Saturday, May 08, 2010

Not great news

Pam and I have just received our P60s for last year. For the benefit of our Spanish readers, the P60 shows how much we earned during the last year and how much tax we paid. We need these forms to make our annual declaration to the Spanish tax authorities.

Because we have public service pensions, we pay our taxes in the UK and not in Spain unlike some of our British neighbours. Even still, we have to make a declaration each year to show we have done just that. The end result is usually a very small rebate from the Spanish authorities ( about 1Euro or less).

Along with the form P60, Pam and I also receive a newsletter from Teachers’ Pensions which notifies us of any changes to our pension for the following year and that is where the news gets bad. As with all public service pensions, the amount of increase in our pensions is governed by the Pensions Increase Act of 1971. The annual increase each year is determined by the Retail Prices Index for the preceding year.

As it happens, the rate of inflation in Britain for the year up to September 2009 was a negative figure so in reality our pensions should go down. Thankfully, the Pensions Increase Act does not allow for a decrease in public service pensions but it does mean that we will get no increase in our pensions this year.

The rate of inflation for Spain in 2009 was 4.13% but is thankfully –0.8 for 2010 so we should effectively be slightly better off this year even without an increase in our pensions. Somehow we don’t feel better off. Still, the thunderstorm last night was short lived, today the sky is blue and the sun is already warming the air so what have we to complain about?

No comments: