UK expats have always loved to spend their retirement years under a southern Europe sun, but do the new Brexit immigration rules mean it is now beyond the average UK household’s means?
UK citizens can no longer come and go as they please – Brexit has meant they are restricted to no more than 90 days in any 180-day period within the Schengen zone, which includes the UK’s three favourite destinations – France, Spain and Portugal.
If clients want to go for more than 90 days, they are going to need to apply for a visa; while 12 months and beyond will generally require a residency permit, writes Jason Porter, director at Blevins Franks and head of the firm’s European Emigration Advisory Service.
These are obtainable from the consulate in the UK of the country concerned.
Each have rules requiring real estate purchase or lease, a minimum level of financial resources and medical insurance.
Case by case
France uses its minimum wage to set its sufficient financial means, but does allow a large degree of leeway. For 2021, this is €18,655 (£16,010, $21,822), but the authorities assume a deduction for social charges, reducing the figure to €14,667.
They also allow other reductions, such as if a property is bought outright, without a need to cover mortgage payments. The French Consulate in London have also confirmed they will use this sum for a couple, even though the strict interpretation requires this amount per person.
The shortfall is only £3,414 compared to the current UK state pension of £9,339 ($12,715, €10,864), while a couple with two state pensions would far exceed the sum required.
Portugal also utilises its national minimum wage with a 2021 annual figure of €7,980 for an individual and €11,970 for a couple. Again, the UK state pension exceeds the single level and is only slightly less than the sum for a couple.
Spain uses the Multiplier for the Public Income Index, or IPREM – an index used since 2004 as a replacement for the minimum wage in determining various economic aids, grants and the unemployment benefit.
This is €6,778.8 for 2021, but then multiplied four times to get €27,115 for an individual, and €33,894 for a couple. A single UK state pension would be considerably less than the sum required and even a couple would have a shortfall of €12,414 in Spain.
Retirement dream still possible
Assuming there is limited other income such as interest, dividends, rental income or similar, how can clients cover any shortfall? Or are we suggesting that without sufficient income, the dream of retiring to sunnier European climes is now just the preserve of the wealthy?
This is not the case. Financial resources includes general wealth. Cash at the bank, or other savings and investments which can be readily liquidated also qualify.
Isas and other investment portfolios, lump sums from pension schemes can be included, as well as single premium or monthly savings plans. In fact, many successful applicants have simply allocated the required annual sum to an account as evidence of satisfying the rules – or annual multiples thereof, where the residency permit is for more than one year.
As most people planning to retire overseas would only do so with some degree of capital or emergency fund behind them, the vast majority will find this, as well as any income they have, should be entirely sufficient to meet the requirements of our favourite southern European hotspots.
This article was written for International Adviser by Jason Porter, a director at Blevins Franks Financial Management and head of the European Emigration Advisory Service.
