Harriet Meyer, Expat Telegraph

With its sunny climate, Murcia, in southern Spain, was the ideal place for Julian and Lesley Singleton to start their watersports company.

However, after putting all their efforts into the business, which began in April this year, they have turned their attention to their personal finances, and are particularly keen to learn if they have sufficient funds for their retirement.

The couple moved to Spain in October last year after selling their home in Lymington, Hampshire, where he worked as a sailing instructor and she worked as an estate agent. They plan to remain indefinitely. She said: "Due to the English weather Julian's work was rather unreliable, and my income was rather poor because of the slow housing market during 2005, so we decided to move."
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They have bought several properties in Spain, including a two-bedroom house, in Estrella de Mar, Murcia, bought in September 2004 for €200,000, and now worth €215,000. They rent this out for €5,000 a year, but they are considering selling to help provide investment funds for their future. Mrs Singleton said: ""We used a foreign exchange broker, Currencies Direct, for our house purchase. They gave us an exchange rate which we could lock into and this meant we could relax and plan ahead knowing that we were no longer susceptible to fluctuations in the currency market.

"However, now we are thinking of selling it so we can invest the money instead of saving into pensions."

Between them, Mr and Mrs Singleton have a number of company and personal pension schemes in the UK.

Plain sailing: But property and pensions rather than the business is now the couple’s priority

Vital Statistics

Name: Julian and Lesley Singleton, 39 and 49.

Location: Mar Menor, Murcia, Spain.

Occupation: Watersports instructors.

Salary: Estimated to be around €15,000 a year once business gets going, plus €5,000 a year rental income.

Bank Accounts: £1,000 in Smile Current Account; €500 in Banco Santander Current Account.

Savings Accounts: £3,000 in ING Direct Savings Account; €1,000 in ING Spain.

Liabilities: £10,000 loan from her mother; paying interest at 4.6 per cent on this.

Mortgage: None.

Assets: Four-bedroom house, in Mar de Cristal, Murcia, Spain, bought in February 2006 for €550,000, still worth the same. Two-bedroom house, in Estrella de Mar, now worth €215,000, which they rent out.

Pension: Around £40,000 combined in Motorola Pension Scheme and £30,000 in Sun Life Pension Scheme, both money purchase; she has £7,000 Lucent Technologies Final Salary Pension Scheme; he has £5,000 in Sun Life Personal Pension and she has £3,500 in Scottish Widows Personal Pension.

Insurance: None.

What the experts say

As the Singletons have not only moved abroad, but set up their own company and become self-employed, they face several changes which clearly affect their pension planning, said our panel of advisers.

They are wise to consider their long-term security and beware of relying on one sole source to provide for their retirement.

Pension: As a first step, the Singletons should get a retirement forecast from the Pension Service to determine their entitlement to a UK state pension by logging on to www.the pensionservice.gov.uk, said Danny Cox of independent financial adviser (IFA) Hargreaves Lansdown.

The couple should ask for projections of the benefits their various schemes will provide in retirement, and review how they are invested, added Jonathan Fry of IFA Jonathan Fry & Co.

Bill Blevins of IFA Blevins Franks said: "The main risk with the existing arrangements is that they are heavily over weighted in UK sterling securities, and the funds are all valued in sterling, yet they are working in euros.

"If the euro strengthens against sterling, then the existing funds will buy less of a euro pension in due course."

While transferring their pension schemes to Spain may seem wise to give them greater currency control, it can be complicated and expensive, said Mr Cox. They also need to be sure they will remain in Spain.

Mr Fry said: "Pension transfer advice is a highly regulated area in the UK and they will need to accept that if they are going to seek professional advice from a suitable adviser with a G60 Advanced Financial planning Certificate (AFPC) qualification, then this will involve a fee."

Mr Blevins suggested they consider a Self Invested Personal Pension (Sipp) to consolidate their various pension plans. Mr Cox added that setting up a personal pension in Spain is unlikely to be wise at this point, as they are uncertain of how the business will progress and of their future employment income.

Property: As a large part of the couple's investment portfolio is in Spanish property, they should consider carefully if they think this market will produce good returns, said Mr Cox.

With the low yield of less than 2.5 per cent a year on their rental property, the advisers agreed that alternative investments are likely to be advisable for the long-term. If they choose to sell, Mr Fry added they should take local advice on potential tax liabilities.

Mr Cox said: "If they want to maintain a high exposure to property they could invest in a property fund. This would give better diversification, though the best experiences we have of property funds are in the commercial property market and not the residential market."

Assuming they are happy to take some risk in their investments, Mr Cox recommended some exposure to equities through collective investments such as unit trusts or offshore insurance bonds, where tax is only paid when profits are taken.

Mr Fry recommended Lombard Assurance SA, based in Luxembourg as a good provider.

He said: "The investment could be denominated in sterling or euros, or a combination of these currencies."

Action checklist

•Get a UK state pension forecast.

•Ask pension providers for projected retirement benefits.

•Take advice from suitably qualified adviser on pension transfers.

•Put off setting up a personal pension in Spain until the business is settled.

•Before considering selling rental property, take advice on any tax liabilities.

•Consider investing in an offshore insurance bond.