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UK bottom of the league for pensions, but all is not lost

The study concluded that, upon reaching retirement age (which will be 65 for both men and women from November 2018 and then set to rise further to 68 for both genders by 2037), Britons can expect to receive just 29 per cent of their salary in state pension. The BBC reports that only South Africa (not a member of the OECD) offered its citizens less generous funds in retirement.

And the consequences of the poor performance of the UK state pension are starting to be apparent. The Joseph Rowntree Foundation recently reported that there were 300,000 more pensioners living in poverty in 2016 than there were three years earlier, which makes it the first sustained increase for the age group in two decades.

Frances O’Grady, the general secretary of the Trades Union Congress, commented that the report acted as confirmation of what has been suspected for a long time, adding that “working people in Britain face the biggest retirement cliff edge of any developed nation”.

The OECD report once again emphasises the importance of saving up a private pension over and above state pension

However, the situation starts to look a lot better once auto-enrolment and workplace pensions are considered, because more people will be saving part of their pay.

That said, even with these schemes taken into account, the average a UK pensioner receives is 62 per cent of their working income, which is still notably lower than the OECD average of 69 per cent. What’s more, the UK still falls behind some of its European neighbours. Germany, France, Italy, and the Netherlands all have pension systems that pay out higher percentages of workers’ salaries.

Obviously, the degree to which your retirement will be affected by the low rate of state pension will be dependent on how much you’ve saved independently and what your retirement goals are.

If you’ve had a retirement savings plan in place since you commenced your career then you should be in a favourable position, but there are a number of options that could help further.

One example would be to transfer your pension pot into a self-invested personal pension (SIPP), which, when completed under the guidance of a financial adviser, can offer more flexibility and control over your savings as well as certain tax advantages. Or perhaps a qualified recognised overseas pensions scheme (QROPS) would be more suitable.

Why not speak to one of our independent financial advisers for more help and advice on expat retirement planning..

So, while it’s unfortunate, yet unsurprising, to read yet another damning report on Britain’s pension system, you don’t have to feel trapped by the it. With the right help from the right people, you can gain control over your retirement, but it’s best to start sooner rather than later..

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

Could the UK’s state pension fund run out in 14 years?

Pound coins stacked in pilesThe defined benefit scheme – whereby the employer promises the employee a specified payment upon retirement, the amount of which is calculated based on several factors including the years the contributor has been in the scheme, their age, and their salary at retirement – is no longer viable in today’s world.

Recently, the high-profile collapse of the construction firm Carillion has served as yet another example of why this is the case.

The collapse means that, just like in the heavily reported case of retail giant BHS, thousands of employees are likely to have their carefully laid out retirement plans affected. Now that the company has gone into liquidation, it cannot afford to pay employees their expected pension amount, leading to yet another sizeable pensions black hole with a deficit of around £580 million (although the BBC reports that the final figure could be as high as £900 million).

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New Spanish Will Laws from 17th of August

Blacktower Financial Management

Many of our clients will have beside their property and / or bank accounts here in Spain still assets abroad.  This could be a property in the “home” country, a share portfolio in Luxembourg, an offshore bank account etc.

Most would have a Will covering these assets in their home country and without specific mention of the asset will have laid out their wishes in the form of for example “spouse to spouse on first death and on second death to the children” which would apply to all their assets.  

Should the person have not bothered taking on a Spanish Will then the heirs would have to go through the extra work and costs involved in relying on a UK or foreign will for the disposal of the Spanish assets.  The Will would have to be translated and apostiled adding delays and extra costs at a difficult time for the heirs.

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