Viewing posts categorised under: Luxembourg

Should I leave money in the bank?

By Michael Doyle
This article is published on: 22nd March 2021

22.03.21

For citizens living in France, assurance vie is known to be one of the safest ways to invest money and organise your inheritance. It is an insurance instrument that serves as a tax-efficient investment vehicle containing one or more underlying investments.

Why It’s Considered Better Than the Bank?
In November 2020, the Banque de France told us that the average interest rate on bank deposits is 0.46%, unchanged since August 2020.

Any gain on your deposit would be subject (in general) to a 30% charge between tax and social charges, leaving a return on investment of just 0.32%.

Couple that with the fact that inflation in France in 2020 was 0.46% (www.statista.com) and you are effectively losing money by leaving it in your bank account.

A well-managed cautious portfolio held within an assurance vie returned about 4% in 2020.

Benefits of Inheritance
When you set up this form of investment before you turn 70, each beneficiary is entitled to a tax-free deduction of €152,500 for money invested before you turn 70, with taxes limited to 20% for everything beyond that (although sums exceeding €700,000 per beneficiary are subject to a higher tax rate of 31.25%).

Why Should You Invest in Assurance Vie?
Investments held within an assurance vie grow income tax and capital gains tax free, so you have a gross roll up of any gains within the investment.

Tax and social charges are paid only on withdrawal, however as part of the return is capital much of these gains are offset.

Advantages for Foreigners
If you are a foreign national living in France, assurance vie should be a key investment, particularly if you expect to live there for the long term. As a British expatriate living in France, you have a host of international assurance vie policies at your disposal, most of which are Brexit-proof. Not only are these policies consistent with the European Union rules, but they also operate across borders in the United Kingdom, meaning you can take them with you if you change your home again or go back to the UK.

Investing 101 for Expats Living in France

By Michael Doyle
This article is published on: 16th March 2021

16.03.21

With today’s economic environment of record low interest rates and high inflation, it’s crucial to understand your investing options. This article will clarify what you need to know about investing as an expat living in France and how we are here to help you.

First, what are your investment objectives? Do you want to preserve your wealth and continue its growth trajectory? Then we recommend reviewing tax efficient savings and investment insurance policies. These can be linked to a whole range of investment assets, from fixed interest securities and bonds, to developed or emerging market equities, specialist funds investing in soft commodities like agriculture or hard commodities like gold and silver, and lastly, alternative investments.

Which investments fit your portfolio best depends on the amount of risk you are willing to take and what kind of returns you are seeking. So, let’s break down the specifics you need to know when thinking about your portfolio.

• Fixed Interest Securities and Bonds are a form of lending that governments and companies may use as an alternative way to raise funds. When you buy a share in a company you own a small part of that company, when you buy fixed interest securities, you become a lender to the issuer. The benefits may include protection during market volatility, consistent returns and potential tax benefits. Some downsides include potentially lower returns, interest rate risk, and issues with cash access.

• Developed Market Equities are international investments in more advanced economies. The benefits include investing in a mature economy that has greater access to capital markets. Drawbacks include more expensive market valuations and potentially less upside.

• Emerging Market Equities are international investments in the world’s fastest growing economies. Some benefits include the potential for high growth and diversification. The potential downsides include exposing yourself to political, economic, and currency risk depending on which countries you choose to invest in.

• Specialist Fund Investing is ideal for investors seeking exposure to specific areas of the market without purchasing individual stocks. One popular area is natural resources, with the three major classifications of agriculture, energy, and metals. A benefit to investing in commodities is that they’re completely separate from market fluctuations so it diversifies your portfolio and offsets stock risks while providing inflation protection. However, commodities can be exposed to uncertain government policies.

• Alternative Investments are financial assets that do not fall into one of the conventional equity, income, or cash categories. Examples include: private equity, hedge funds, direct real estate, commodities, and tangible assets. Alternative investments typically don’t correlate to the stock market so they offer your portfolio diversification but can be prone to volatility.

Overall, it’s important to have a diversified and balanced investment portfolio so understanding each category is key. Keep in mind that when it comes to investing, advice is not one-size-fits-all. That’s why we are here to help personalise your investment portfolio to match your specific needs.

In today’s financial climate it is vital to understand your investing options. Many experts have a positive outlook as vaccine distribution increases and fiscal stimulus boosts economies. Intelligent investing is essential when building and maintaining wealth so consult with your Spectrum IFA financial adviser and start planning today!

Assurance Vie, an Alternative Way to Save For Your Retirement

By Michael Doyle
This article is published on: 15th March 2021

15.03.21

Many people are looking for an alternative to setting up a regulated pension for their retirement savings. Whilst there is tax relief on pension contributions in the savings phase, they are happy to give this up for more flexible and tax-effective income during retirement. In France, the most popular vehicle used for long-term savings is a contrat d’assurance vie, in which investors have the opportunity to invest regular premium savings or a temporary amount.
What Is an Assurance Vie?

An assurance vie is an insurance-based investment that can be as straightforward or as nuanced as you like. The following are the benefits of assurance vie for French residents:

While the funds remain within the assurance vie, there is usually no tax on any income or gains (i.e., the tax is deferred). However, social contributions are now withheld on an annual basis (rather than when the funds are withdrawn) for sums invested in a fonds en euros portfolio, just as they are for French bank deposits
A portion of any withdrawal is regarded as a capital withdrawal and is tax-free
An assurance vie becomes more tax-effective over time, and after eight years, the income can be offset against a tax-free allowance of (currently) € 9,200 per year for a couple submitting a joint tax return or €4,600 for an individual
You have total control of your money and may obtain monthly income payments from the insurance provider. However, withdrawals in the policy’s early years you can incur penalties, depending on the contract you select
If your circumstances or attitude toward investment risk changes, you might be able to change the funds in which you invest
For inheritance purposes, assurance vie is extremely tax-efficient

Assurance vie is the traditional form of saving for millions of French citizens. Several billions of euros are invested by French banks and insurance firms that sell their own branded products.

Additionally, a much smaller group of non-French companies have designed French-compliant policies for the expatriate market in France. These businesses are generally located in heavily regulated financial hubs like Dublin and Luxembourg.

However, before selecting such a firm, make sure that it is a product completely compatible with French law to get the same tax and inheritance benefits as the French equivalent product.

Below are some of the benefits of a foreign assurance vie policy over a French assurance vie policy:

Other currencies, such as sterling, US dollars, and Swiss Francs, may be used to save
There is a wider variety of investment options available, including access to top investment management firms and capital-guaranteed products and funds
The report is written in English, making it easier for you to comprehend the terms and conditions of the assurance vie program
The assurance vie policy is generally portable, which is beneficial when travelling within the EU (or many other countries in the world)

When it comes to EU countries, the taxes can be confusing. In these jurisdictions, the plan is often accepted for its beneficial tax performance.

How Does Assurance Vie Work?
Your one-time or regular investment or premiums are paid to an insurance firm, which then invests the funds with the investment managers of your choosing. These are typically unit-linked investments, such as equity or bond funds, but they may also be deposits or unique products sold by different financial institutions.

You may invest in a range of funds which the insurance provider can pool together to create a mutual bond, which is your assurance vie policy. The value of the units you keep in managed funds is likely to increase over time if you have selected your investment wisely.

As a consequence, the value of your assurance vie policy will grow accordingly. You must, however, be fully conscious of and comfortable with the level of risk you are taking. As with any unit-linked investment, your fund’s value will go up or down depending on what is happening in the investment markets. Short-term market instability, on the other hand, typically has a lower impact over time

How Do I Choose What to Invest Inside My Assurance Vie?
You may hold strong opinions on the subject or have no opinions at all. In any case, having an excellent financial planner on hand is helpful. His or her job is to help you comprehend the full definition of investment and decide your attitude toward investment risk.

