How do pensions work?
Some employers, and the Department of Work and Pensions (for your State pensions), will pay your pension income directly to your Spanish bank account in Euros, which you may find simpler, although you have no choice over the exchange rate used. Alternatively, you can arrange to continue to pay into a UK bank account and arrange a monthly transfer at a fixed rate (for a year or two) via one of the currency dealers. There are a number of currency dealers available who typically offer a superior exchange rate than the banks. Private pensions are a complex area and advice over the best way to proceed with these is recommended. A savings scheme exists which is tax relievable in Spain and can be drawn as a pension, however other potentially more suitable schemes exist for certain individuals. If you live in Spain, you are a Spanish tax resident and must declare your worldwide income on your Spanish self assessment form. You will need to arrange for your pensions to be paid gross from the UK.
