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Gibraltar National Day celebrations illustrate the Rock’s British pride

Celebrations are held every year, but the 2017 National Day had a particular significance. For one thing, it was the 50th anniversary of the referendum, and it has also took place at a time when political tensions are high. British control over the Rock has been under potential threat from Spanish politicians, who have seen Brexit as an opportunity to reclaim the small territory. But this seems only to have spurred the people of Gibraltar on to rejoice in their Britishness even more; this year’s National Day was as much of a chance for them to make a statement as much as it was a chance for them to enjoy themselves.

As part of the celebrations taking place on the Rock, Theresa May sent a recorded stating that she felt Brexit has made Gibraltar and the UK “closer than ever before”.

She also confirmed that Gibraltar will remain “fully involved” as the UK continues to negotiate a Brexit deal with the EU, reassuring the Rock’s citizens that her government “will resolutely safeguard Gibraltar”.

Another speaker on the day was Fabian Picardo, Gibraltar’s Chief Minister, who appeared in person to voice his support for the British Prime Minister’s commitment to defending the Rock, helping protect its sovereignty and economy.

To also commemorate the special date, there have been 50th-anniversary coins minted and a set of stamps issued. An exhibition also ran in the summer, which displayed footage, photographs, and memorabilia relating to the 1967 referendum, and the steps on Devil’s Gap road have been repainted red, white, and blue by the youth service, mirroring the actions of the older generation who, 50 years prior, decorated Gibraltar’s neighbourhoods with the Union Jack to symbolise their pride in being British.

Why was the 1967 referendum so significant?

On the day of the referendum, 50 years ago,12,138 people voted to remain British while only 44 voted for Gibraltar to become part of Spain (turnout of 95.8%). This is seen as a pivotal moment in the Rock’s history. It was the first time that Gibraltarians had the chance to determine their own future democratically. The power was placed in their hands, and the result cemented the Rock’s identity and culture for generations to come. Their actions gave birth to Gibraltar as it is known today.

As Fabian Picardo said, the National Day is about recognising the “generation that gave birth to the Gibraltarian Nation”.

Brexit’s potential impact on Gibraltar

So, if you’re thinking of joining the Gibraltarian people as an expat, one thing’s for sure: you’ll be met by a population who are very proud of their British connection.

However, it’s been a bit of a rocky road (no pun intended) for Gibraltar during Brexit negotiations, and Gibraltarians have had every right to be concerned.

We have already reported on Spanish officials who have made comments suggesting that they would like to see Gibraltar, at least partly, come back under Spanish rule. This would unquestionably cause fundamental changes to the territory, some of which would almost certainly adversely affect the financial planning of Gibraltarians.

For instance, earlier in the year, there were worries that Spain would use the power given to it by the EU to put an end to the Rock’s status as a “tax haven”. As a report from the Spanish Government put it, Gibraltar’s “situation has become one of unjustifiable privilege”.

It’s true that living in Gibraltar can bring many financial benefits. At the forefront of these is having a QROPS based in Gibraltar. A Gibraltar QROPS provides savers with a variety of different benefits (a Gibraltar QROPS is not subject to UK income tax or inheritance tax), and the Rock is often considered one of the best QROPS jurisdictions when it comes to giving savers many different investment options. A change in sovereignty would likely affect the rules and lead to a reduction of advantages.

However, even if it were to stay British, Gibraltar’s QROPS rules may still change after Brexit. The only way to be fully up to speed about how you’ll be affected is by receiving financial advice from an experienced adviser.

So, if you’re thinking of moving to Gibraltar soon or perhaps you’re moving somewhere else but are interested in transferring your pension fund into a Gibraltar QROPS, contact a Blacktower adviser today. We can advise you on how to best approach your financial future in light of the many changes afoot..

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.

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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.

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Spanish Inheritance Tax Explained

As retirement draws near, many of us begin to think about how we want our hard-earned earthly possessions to be distributed amongst our nearest and dearest. Making a will, of course, is a good starting point, but you also might want to think about the slice of the pie that the taxman will take from our relatives’ inheritance.

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