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UK basic state pension changes

The new system will apply to you if you are a man born on or after 6 April 1951, or a woman born on or after 6 April 1953.  To save the state money, the official retirement age is gradually being raised. While many women currently get the state pension at age 63 and men at age 65, the thresholds are moving up. They will rise to at least 66 for both by 2020, and possibly to 68 in the 2030s

The maximum flat-rate people can receive under the new single-tier system has been set at £155.65 a week. This will be paid as long as men and women have built up the necessary 35 qualifying years.  As a general rule, you’ll get the equivalent value of the state pension according to the total number of years you’ve built up – so 23 years would give you roughly two thirds of the payout, or about £103.

It’s estimated less than half retiring under the new system will qualify for the full flat-rate amount in the first five years. This is mainly due to the numbers of people who won’t have enough qualifying NI years because they’ve been what’s known as ‘contracted out’ of the old state pension in the past.

Now, if you are, or were, in what is known as a defined benefit pension, you’re likely to have been ‘contracted out’ of the additional state pension.  In a nutshell, it meant workers paid a lower rate of NI contributions. This was because, in return, they will have paid extra into their workplace scheme, or had it paid for them by their employer. Millions of workers with company pensions in the public and private sectors are affected. Some stakeholder and personal pension schemes were also contracted out. 

This means that, for the purposes of eligibility, you may not qualify for a full £155.65 despite having what you thought were 35 years of NI contribution.

I have been a fully Qualified Financial Adviser for 28 years and also understand the needs of expats and the rules that apply to ex British living and retiring in Spain. In today’s financial climate it is essential you do everything you can to make sure your money is safe and secure, ensuring that what you want to transpire in the future has the best chance of happening.

 

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

More Taxing Times Ahead

From April 6th this year, individuals who do not spend sufficient time in the UK, or have insufficient ties with the UK to be resident there for tax purposes but who nonetheless own a home in the UK, may now need to pay capital gains tax (CGT) on any gains arising on the eventual sale of the property. 

How will the tax work?

Only gains made from 6th April 2015 are taxable in calculating the gain on the property disposal i.e. non-UK resident property owners will substitute the value of the property as at 6th April 2015 for its actual acquisition cost, thereby rebasing the value to its market value as at that date. Alternatively, property owners may elect to calculate the gain by using the actual acquisition cost but paying tax only on the time-apportioned post-5th April 2015 part of the gain.

If the non-resident usually files a UK self assessment tax return any gain must be included in the appropriate year’s return, otherwise any tax must be paid within 30 days of completion.  Non-residents will continue to be exempt from CGT on disposals of commercial property and other assets.

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Term Life Insurance, a Priority for the Expat in Germany

Life insurance formLiving in Germany brings a few challenges for the expat. Not only do you have to negotiate the language and the culture you also have to get to grips with the German insurance system, which to anyone whose experience of insurance has largely been confined to the UK can seem incredibly complicated.

Yet, once you overcome your unfamiliarity, and get your head around the innumerable syllables of all the various “komposita” involved, you may be able to take advantage of the system so that it works in your best interests. Finding an expat wealth management specialist who has familiarity with the system and the products on offer is likely to be part of the solution to finding the cover that is best suited to your needs.

For example, finding risikolebensversicherung (term life insurance) is about securing cover for all of life’s eventualities so that your family and other dependents are properly looked after in the event you die before they do.

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