Without acknowledging any risk, there is little reasonable chance of making a significant return on your savings. Even leaving your savings in a bank these days carries the risk of not receiving a ‘real’ rate of return, i.e., one that keeps up with inflation.

An adviser can show you various types of investment options, clarify how they operate, their track record, and the nature and level of risk that the investment entails. Although you make the ultimate decision, his or her support may be helpful.

Following the initial investment, there should be regular follow-up meetings to assess your investment’s success and make any appropriate adjustments. This may be because your circumstances have changed or because certain funds aren’t performing as well as anticipated, and you’d like to replace them with funds that are.

Can Capital Be Guaranteed Via a French Assurance Vie?
The willingness to invest in a fonds en euros is a common feature of the French assurance vie (though this is also available, in limited circumstances, from insurance companies outside France).

Since your money, as well as any interest and year-end bonus applied to it, is guaranteed, this unique type of fund is structured to shape a very conservative base for your overall investment.

The majority of foreign companies that supply these forms of funds also provide sterling and US dollar equivalents. Intending to increase returns, the funds invest mainly in government and corporate bonds, with some exposure to equities and assets (real estate). Your money will earn interest over the year.

The insurance firm is allowed by statute to refund the bulk of the funds to your account in the form of a year-end bonus. The remaining portion of the fund’s return is kept in the insurance company’s reserves to smooth out potential investment gains, such as in periods of weak market results. However, the rate of return on the fonds en euros is ordinarily low due to the quality of the guarantees. Still, it is generally better than the interest received on a bank deposit account with immediate access.

However, the French tax authorities consider this form of a fund to be so without risk that annual social charges are imposed on the gain, potentially lowering the return rate over time.

It is also possible to invest in structured bank deposit offerings through some foreign assurance vie policies. The investment return is related to the stock market, but the capital invested is guaranteed.

How Is an Assurance Vie Taxed?
Only the benefits portion of every amount you withdraw is taxable, and after January 1, 2018, the tax treatment differs depending on whether premiums were charged before September 27, 2017, or after that date.

Premiums paid before September 27, 2017
You may either be taxed at the set prelevement rate or file an annual income tax return, depending on your tax situation. The following is how the prelevement scale works:

Withdrawals made within the first four years are taxed at a rate of 35 percent
Withdrawals made between years four and eight are taxed at a rate of 15 percent
After eight years, withdrawals are taxed at a rate of 7.5 percent

Furthermore, social charges are imposed on the benefits portion of the amount withdrawn, at a rate of 17.2 percent. People prefer the progressive rate tax if it is lower than their marginal rate of income tax.

In France, the highest income tax rate is officially 45 percent. As a result, even though 35 percent appears to be a high rate, it is still the best choice for higher-rate taxpayers. After four years, you’ll have to reconsider which form to use. If your marginal tax rate is at least 30 percent, a prevelement rate of 15 percent is a better choice.

If you are a non-taxpayer (as more people are now since the 5.5 percent tax bracket was eliminated), you can opt to report the withdrawal on your annual income tax return.

After eight years, there is an extra income tax incentive to encourage people to save more for the long term. A single taxpayer is entitled to a €4,600 income tax credit against the benefits portion of any withdrawals made during the tax year. This is raised to €9,200 for married couples who are subject to joint taxation. There will be no income tax to pay if the benefits portion of total withdrawals made during the year does not surpass the allowances.

This might not seem like much, but it’s a valuable allowance, as shown by this example of Peter and Pam’s assurance vie policy, which they began nine years ago with a €100,000 investment. They have not taken any withdrawals, and the account is now worth €160,000. They want to buy a new car and need €15,000 to help pay for it, so they withdraw this amount. They receive a tax certification from the insurance firm when they make this withdrawal, showing how much gain is included in the amount withdrawn. The guaranteed value has risen by 60%, but the taxable benefit factor is only 37.5 percent (or €5,625) in this case. Since they have a tax-free allowance of €9,200 and they are subject to joint taxes, there is no income tax to pay.

Premiums paid from September 27, 2017
The tax rate varies based on the contract’s duration, plus whether capital remaining in the contract as of December 31 of the year before the withdrawal was above a threshold sum for contracts longer than eight years. The threshold amount is €150,000 per person (across all assurance vie policies), measured by the amount of premiums invested minus any money already withdrawn, rather than the contract’s value. Couples taxed as a household cannot share each other’s threshold because the threshold is not cumulative between individuals. As a consequence, one spouse can meet the threshold while the other does not.

On January 1, 2018, France adopted a 30 percent flat tax,’ consisting of 12.8 percent income tax and 17.2 percent social charges. As a result, for contracts that are less than eight years old, a flat tax is levied on gains in withdrawals which are deducted automatically by the insurance provider. The flat tax replaces the pre-September 27, 2017 rate of 52.2 percent (35 percent tax plus 17.2 percent social charges) for contracts of up to four years and 32.2 percent (15 percent tax plus 17.2 percent social charges) for contracts of four to eight years.

After eight years, the tax rate is 7.5 percent. In addition, there is 17.2 percent social charges to pay. The tax free allowance of €4,600 for a single taxpayer or €9,200 for a couple is still in place after eight years. When filing their French tax return, taxpayers can also choose to pay tax at their marginal rate in the ordinary income tax brackets (rates varying from 0-45%) plus social charges. Any excess tax already charged would be refunded after processing the tax declaration made in the year after payment of the withdrawal since the insurance provider will have already deducted 12.8 percent or 7.5 percent.

However, taxpayers should be mindful that if ordinary band taxation is selected for assurance vie dividends, this will extend to all other sources of investment profits, such as interest and persons, as well as capital gains from the selling of shares.

Does Assurance Vie Have Other Advantages?
Without question, assurance vie is also a powerful tool for estate planning, both in reducing French inheritance taxes and giving you leverage over who inherits your properties after you die. This form of investment is considered outside of your estate for

When you set up this form of investment before you turn 70, each beneficiary is entitled to a tax-free deduction of €152,500 for money invested before you turn 70, with taxes limited to 20% for everything beyond that (although sums exceeding €700,000 per beneficiary are subject to a higher tax rate of 31.25 percent).

The inheritance benefits are limited for sums invested after the age of 70. There is a €30,500 tax-free exemption in this situation (plus the investment return on the total invested) for all of the people who profit from it. Any portion of the premium that reaches €30,500 is subject to regular French inheritance allowances, which differ based on the beneficiaries’ connections to the policyholder. Any gain in the scheme paid out as a death benefit is also subject to social taxes at the current rate of 17.2 percent.

Assurance vie can be a valuable tool for estate planning and providing a tax-efficient source of income for the policyholder over his or her lifetime.

HOW TO INVEST – What are Stock Options?

By Spectrum IFA
This article is published on: 11th March 2021

More and more people are accumulating new wealth through gaining stock options as part of their remuneration package. Whether you are fortunate to work for one of the 40% of start-ups that become profitable or work for a large established corporation, the potential financial gain can be life changing. Today, I want to talk to you about stock options and why you should understand what they mean to you.

WHAT ARE STOCK OPTIONS?
For any organisation you work for, you are likely to get a salary (unless you are volunteering) and, if you are lucky, stock options. Stock options make up a designated number of shares in a company and are designed to give you some measure of ownership in the organisation. They are the right, not obligation, to buy or sell a share at an agreed upon date and price (also known as the strike price). The idea being, if you own some of the company you are working for, then you are more committed to see the company grow, be profitable and stay with the company for a long time.

WHERE DO THEY COME FROM?
Stock options come from what is known as a stock option pool. These tend to be up to 20% of an organisation’s shares and these options are granted to employees and non-employees (typically investors). The initial owners start out with a certain number of shares in the company and effectively create new shares in the company by setting up a stock option pool.

HOW DOES THIS WORK?
This can be confusing, so for illustration purposes, I am going to use an example of a start-up called LIO that is today valued at 2,000,000€, has an initial share total of 5,000,000 and wants to create a stock option pool of 5% for its employees.

With the creation of a stock option pool, LIO now has 5,250,000 shares. Given that the value of the company is 2,000,000€, that means that each share is worth 0.3809€. Now, let’s say that LIO wishes to give an employee, Avery, 1% of the company’s shares as part of their remuneration package. This means that today, Avery’s 52,500 shares would be worth approximately 20,000€.

A few years into the future, LIO is bought and is valued at 20,000,000€. At this point, Avery decides to exercise his right to buy the shares. He would not have to pay the 3.809€ per share that they are now worth, but at the strike price of 0.3809€. Avery’s gain would be the difference between the two numbers multiplied by their shareholding, meaning that they would have made approximately 180,000€ thanks to the buyout.

I have oversimplified things for the sake of illustration. However, this is what happens in essence, even in large, publicly traded companies.

WHAT DO I DO IF I HAVE BOUGHT SHARES?
The technical term is vested. So, if you have done this and hold shares, then you may be liable to tax on those shares and we will see if we can work towards a solution for you. If you live in Belgium or Luxembourg, we can definitely help.

This article is intended for general guidance only and is based on our understanding of Belgian tax law. It does not constitute advice or a recommendation from The Spectrum IFA Group.

Time not timing – investing for the long term

By Michael Doyle
This article is published on: 8th March 2021

08.03.21

We often get asked the question, “When is the best time to invest my money?” Our answer is never based around when you should invest, but rather how long you can invest for.

• No one can predict the top or bottom of any market.
• The market has always exceeded its previous high when it has recovered.

So the question is not when you should invest your money in the market, but how long can you stay in the market to achieve your financial goals? Or to put it more simply, time is more important than timing.

During periods of stockmarket volatility, investors often become uncertain and lose sight of their initial long-term investment view. They often find themselves postponing a new investment, or even selling their current holdings with a view to re-invest when the markets stabilise.

What often happens in times of trouble, however, is that investors sell at a lower price than that which they bought at.

A study by Dalbar in Boston USA, highlighted a key area for private investor’s underperformance:

• According to Dalbar, from 1985 to 2004 the average personal investor achieved an annualised return of just 3.7% while the S&P500 returned 11.9% and inflation averaged 3%

A further study showed that playing the waiting game could cost you dearly. Investors who remained fully invested in the UK market over the period March 2003 until March 2008 would have received returns in excess of 60%. However, those investors who tried to time the markets would have had their returns cut to 40% if they missed out on the best 10 days of the market and those who missed out on the best 40 days would have seen returns of 4%!

This applies across other major markets as the table below shows:

MARKET	INDEX	FULLY INVESTED	MISSING BEST 10 DAYS	MISSING BEST 40 DAYS
UK	FTS All Share	63.4%	40.0%	3.9%
US	S&P 500	56.4%	11.6%	-39.2%
GLOBAL	MSCI World	63.7%	21.6%	-26.2%

Sources: JP Morgan Asset Management/Bloomberg/Datastream

What we do know is that historically the markets have always recovered, as the table below shows.

EVENT	DATE	RESPONSE	AFTER 4 MONTHS
Pearl Harbour*	December 1941	-6.5%	-9.6%
Korean War	June 1950	-12%	+19.2%
JFK Assassination	November 1963	-2.9%	+15.1%
Arab Oil embargo	October 1973	-17.9%	+7.2%
USSR in Afghanistan	December 1979	-2.2%	+6.8%
1987 Financial Panic	October 1987	-34.2%	+15%
Gulf War	December 1990	-4.3%	+18.7%
ERM Currency Crisis	September 1992	-6%	+9.2%
Far East Contagion	October 1997	-12.4%	+25%
Russia Devalues Rouble / Long Term Capital Management Crisis	August 1998	-11.3%	+33.7%
World Trade Centre	September 2001	Dow -14.3% Nasdaq -11.6%	+5.9% +22.5%

*(The markets rose 8% during the year following Pearl Harbour)

Essentially what we can conclude is that most investors do not buy and hold for extended periods of time. Thus getting in and out of the market at the wrong times or switching funds with a view to chasing the top performers, unfortunately at a time when these ‘top performers’ have reached their peak.

Almost without exception, successful investment strategies rely on discipline, patience and taking a long-term view. Successful investors typically neither react to short market events, nor try to pre-empt short term market direction.

For advice on an investment solution aligned with your personal objectives and risk profile, feel free to contact me for an initial discussion.

Your Expat Guide to Pension Planning

By Michael Doyle
This article is published on: 4th March 2021

04.03.21

Are you planning on retiring in France or Luxembourg but have a pension in the UK?

Look no further than this article as we guide you through your options. Pensions are a pinnacle part of your retirement plan but can be a complex topic for British expatriates with rules frequently changing, so always consult with your financial adviser when deciding which plan best suits your needs.

First off, you can leave your pension as is in your existing UK pension scheme if you want. However, with the Brexit decision, you should check with your UK financial adviser and make sure they can still support you. If you want to move your funds to an international pension plan, then your best options may be opening a QROPS or SIPP account.

QROPS (Qualified Recognized Overseas Pension Scheme) allows foreign nationals who have worked in Britain to transfer their UK pensions overseas.

Expatriates can avoid various restrictions imposed by the UK when taking retirement benefits
HMRC allows individuals to access 100% their pension fund after the age of 55. However, it may not be advisable to do so as it can result in higher taxes on withdrawals. It is potentially better to draw the funds periodically in a more tax-efficient manner
There’s no compulsory annuity purchase
Reduction in currency risk because QROPS allows you to invest and take benefits in a currency of your choice
QROPS gives you more freedom to select a portfolio suited to your needs because it offers a more extensive range of investment options

SIPP (International Self-Invested Personal Pension) enables someone access to greater investment choices because it is a personal pension plan based on making your own decisions. However, the pension structure is based in the UK so it’s subject to any legislative changes made by the UK government.

Benefits include, but are not limited to:

An international SIPP can provide a regular or variable income
No obligation to purchase an annuity
They provide greater flexibility regarding investments, tax benefits, and currency choices
Ideal way to consolidate various personal pensions, which reduces administrative complications
If you plan on moving back to the UK this option may be most suitable for you

You can also try a combination between both UK and international pension plans. The main objective is to arrange your retirement in a manner where you can access your finances when you want, where you want, and in the currency of your choice. Overall, there are many things to consider when choosing your pension plan, so be sure to do your research and understand your different options before making any decisions.

It is in your best interest to act now when planning your pension scheme, so touch base with your financial adviser today to discuss your options.

Are you a UK IFA with Clients Living in Europe ?

By Spectrum IFA
This article is published on: 17th November 2020

17.11.20

ARE YOU UNABLE TO SERVICE THESE CLIENTS POST BREXIT?

At The Spectrum IFA Group we can look after your clients long term as licensed and regulated financial advisers operating in France, Spain, Italy, Portugal, Malta, Luxembourg and Switzerland.

The things you should know before you contact us for our help:

We specialise in financial planning for English speaking expatriates across western Europe
We are locally authorised in all jurisdictions in which we operate and across the entire EU (and Switzerland). Our regulatory status is unaffected by Brexit
We hold financial services licenses for both insurance mediation (Insurance Distribution Directive compliant) and investment advice (MiFiD compliant)
Established in 2003, we have 50 advisers and 12 regional offices
We work only with large, well known asset managers including Blackrock, Jupiter, Fidelity and Prudential. For clients with higher value portfolios we also use discretionary investment managers such as Rathbones, Smith and Williamson and Quilter Cheviot
As part of our terms of business, clients of The Spectrum IFA Group receive ongoing, long term service and support. All advisers live within easy travel distance of their clients
We are not an offshore broker. We do not use products from UK dependant territories (such as the Isle of Man or Channel Islands) as they can produce adverse tax consequences for clients living in Europe. We advise that you don’t use any of these structures for your clients if they are EU resident
We use only locally compliant products which are designed specifically for the jurisdictions in which our clients are based
We work on a transparent charging structure with all clients. Charges are deducted directly from the products and solutions we recommend. We do not invoice separately

As the end of the transition period is rapidly approaching we ask that you contact us as soon possible to allow time for us to complete any necessary restructuring of client assets.

