Sunday, 10 December 2017

Post Brexit phase 1 - a move to the Med is go!

Paphos Forest, Cyprus
Paphos Forest, Cyprus
In the immediate aftermath of the Brexit referendum result my immediate thoughts were has the door to our dream been slammed shut.  An initial review suggested that it was still ok, albeit with some potential speed humps, but even though the data said we were still golden some trepidation was still there.  In particular I had three main concerns.

The first concern was being able to register and live legally in our new chosen country.  Both the EU and the UK government were always verbally saying current residents would be ok but they never spoke about new entrants since the referendum or since the trigger of Article 50.  Even as recently as September 2017 the UK would only commit to the negotiations being applicable from a date between the date of Article 50 trigger and date of exit.  The joint report published on Friday finally clears that up with the paragraph:
“The overall objective of the Withdrawal Agreement with respect to citizens' rights is to provide reciprocal protection for Union and UK citizens, to enable the effective exercise of rights derived from Union law and based on past life choices, where those citizens have exercised free movement rights by the specified date.”

A subsequent paragraph then defines the specified date as:
“The specified date should be the time of the UK's withdrawal.”

So provided we’re residing in an EU27 Member State by 29 March 2019 we’re within scope of the agreement.  Tick.

The second concern was around healthcare.  We know we’ll need to be private in the early days but our concern was that if we really loved it and wanted to stay into our dotage could we find ourselves with problems if private became non-viable (it became prohibitively expensive or the company decided to stop insuring us at a point where reinsurance elsewhere was not possible).  We did have some options here, particularly if the new Cyprus NHS comes to fruition, but it was not as attractive as previous.  The joint report clears that up:
“Rules for healthcare, including the European Health Insurance Card (EHIC) scheme, will follow Regulation (EC) No 883/2004. Persons whose competent state is the UK and are in the EU27 on the specified date (and vice versa) – whether on a temporary stay or resident – continue to be eligible for healthcare reimbursement, including under the EHIC scheme, as long as that stay, residence or treatment continues;”

It looks like we’ll have the same access to healthcare as we currently do meaning as we pass State Pension age the S1 route to healthcare should still be possible.  Tick.

The third concern (concern is probably too strong a word) was State Pension rights.  In all my planning I assume no State Pension but at the same time I intend to build 35 years of contributions via voluntary contributions post FIRE as an insurance policy against it going all wrong.  My primary concern was that the UK might stop the pension keeping pace with inflation (currently part of the triple lock) as they do for many countries outside the EU and Switzerland.  The joint report covers it:
“Social security coordination rules set out in Regulations (EC) No 883/2004 and (EC) No 987/2009 will apply. Social security coordination rules will cover Union citizens who on the specified date are or have been subject to UK legislation and UK nationals who are or have been subject to the legislation of an EU27 Member State, and EU27 and UK nationals within the scope of the Withdrawal Agreement by virtue of 3 This includes beneficiaries of the Withdrawal Agreement who hold valid domestic immigration documents conferring a permanent right to reside in the host state (such as UK Indefinite Leave to Remain (ILR) status). Page 5 of 15 residence. Those rules will also apply, for the purposes of aggregation of periods of social security insurance, to Union and UK citizens having worked or resided in the UK or in an EU27 Member State in the past;” 

with the supporting comparison notes making it even clearer:
“Lifetime export under conditions in Regulation (EC) No 883/2004, including lifetime export of uprated pensions.”

It looks like the insurance policy is still in play.  Tick.

Another indirectly related consideration is that the Brexit vote has seen the Pound weaken and I’d suspect if a decent trade deal is not forthcoming it will weaken further.  Today the exchange rate is still above my worst case planning of 1.123 but even if it weakens further in the coming years we should still be golden.  Financial Independence (FI) being achieved way back in July 2016 and a subsequent acknowledgement I would do one more year (OMY) is seeing to that:

Wealth growth in Euro’s since FI (July 2016) and OMY (July 2017)
Click to enlarge, Wealth growth in Euro’s since FI (July 2016) and OMY (July 2017)

Of course the joint report leaves everything subject to change:
“Under the caveat that nothing is agreed until everything is agreed...”

But even I’m not so risk averse that I need to wait for the final deal just to be sure.  So the Med is go!

As always DYOR.


  1. Looking forward to your post telling us you have finally pulled the trigger.

    1. So do I Anon. It's now starting to feel a little bit like we are in limbo and we're all now anxious to get on with it.

      The next critical step is my resignation which should occur in just a few short months. It will be timed to ensure I can collect a bonus I'll be due. No point in throwing a chunk of change away for just a few weeks.

  2. Many congratulations, RIT. You're over the next hurdle. I was beginning to worry given you hadn't posted for a while.

    1. Thanks. Just haven't had a lot to say TBH. We've just had our heads down trying to stack as much cash as possible, while continuing with out current investing strategy, while waiting for Brexit to play out a little more.

      From here it'll start to get interesting again. Over the next 6 months'ish we have to settle on final location, I have to give notice, we have to pack up our lives and finally we have to settle in our new home. Should be plenty to blog about I'd guess.

  3. Hi RIT
    I've been eagerly awaiting this update and am pleased that it's all systems go! Looking forward to the post where you pull the trigger!

    1. I must say I'm also very much looking forward to that day.

  4. Don't take your eye off the ball ! The growth in your overrall " portfolio " value since Jan 2016 is impressive- about 50% increase in £ sterling terms ( approx. £800 K to £ 1200 K ) The weakness of the £ has undoubtedly contributed to this performance - depending on your range of holdings : investments designated in non- sterling currencies, "overseas " companies and UK companies that have a high %'age of their earnings coming from outside of UK ( this includes many of the largest FTSE 100 companies as we know )

    Also - I wonder what proportion of your " portfolio " is held in passive funds - trackers , etf's etc . Your dedication to low on-going and management costs/fees have steered you away from actively managed funds but I wonder if now might be a good time to look at overrall diversification ( in the broadest sense ) of your portfolio and also look at a shift in emphasis more towards value rather than growth. I am thinking along the lines of potentially sacrificing some future growth for increased safety and trying to lock in some of the gains you have made.

    Clearly you also have a large purchase ahead of you - buying your house - I think you have your ILC's earmarked as the main source of cash for this . That will hurt you ( personally speaking ) as they are performing exceptionally well at present benefitting from RPI increases ,no management or tax costs - just what anybody would want in their portfolio . Only downside is that there are some penalties for cashing them in at any time other than their maturity dates. Are you considering keeping the ILC's after all - and funding the house from elsewhere ? - or even locking in to some low fixed interest rate cash on loan ( ie a mortgage !) Horror of horrors I hear you say .

    1. You are right that £ devaluation has definitely flattered my performance. To demonstrate since FI day wealth has increased by £259k but by a much more modest EUR238k. That said it's still EUR238k that I didn't think I'd need so I'm still happy to have it.

      These days I'm pretty much all passive with the only remnants being a few early mistakes which I can't sell for tax reasons (Cyprus would allow this to be cleaned up). I don't think I'm prepared to go 'active' now as I'm at the point where I think I've actually won the war (provided the future is no worse than the past) and just don't need the out performance of the few at the risk of the neutral/under performance of the many after expenses.

      With regards to the house you've hit on the elephant in the room. Right now it looks like:
      - EUR250k in savings accounts and P2P which for some time I've been moving from 3 year to 1 year and which I'll soon start moving to savings accounts.
      - EUR125k in ILSC's.
      - EUR117k in potential earnings to come as I wind down.

      The first problem is that it's all in £'s which gives me ridiculous risk but let's ignore that for now. At one extreme if we go to Cyprus 'enough' home will cost us about EUR280k after expenses and at the other extreme if we go to Spain 'too much home' (OMY has given us wealth which we haven't yet allocated) will cost us about EUR390k. The thinking is that the first to go will be the savings accounts + earnings to come and only then will I cash in the ILSC's. So at one extreme I'm not spending ILSC's for a long time/if at all and at the other end I'm spending some to buy the home. The positive is that no matter which end I look at I have >3 spending in cash/cash like assets which was always the aim.

  5. Hope I'm not raining on you're parade, but I saw this article in the Guardian this morning -

    And this -

    I really hope this does'nt affect your plans at all.

    1. It makes our choice of country very important and it's definitely something I'm aware of. It's why I'm yet to declare Spain or Cyprus and why we're going to head back early next year for some more research 'to be sure'.

      What they're on about is that let's say we go from the UK to Cyprus pre-withdrawal where we get plenty of EU rights but then post withdrawal we realise we've made a mistake and want to go to Spain. Pre-Brexit this was not a problem but the phase 1 outcome is that those rights look to be lost once we change EU27 countries. This was a 'red' issue in the September position statement with the UK position being "UK nationals in scope who move within EU27 after the specified date should keep all existing rights; also for crossborder activity begun after the specified date."

      The EU position at the same time was "UK nationals in scope of withdrawal agreement only have protected rights in the state(s) in which they have residence rights on exit day, without prejudice to Social Security rights."

      The UK's September position was clearly more favourable and the whole section has been removed from the December positions. So the UK have clearly had to 'sell out' those UK citizens to get a deal.

  6. I have never been to Cyprus although I have friends who have had holidays there and had a great - and relaxing -time . But looking at an atlas - for me it is too close to both current and future, countries ripe for serious political instability - as well as the existing division of Cyprus itself.

    Turkey, Syria, Lebanon , Palestine , Israel, Egypt are all nearer to Cyprus than the nearest mainland EU country ( Greece ) although Crete and Rhodes are about as far away as the nearest part of Egypt.

    This proximity would lead me to be watching World News too much for Cyprus to be a relaxing place to retire to. OK for a holiday but not to live.

    Just my opinion.

    1. Thanks for this stringvest. It's certainly a consideration that was already on our spreadsheet.

      What has become clear to us as we travel on this fabulous journey is that there is no nirvana where unicorns roam free. Instead everywhere has pro's / con's and so the aim is to simply find the best place for this small family to call home.

    2. Good luck with that . The clock is ticking and it is just over 15 months until 29th March 2019. That is not much time left for you to choose a country , choose a region , find a house , buy a house , do any necessary work to the house to make it habitable, organise schooling for your children , healthcare for you all, organise a physical move out of the UK ( maybe sell stuff you don't want any more ) arrange your finances , pensions etc etc for when you are living outside of UK .

      Your OMY has benefitted your finances but you still have not handed in your notice and fixed a leaving date.

      You are asking a lot of yourselves - unless you are not too worried about the looming date of 29th March 2019.

      Sorry to be interfering in these personal life decisions - but you have shared a lot and it seems only fair for me to share this with you - whether it helps, irritates, annoys or not !

    3. "What has become clear to us as we travel on this fabulous journey is that there is no nirvana where unicorns roam free. Instead everywhere has pro's / con's and so the aim is to simply find the best place for this small family to call home."

      You obviously haven't been to Wales then?

    4. @stringvest
      No problem with questioning as if I can share anything that helps others it's a bonus.

      TBH we're not that daunted by it all. Maybe that's because I've moved countries previously and moved houses multiple times as landlords have thrown us out as they wanted to sell, move back in or rent to a family member. We also might just be naive...

      For a year or so we've been paring down what we own so we won't have much to move. We currently rent so that's easy as well. We also have no cars to sell.

      The ticking clock is about registering in our new country. Let me play out a Cyprus scenario for registration:
      - Day 0 - Make sure we have passports and marriage certificate close by.
      - Day 1 - Finalise private health insurance. We already have quotes.
      - Week 1 and 2. Rent a place for 6 months. We'll rent an Airbnb for the first 2 weeks.
      - Day 2 - Visit immigration in person and make appointment for registration.
      - As soon as rental secured then sort bank accounts as we'll need rental agreement for that.
      - Wait for 3 months from bank account opening as immigration want to see 3 months of bank account activity (including signed statements). Then register at immigration.

      Of course it depends how big the wait is for registration but we'd be ready within 4 months of arrival I'd expect. The day that clock starts ticking is still a little TBC but it will be between start June 18 and start August 18 so we should have a little buffer.

      Spain adds a little more as you need to sign on to the Padron (register at local council as they get state revenue based on number of residents) and get an NIE (like a NI number) which are both apparently trivial.

      If I'm interpreting correctly I think we're also safer than that as I think we only need to be in country by Brexit day because as soon as we hit the ground we become residents under Article 6 of Directive 2004/38/EC which states "Union citizens shall have the right of residence on the territory of another Member State for a period of up to three months without any conditions or any formalities other than the requirement to hold a valid identity card or passport". This Article is stated as being in personal scope on the comparison of positions document I linked to in the post. I don't want to push it this close though.

      @The Rhino
      "You obviously haven't been to Wales then?" Are there 2 Wales on this fantastic planet? The one I've visited while beautiful tended to be quite wet and cold regularly. :-)

  7. I'm glad things are still going so well and there is some relief with the brexit situation. It is a real shame that you won't retain full free movement rights but if I had to find a silver lining perhaps it's forcing your hand to make the move before the cut-off, rather than another one-more-year :)

    Possibly there is the opportunity for dual citizenship in the future?

    1. Many thanks for the wishes mwpt and you may well be right about "...rather than another one-more-year." LOL

      Dual citizenship is not something we overly desire but it might give further advantages. TBH haven't really investigated to much. What will give real advantage though is permanent residency.

  8. Congrats on the milestone RIT, glad its all still on track.

    Apologies if this has been asked before but can i ask why you are so dead set on buying a property when you get to your destination? Your investments are working so well why would you tie up investment capital if the current investment growth essentially gives you free rent?

    As you will no doubt know, Med property can be very illiquid if you do make the wrong buying choice (not suggesting you will but the risks are higher in unknown locations - even after 6 months living there).

    Also im curious (this is relevant to my own future FIRE plan), have you ever included future inheritances into your numbers and if so how have/will these influence your plan?

    All the very best

    1. Thanks for the wishes S. The reason we want to buy property is that having rented for many years (which served a purpose such as enabling mobility to chase earnings) we now want to build a real and genuine home. By that I mean 2 things:
      - security of tenure - I never again want to be moved on because of a landlords whim. Examples include "I'm selling up", "I'm moving back in", "I want an exorbitant rent increase" or "My son/daughter is moving in" to name four.
      - decorate to our taste - It's time to be able to hang a painting where we want it or when something needs replacing it's done in a timely manner and replaced with something that isn't the cheapest thing that money can buy.

      Never included inheritance as we won't ever get one. In my book I reveal more about my background which tells a bit of the story here. In short we are on our own with this FIRE lark. No inheritance and no back stop if it goes wrong. Possibly why over the years a number of people have suggested I'm pretty cautious in my planning (but others of course think I'm too bullish).

  9. I'd rather learn Spanish than Greek.

    It would be more useful for my children to speak Spanish than Greek.

    But then in your shoes I'd probably go to NZ, so wot the hell.

  10. If you decided on Cyprus, before you leave the UK you could apply at the Spanish consulate for an NIE. Strictly speaking it's for buying property in Spain not for residency but there must be lots of people who buy then later decide to move permanently. Having the NIE might make it easier if you changed your mind and then fancied Spain. I think it only lasts 3 months then needs renewing but for £7.90 it's a small cost as an attempt at some insurance.

  11. This whole thing is very sad.

    In reality, almost all sane people I know or speak to, clearly feel that Brexit is a mistake.

    The problem is that only half will openly admit to it in public.

    Seems like Titanic in slow motion, can someone not do something about this?

  12. Do you know a lot of insane people to require the'sane' qualifier?

    How do you know people that you don't speak to? Telepathy?

    So you're saying out of the tiny subset of UK population you know, that subset tend s to be like-minded? Dazzling insight.

    That only half of that subset actually admit it begs the question how you then know it? Telepathy again?

    Or does public admission imply standing on a street corner with a loudspeaker?

  13. I am hoping to move to Portugal before March 2019. That said, I am pretty relaxed about any cut off dates as I don't think Brexit will happen anyway!

  14. I wouldn't be too relaxed, as MV recommends, if you start thinking in probabilities rather than binary outcomes, you should probably conclude its more likely to happen than it is not to happen?

  15. Greetings RIT. I am at exactly the same stage as you. We are now FIRE and moving to Spain in March having looked all round the world for our next home. We will settle near Marbella and work out how to fill our free time. Good luck and maybe see you in Spain in 2018. Exciting times ahead.

  16. Hi RIT, glad there is now sufficient clarity in the Brexit negotiations for you to pull the trigger. Looking forward to hearing about your life in the med and the RE part.