Organising Your Retirement To Spain
Retirement abroad is increasingly popular with over one million British expats having their pension paid overseas and Spain is by far and away the most popular destination. The visa requirements for Brits have become more onerous now that the UK is no longer a member of the EU, but Spain is sure to remain a popular destination for British retirees, however.
Brits are now subject to the same general rules as other non-EU citizens (see the article ‘The New Rules For Brits Moving To Spain‘ for more details).
Where you are not planning to be resident you will of subject to the terms of a Schengen visa. This allows you to visit Spain regularly but you will be subject to a maximum of 90 days in Spain in every 180 days. British citizens do not need to apply for a visa but are subject to the same rules. Your passport will be stamped on entry and exit from the Schengen zone and they will use this to monitor compliance with the 90 in 180 days rule.
If you wish to stay longer than 90 days you will need to get a visa appropriate for the purposes of your stay in Spain. Thus Brits or other Non-EU citizens wishing to retire to Spain will generally need to apply for a Golden Visa or a Non-Lucrative Visa if they wish to stay long term in Spain. This places more onerous requirements on those wishing to settle in Spain, particularly in terms of financial resources to demonstrate you will be able to support yourself. A single applicant for a Non-Lucrative Visa will need to demonstrate at least €27.115.20 through their account per annum ( €33,894 a year for a couple). The financial requirements for a Golden Visa are lower but it requires a capital outlay of €500,000 on property.
It is still possible that special arrangements will be agreed for Brits to enter Spain on more favourable terms but there has not been any indication that this will be the case yet.
Rent or Buy
There are many issues to be considered when deciding whether to rent or buy your home in Spain. Rental arrangements allow for greater flexibility if you suddenly need to return to your home country for unexpected reasons (such as health or family issues). It can be sensible to rent initially even if you plan to buy so that you can get to know the area and experience the lifestyle before committing to buying a property. This also allows you to really know the local property market and be sure you have chosen the right location.
Buying your property gives a greater security and allows you to see this as your home with the freedom to do what you want to your home. Whatever the current market conditions, there is always the risk of the market falling and leaving you unable to sell in the short term until the market recovers. Provided you do not intend to leave this will not be a problem, but if you feel you may decide to return home this is a risk to consider.
When planning your retirement anywhere you will need to know what funds will be available to you. This may include personal and state pensions or social security benefits.
You should be sent a claim form 4 months before you reach your State Pension age. Contact the International Pension Centre (IPC) if you haven’t received a letter 3 months before you reach State Pension age.
If you’ve worked in the UK and abroad, you will need to send the international claim form to the IPC.
You can fill in the international claim form, which requires a wide range of information about your past addresses and employers etc. It may be easier to make a claim by phone on the number below.
You will need to provide your National Insurance Number (plus your spouse’s), details of your most recent employer, current address, most recent address in the UK. They will also ask various questions such as when you moved abroad. You will also need the account details of your UK bank account or the international bank account number (IBAN) and bank identification code (BIC) numbers for your overseas account if you wish to have the pension paid abroad.
The Pension Service 11
Mail Handling Site A
The Basic State Pension from April 2022 will be £185.15 a week for a single person provided you have made a minimum of 30 years’ National Insurance contributions during your working life. You can claim this wherever you live once you qualify for the UK state pension. The pension can be paid into a UK bank or directly into an overseas account in the local currency (saving transfer fees and bank charges). You can choose to be paid every four or 13 weeks, but if your State Pension is under £5 per week, you’ll be paid once a year in December.
If you work abroad before retirement it may be possible to receive the state pension from more than one country.
If you have retired early, or have yet to start drawing a pension, there is the possibility of moving your pension pot overseas. You can do this by transferring it to a Qualifying Recognised Overseas Pension Scheme (QROPS). These can be based in the new country you are moving to, or set up on an offshore basis. They offer increased flexibility and, once you have been a non-UK resident for five years, are outside the UK tax net. The income from QROPS may also be taxed favourably in your country of residence. Advice should be sought from a specialist IFA before doing this.
In Spain a lump sum withdrawn from your pension may be treated as taxable income, so it may be better to leave the money invested or take the lump sum before you leave the UK and become tax resident in Spain.
If you decide to return to the UK you will need to call HMRC’s Residency Helpline.
US Social Security Benefits
If you are thinking about retiring abroad, find out if you can receive your Social Security or other federal agency benefits outside the United States. The Social Security Administration’s Office of International Operations (OIO) provides such information, and consular officers at the nearest U.S. embassy or consulate can also assist you.
You can have US Social Security Benefits paid while living outside the US. You can find a guide at http://www.socialsecurity.gov/retirement/retirement.htm
Getting the Best Out Of Your Retirement In Spain
You will know what it is about Spain that has attracted you to retire there, but you should be clear on how you plan to spend your time. As with retirement anywhere you cannot approach it as an extended holiday. You may have spent time in your intended new home area, but have you been there out of season. Consider what you will do when the weather is not as reliable.
There are many other expats living in Spain and many clubs around the country, including cricket clubs, American Women’s Clubs and many more. Getting involved with such clubs can be a great way to meet people with similar interests, but there will also be popular bars, restaurants, golf clubs, gyms and other places where as a regular visitor you will soon meet other long term residents.
Ensuring that you have adequate healthcare is an important consideration for everyone as they get older. The Spanish state health service establishes that all people, regardless of their nationality, have the right to health care. The National Health Service (NHS) is available for Spanish nationals as well as foreigners, who work in Spain and are registered and contribute to the Spanish Social Security System. This also applies to foreigners, who have retired from that system, or for those who work or have worked in an EU country or other country with whom Spain has a Social Security treaty that covers health care.
There is generally a health centre or ambulatorio, within each neighbourhood, where there is a general practitioner and a paediatrician. To see a physician, you must make an appointment. If a specialist is necessary, the general practitioner must refer you for care.
UK-funded healthcare: using an S1 form in Spain
If you are a Spanish resident and receive a UK State Pension you may be entitled to state healthcare paid for by the UK. You will need to contact HMRC National Insurance enquiries to check that you are eligible.
You will then need to request an application form by phone from the Overseas Healthcare Services.
NHS Overseas Healthcare Services
Telephone: +44 (0)191 218 1999
Monday to Friday, 8am to 6pm
When you get your S1 form, you will need to register your S1 at your local INSS office or via the INSS online portal. Read the UK Government guide to registering your S1 form online.
Once your registration has been processed, the INSS will send you a Spanish social security number by post. You will need to take this to your local healthcare centre to register. You will be given a medical card which you can use when you visit a doctor, hospital or pharmacy.
This will mean you and your dependents will be entitled to state healthcare on the same basis as a Spanish citizen.
An S1 entitles you to get a new UK-issued EHIC for travel in the EU.
Private Health Insurance
If you are going to be resident in Spain permanently and do not intend to travel for more than three months at a time, you will probably be better taking out a local health insurance policy in Spain rather than an international policy. You can take out a separate travel policy when you travel abroad.
Local health insurance plans will generally cover you for hospital care, consultation fees and surgery and will generally include emergency dental treatment as well as cancer treatment. It is also possible to add options, such as coverage physiotherapy, prescriptions, full dental care, psychiatric support etc. Some local plans will cover you when you travel abroad, typically only up to 3 months. It is worth researching which policy gives you the best coverage based on your age, health condition and other circumstances.
Policies become much more expensive as you get older and it is well worth using a specialist health insurance broker to help you to find the best option, especially if you are over 60.