.5 Growth of your investment can also be provided by the performance of the company in which you bought shares.

If you are not an expert, it is often best to use a Fund that provides a basket of shares and they have experts to do the picking for you.  At Blacktower we have partnered up with Quilter Cheviot in London to offer the Nexus Dynamic Portfolio.  2016 saw growth on this fund of over 14%.

There are other investment vehicles such as Annuities, Structured notes, unit-linked or unit trust funds but then we are going up the risk ladder and usually a fully Qualified Financial Adviser will be involved.  Remember, when selecting your investment options,  everything is okay in moderation and putting all your eggs in one basket can lead to trouble.

In today’s financial climate it is essential you do everything you can to make sure your money is safe and secure and then, what you want to transpire in the future has the best chance of happening.

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

This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

Other News

Will I outlive my retirement savings?

Golden Piggy BankThe Office for National Statistics puts UK life expectancy at 79.4 years for men and 83.1 years for women. Today, a 65-year-old man can expect to live for 18.5 more years, while a woman would typically have 21 more years left in her. Of course, life expectancies are averages – so this won’t hold true for everyone. Your lifestyle, diet, genetic make-up and wealth could all affect how long you will actually live for, with luck also playing a big role. Obviously, living a longer life is a good thing in theory, but from a retirement savings perspective, it can pose a real challenge. In fact, 60% of baby boomers admitted in a recent Allianz study that they’re more fearful of outliving their savings than of dying. This sentiment is shared by 43% of workers surveyed by Transamerica, who say that outliving their savings is their greatest retirement-related fear.

Read More

Final salary pensions – why now is a good time to cash in

Juicy lottery-sized sums are being offered to savers to tempt them out of gold-plated workplace pension schemes and into personal plans. We’ve explored whether you should consider taking a final salary pension, as well as the benefits and drawbacks of withdrawing.

What is a final salary pension?

A final salary pension, sometimes referred to as a gold-plated pension, is a special style of retirement fund that is based on your final or average salary.

The main difference between this and a defined contribution pension is that a final salary scheme gives you a guaranteed sum annually for the rest of your life when you retire.

To work out the value of your final salary scheme, consider a few factors: 

  1. Your final or average salary at your place of employment (confirm this with your employer)
  2. Your length of service
  3. The final salary scheme’s accrual rate (this is often 1/80th)

Your final salary pension will take each factor into account, and the resulting figure will be the guaranteed annual sum you are entitled to.

For instance, if you worked somewhere for ten years, and leave on a salary of £100,000, with an accrual rate of 1/80th, you will have a guaranteed retired annual income of £12,500.

It is possible to undertake a final salary pension transfer. Depending upon how long you expect to enjoy retirement, this could be a favourable choice. However, it’s important to consult a financial advisor to make your final salary pension transfer values work harder.

What are the benefits of transferring a final salary pension?

Assessing your final salary pension transfer value, you might consider it worthwhile to withdraw. We’ve outlined the main benefits of taking your final salary pension:

Receive the cash value of your final salary pension

Withdrawing from a final salary scheme allows you to receive a cash lump sum in return for forfeiting your guaranteed income in retirement. This final salary pension transfer value is the main reason to withdraw from a scheme, as it offers you financial freedom.

Remove ties with your employer

This is an especially important point if you’re concerned that your employer may not exist throughout your full retirement. For most, the pension protection fund (PPF) will cover your pension, but, for especially high earners, there is a PPF ceiling of £41,461 (as of April 2020).

Enjoy a flexible income in your retirement

A final salary scheme entitles you to a guaranteed annual income when you retire, but if you go down the route of transferring your final salary pension you will be able to enjoy a little more flexibility in how you receive your income. Usefully, by withdrawing from your final salary scheme, you can choose to take more out in your younger years.

Choose how you want to invest your pension

A final salary scheme is controlled tightly to accommodate all employees and their interests. When withdrawing from the scheme, however, you can take complete control over how your pension fund is invested.

The considerations you should make before transferring your final salary pension

While there are certainly benefits of going down the route of transferring final salary pension funds into various other pots, it’s important to consider what you’ll be giving up:

  • Entitlement to a fixed annual income for the rest of your life
  • A safe income that doesn’t fluctuate with volatile markets and share prices
  • Spousal and family benefits that come with a final salary scheme

 Example: Should I cash in my final salary pension?

An example is Mrs Dee (not her real name), 4 years ago she asked for her final salary transfer values, which came in at £250,000 – a nice sum, you may think. After reviewing all the facts and figures available, however, I advised Mrs Dee to leave her final salary pension where it was, which she duly did.

Towards the end of last year, because of favourable market conditions, I applied again to see the value of transferring her final salary . This one came in at just under £600,000.

Read More

Select your country

Please select your country of residence so we can provide you with the most relevant information: