Pensions, tax and Portugal

[RogerS]

Interesting idea put forward in the Weekend FT. As you know, come April you could if you wanted to (and met age criteria etc) pull out all your pension in one go. The downside is, of course, that you'd pay Income Tax on it.

Unless, that is, you domicile for tax purposes in Portugal for a couple of years because they have a tax arrangement with the UK and you pay no tax at all on this sort of thing.

 

[9fingers]

I have a feeling that the ability to withdraw all money purchase/defined contribution pension funds will be the foundation for miss selling claims for the next couple of decades the like of which we have not seen before.
The topic is so complex to analyse, even the above average man in the street could easily slip up and there will be a number of financial start-ups with sackfulls of banana skins to scatter liberally along the roads.

Thankfully I don't feel hard done by missing out on this legislation change as my pension is 100% defined benefit and would have been ineligible for the post April 15 jamboree.

Bob

 

[RogerS]

Have to agree with you there, Bob. The experts in the FT describe it as 'unchartered territory'.

 

[9fingers]

Have to agree with you there, Bob. The experts in the FT describe it as 'unchartered territory'.

Was that meant to be a pun? Unchartered firms will be leading punters into uncharted territory!


The worst of it is that people can now choose to turn down a guaranteed income for life from an annuity, and potentially invest/spend or otherwise lose "everything" and presumably fall back on the state.
But someone else (of whatever political hue) will be in power when the excrement hits the air handling device.

My feeling is that anyone wanted to take advantage of the new rules should have to sign a binding agreement that they will take all future responsibility for their financial security and that of their dependants. The signing process alone might make many think twice. An alternative might be a compulsory insurance policy having the same effect?

Bob

 

[AndyP]

Far too complicated for me to get my head around especially as I have at least 8 years to wait and who knows what the regulations will be then.

 

[9fingers]

Far too complicated for me to get my head around especially as I have at least 8 years to wait and who knows what the regulations will be then.

With 8 years to go, it possibly around the time to switch it to a minimal risk fund trying to spot a peak in value and then switch. A key investment strategy is to minimise the risk of having to withdraw (convert to annuity etc) a fund on a specific date when it could dip in value due to being a volatile fund. Some pension companies do this automatically - usually called a lifestyle fund


Bob

 

[Rod]

There was a programme on TV where one person was going to invest his pension in properties to let and another buying into Classic Cars ( Jaguar XK).
They reckoned they will get much better returns?

Rod

 

[9fingers]

Property typically will return twice that of an annuity provided you manage it yourself plus you still have the capital assets with modest gain. Obviously need appropriate tenants. With several properties you can spread out the maintenance to minimise your tax bill.
It can also 'give you something to do' if you've been used to an active life at work.

The downside is that the law is largely skewed in favour of tenants.

Bob

 

[Woodpile]

The downside is that the law is largely skewed in favour of tenants.

Bob

Bob the law isn't largely skewed in favour of tenants, it IS skewed in favour of tenants.

Stew

 

[Wizard9999]

Have to agree with you there, Bob. The experts in the FT describe it as 'unchartered territory'.

Maybe my memory is playing tricks with me, but when this first came up I thought I read that Australia had a similar system.

Terry.

 

[Wizard9999]

The downside is that the law is largely skewed in favour of tenants.

Bob

Bob the law isn't largely skewed in favour of tenants, it IS skewed in favour of tenants.

Stew

Absolutely, and if you gat a bad one (as we did) and end up in court the judge will bend over backwards to further shift the balance in the tenant's favour, because of course all landlords are money grabbing, evil scumbags - at least that is what the just told us in not so many words. Don't worry about the fact the tenant gave a false name for the pre-tenancy checks to hide their serial offending! Me, bitter, surely not.

Terry.