Your money needs to last as long as you do, so having a financial planning road map is important. | Archives


Pensions are key for our long-term financial security, but they’re complex. You have to navigate various options, establish if they meet your objectives, research the tax implications and weigh the pros and cons. UK pension and tax regulations change regularly. Keep up to date on reforms in UK and Spain to review your retirement planning as necessary and make informed decisions.

Lasting a lifetime, the longevity factor

Your money needs to last as long as you do, so having a financial planning road map is important. If you overestimate how long your retirement savings will last, your later retirement lifestyle could fall well below expectations.

Much depends on the type of pension. A pension providing a secure income for life can give peace of mind. Other options provide the opportunity for your funds to grow, but you should carefully manage investment risk and the rate of withdrawals.

The inflation, income and investment factors

Recent years reminded us how inflation can impact our spending power. Even low levels reduce the value of savings and income over the long-term, so plan ahead to protect your pensions and investment capital.

When the cost of living is high, it can be tempting to draw larger amounts from your pension fund. When combined with longevity, the impact of spending too much in the short term (especially when portfolio returns are lower than average) can affect the fund’s long-term value and ability to meet future income requirements.

With a sensible portfolio and drawdown plan, this can be effectively managed. The key is to understand your financial needs and adjust your plan to cater for inflation and portfolio performance over time.

The tax factor

When weighing up the options for your UK pension you need to consider the Spanish tax implications. Most UK pension income (except government service pensions) is subject to Spanish taxation if you are resident here, including lump sums.

The advice factor

Pensions are personal so establish a solution that works for your circumstances and objectives. The problem British expatriates face is that most UK advisers are not regulated to give advice to EU residents.

Regardless, it’s important to get local advice in Spain. Most UK-based advisers don’t have in-depth understanding of Spanish taxation, which can result in you paying more tax than necessary.

Find a qualified advisory firm which is regulated to provide advice on UK pensions in Spain, and has specialist cross-border knowledge of UK pension regulations, and UK and Spanish taxation, and interaction between them.

Summarised tax information is based upon our understanding of current laws and practices which may change. Individuals should seek personalised advice.

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