The impact of UK interest rate rise on the size of your pension pot by Blacktower Financial Management (Int.) Ltd.
Keith Littlewood examines the effect of the UK's interest rate rise on expats' pensions
The Bank of England raised interest rates for the first time in almost a decade last Thursday. Ok. it isn’t time to start running to the Banks expecting great interest rates - as the rate is still only 0.5% after the 0.25% rise, but this could mean some significant impacts for many expats deciding to make Spain their home in 2018.
Normally, an interest rate rise would signify a fall in FTSE share prices, last week’s announcement triggered a 1% rise on the day. The BOE base rate is what many institutions make their assumptions from. Many things can be impacted: loans rates, bonds, wages but more significantly Pension transfer values.
In 2016, the government announced the ‘pension freedom’, which allowed many people the ability to control their own pension pots. This triggered a huge outflux of funds from defined benefit pension schemes in the UK and because the base rate is the single most important factor in calculating transfer values, some of the individual transfer values have been reaching astronomical levels.
Transfer values are still going to be very high as 0.5% is still a very low base rate, so all the figures such as annuity rates and long-term bond rates are still going to be poor, but with the trend for interest rates now changing and the government considering making changes to how transfer values are calculated, the window for obtaining the huge transfer values might be showing the first signs of closing.
If you have a deferred Company Pension scheme (one that you have not started taking benefits from) and not given it much thought, you really should act now if you want to take advantage of the over generous transfer values offered by companies.
If you are unsure about how to go about finding out the value of your pension just contact me and I will point you in the right direction.
In today’s financial climate it is essential you do everything you can to make sure your money is safe and secure and what you want to transpire in the future has the best chance of happening. If you need advice or if have any questions regarding the above you can contact me, Keith Littlewood DipPFS on 657 684 094 or email keith.littlewood@blacktowerfm.com
Visit us at 120 Avenida Dr. Artero Guirao 2C. San Pedro Del Pinatar, 30740, Murcia, Spain or call Keith Littlewood, DipPFS on 657 684 094 to find out how you can make your money work for life!
The above information was correct at the time of preparation and does not constitute investment advice and you should seek advice from a professional adviser before embarking on any financial planning activity. Blacktower Financial Management (Int) Ltd is licensed in Gibraltar by the Financial Services Commission (FSC) and is registered with both the DGS and CNMV in Spain.