If your clients are resident in the EU or Switzerland, or intending becoming resident, please feel free to contact us for a no obligation discussion to determine if we can look after your clients post Brexit.

You can contact us at info@spectrum-ifa.com

Or speak to the specific country managers in France, Spain or Italy

Click the relevant flag below

The Spectrum IFA Group and Blackden Financial join forces

By Spectrum IFA
This article is published on: 26th May 2020

26.05.20

One of Europe’s leading expatriate advisory companies today announced the acquisition of a 50% shareholding in Geneva based financial planners Blackden Financial, the transaction having been concluded on Friday following discussions which began last year.

The move forms part of Spectrum’s ongoing strategic growth in Europe and expands its existing Swiss operation based in Lausanne. Blackden’s name, office and personnel will be retained.

Spectrum, established in 2003, specialises in financial planning for English speaking expatriates across Europe, operating from twelve regional offices in France, Spain, Switzerland, Italy, Belgium and Luxembourg. Blackden (also founded in 2003) operates exclusively in Switzerland from its central Geneva premises, providing investment, pension and savings solutions to a predominantly high net worth expatriate client base.

Spectrum Director, Chris Tagg, commented “Having observed Blackden Financial’s success over many years, we recognise the team’s disciplined advice process, high professional standards and commitment to long term client service. We are pleased to be investing in a company, and in people, knowing that the essential features of good business practice are already in place. We look forward to continuing the growth of our expatriate financial planning services across Switzerland.”

“The stake in Blackden allows Spectrum to further develop its Swiss based expatriate investment and tax planning capabilities, whilst giving Blackden access to locally compliant solutions in some of Spectrum’s EU markets including France, Italy and Spain.”

Chris Marriott, founder and CEO of Blackden, added “Having specialised in advising Swiss based expats for the last 17 years, we are delighted to complete this deal, which complements and strengthens our presence locally, and look forward to Spectrum’s involvement in the next phase of our business development.”

Michael Lodhi, Spectrum’s Chief Executive Officer and co-founder said “I have known Chris Marriott for more than 15 years, we were instrumental in the creation of The Federation of European Independent Financial Advisers (FEIFA) and I am delighted that we can now work together on a commercial basis.”

EU Pension Transfer from the EU Institutions – It is EUr money

By Spectrum IFA
This article is published on: 15th August 2017

15.08.17

Have you ever worked for any of the below institutions for less than 10 years? Go ahead, and have a look:

• European Commission
• European Council
• European Parliament
• EEAS
• European Court of Justice
• Eurocontrol

If yes, then carrying on reading this article, as an EU Pension Transfer will definitely be of interest to you. If not, then you’ll probably want to stop reading, unless you know someone in the aforementioned position.

To Whom It May Concern, if you have worked for less than 10 years at the EU Institutions (and have left), you will not have qualified for the gold plated, much coveted, EU Pension. I say much coveted, as no one is really making pensions like them anymore; as they are very, very expensive for the employer to maintain. Yet, they can be very, very good for you, the employee. Anyway, I digress. That is for another article.

As you will know by now, you have to work at the EU Institutions for at least 10 years (this can be interrupted, as long as the total is 10 years) before you qualify for the pension. If you leave before that time, then you are eligible for a severance grant which you can transfer into a scheme that has been approved by the EU. As it states in the EU Staff Regulations handbook:

“An official aged less than the pensionable age whose service terminates otherwise than by reason of death or invalidity and who is not entitled to an immediate or deferred retirement pension shall be entitled on leaving the service:

a. where he has completed less than one year’s service and has not made use of the arrangement laid down in Article 11(2), to payment of a severance grant equal to three times the amounts withheld from his basic salary in respect of his pension contributions, after deduction of any amounts paid under Articles 42 and 112 of the Conditions of Employment of Other Servants;

b. in other cases, to the benefits provided under Article 11(1) or to the payment of the actuarial equivalent of such benefits to a private insurance company or pension fund of his choice, on condition that such company or fund guarantees that:

I. the capital will not be repaid;
II. a monthly income will be paid from age 60 at the earliest and age 66 at the latest;
III. provisions are included for reversion or survivors’ pensions;
IV. transfer to another insurance company or other fund will be authorised only if such fund fulfils the conditions laid down in points I, II and III.”

