Your Finances Under a No-deal Brexit

By Advertiser, in Personal Finance · 04-12-2020 01:00:00 · 0 Comments

June of 2016 seems an unfathomably long time ago from this juncture in the proceedings, but cast your mind back and I’m sure you will recall a certain UK referendum that took place.

Although we fully expected to have the details of it confirmed by now, it seems we are as yet still unclear exactly what will happen post 31 December. One thing does seem certain however; people from the UK will continue to seek out the sun and the golden allure of Portugal will lose none of its lustre – however long that passport queue may be.

But for those of us that have made our lives here or intend to in the very near future, what does Brexit mean for our financial futures, and how can we best navigate these unsettling times?

Healthcare

First off – good health is always a priority. To enjoy the best of what life has to offer in Portugal, you need to be on good form, physically. If you are British, and currently reliant on your European Health Insurance Card (EHIC) for medical cover, you will continue to be covered for the remainder of 2020. However, should the UK leave the EU with no deal, then this may no longer be the case. It might be time to start thinking of arranging some private medical insurance if you haven’t done so already, or perhaps updating your existing cover to a more comprehensive policy.

Pensions

If you are happily retired here, you may be wondering what effect Brexit will have on your monthly UK pension payments. The good news is that short-term, the government has agreed to continue uprating pensions by at least 2.5% a year until March of 2023. For those who are planning to retire here after 2020, things are not so clear and it remains to be seen what is agreed in the coming weeks – it’s reassuring to note however, that the government has expressed every intention of maintaining the current agreement so long as it is reciprocal.

For those with a private pension plan, concerns have been raised recently that access may be lost to these come the New Year. The pensions industry has been busy preparing for this eventuality, but can only do so much to negate the effects of a no-deal and has been left at the mercy of the powers that be. One of the best things you can do in this situation, is to contact your financial advisor directly to see if this is likely to be an issue for you and what can be done to mitigate it.

Currency Markets

Uncertainty in the political world results in the same for the world of finance – the markets simply don’t like it. Sterling too has had a somewhat bumpy ride over the last four years (how could it not with the combined forces of Brexit and Covid?) and the volatility looks set to continue as we all adapt to the new normal. This is going to make planning your monthly finances a little trickier if your income is being converted from pounds into euros.

If you do have a private pension in the UK, it might be a good idea to start thinking about transferring your fund into a Qualifying Recognised Overseas Pension Scheme (QROPS). This will give you the benefit of receiving your payments in euros and protect you against the more dramatic currency fluctuations we’ve seen recently.

As things stand now, you are able to transfer your pension into an EU/EEA-based QROPS tax-free, but this could change after Brexit. Tax fees of 25% are levied on some other overseas transfers currently and it’s possible that, unshackled from EU regulations, these same charges could be applied to schemes in Europe.

If you would like to know more about the process of transferring UK pensions to a European provider, and the implications for your finances, please get in touch with me to arrange a free consultation. During these uncertain times, it’s good to have an unbiased second opinion with your best interests at heart.

Blacktower Financial Management has been providing expert, localised, wealth management advice in Portugal for the last 20 years. We can help with specialist, independent advice on securing your financial future. Get in touch with us on (+351) 289 355 685 or email us at info@blacktowerfm.com.



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