The last 4 points are the most important to note as your money will not be transferred unless the approved receiving organisation adheres to those criteria.

WHY WOULD I TRANSFER?
Essentially, you have to, unless you like losing large sums of money. If you have not transferred by the time you have reached pensionable age, then your money disappears and is absorbed by the EU. If you die before you claim your money, then it is also lost. It will not be transferred to any beneficiaries as it is not a pension. When you leave, the amount that you leave behind is frozen and only increases at a very low interest rate; no further contributions are made on your behalf. So moving it when you leave allows you the opportunity to invest it into funds that could grow your money substantially over the years (depending on how close you are to retirement). For example, if you left the institutions at 40 years old, you would have at least 25 more years to grow your money. If you leave earlier, then you would have longer.

Moving it would also allow you better protect your financial future, make provisions for your partner or dependents/beneficiaries. It can be of benefit even if you decide to return to the EU Institutions.

There may be circumstances where it is not appropriate for you to transfer the money at that time, your particular situation will be evaluated by our pension specialist who will compile a report detailing the appropriateness of the potential transfer.

SOUNDS GREAT! WHAT NEXT?
We will conduct an evaluation of your situation and also the accumulation of your money at the EU. Once we have confirmed and agreed with you that transferring out is the right option for you, we will work with an approved provider to who complies with the requirements as stated above who will help set up your new pension. Then, as part of our ongoing service, we will review your pension and personal circumstances every quarter to ensure that you are always updated with the latest information. Even if you move countries, our service will continue.

We have established contacts with case handlers in the Office for the Administration and Payment of Individual Entitlements (the department responsible for calculating and transferring your money), and have developed the knowledge and expertise to ensure a smooth transfer, putting you in control of your money and helping you make the right decisions, as and when they are needed.

So, if you have no longer work for the EU Institutions and have less than 10 years’ service, you don’t like losing large sums of money, wish to protect your financial future, and potentially provide for your dependents/beneficiaries, then contact me either by email: emeka.ajogbe@spectrum-ifa.com or phone: +32 494 90 71 72 to see whether an EU Pension Transfer is suitable for you.

Pension Presentation in Luxembourg

By Spectrum IFA
This article is published on: 24th May 2017

24.05.17

The Spectrum IFA group held a pension seminar at the NH Hotel in Luxembourg. The guest speaker was David Denton, Head of Technical Division from Old Mutual International who flew in especially for the afternoon to join two of the local Advisers in Luxembourg, Dave Evans and David O’Donoghue.

It was a sunny afternoon, which only happens a couple of times a year in Luxembourg, so it was great that the 39 guests still managed to turn up. It was hard to book David Denton in as he mentioned he had only just that month already been to Singapore and South Africa to give similar presentations.

David discussed the recent changes with the UK Budget and how this has affected non EEA residents when considering QROPS transfers, he mentioned the changes to the death benefits and the fact that unfunded Final Salary schemes can no longer be transferred. The changes to pensions over the last couple of years shows the UK Government are intent on narrowing down the option in the future, especially with regards to International Pension transfers to Qualifying Recognised Overseas Pensions (QROPS) and transfers from Final Salary schemes. Whilst these schemes do have good benefits, so should not be moved lightly, but with the very high transfer values at the moment and potential ban on transfers in the future, requests for transfer values are at record highs. With the general election coming up there could be another snap Budget and so why not review you pension plans now while you have time to think about the best way forward and before some retirement options are closed by the UK Government.