QROPS France | Understanding Your UK Pension in France
LEARNING OBJECTIVES
We’re passionate about providing free, high quality and up-to-date information to Expats in France.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
The treatment of UK pensions within the French system
How your UK pensions can be taxed in France
Reasons to consider a pension transfer
How to maximise tax-efficiency as a British Expat
What to look out for when taking advice in France
The life of a British Expat in France can be complicated. With a new country comes new regulations, requirements and administration. This article will consider all things related to your UK pensions as a French resident, and will cover the most common issues faced by Expats, namely:
What do I do with my UK pensions in France?
What is the tax on UK pensions in France?
Should I transfer to a QROPS in France?
Can I take my pension in France and invest in an Assurance Vie?
Taking your Private Pension in France
The first and most simple option is to do nothing, and take your existing UK pension as it is in France. This may be with providers such as Aviva, Aegon, Standard Life, Scottish Widows, Transact etc.
These may be pensions that you have built up over your career with your employer, or perhaps they could be self-invested personal pensions (SIPPs) that have accrued over time.
There is nothing wrong with keeping your UK pension provider whilst living in France. However, make sure you understand how your provider will work with you post Brexit
UK Pension in France After Brexit
Post Brexit, most UK providers will not offer full-flexible access draw-down. In simple terms, this means that your UK pension pot will not offer you the freedom to take your pension as and when you please.
The vast majority of UK pension providers will offer French residents the following 3 options:
Take 100% of your pension as a lump sum
Take 25% of your Pension Commencement Lump Sum (PCLS) and buy an annuity with the remainder
Buy an annuity with 100% of your pension
The first option could potentially trigger a very large tax bill in France, if you do not have your pension set up correctly, or if you do not have an S1 status.
The second and third options are unattractive, given the poor current annuity rates, which whilst will give you guaranteed income for life, may not be the best option when compared to alternatvies.
How are my Pensions Taxed in France
Typically, your UK pensions will be taxed at your highest rate of marginal income tax. Ensure that you have an NT Code on file (nil-tax code) with HMRC. Failure to do so will result in tax being deducted at source in the UK from HMRC, which you'll have to claim back - this isn't a quick or easy process.
S1 Status France
If you are an S1 holder, or have S1 Status in France, you may be able to apply for a flat-rate of tax if you take the entirety of your pension at once. This tax rate is 7.4% plus any social charges due on the payment.
In certain scenarios, this is the most tax-efficient option. You can then re-invest the proceeds into a tax-efficient investment in France, such as the Assurance Vie. An Assurance Vie is one of the most efficient investments in France, and in some ways can be likened to an ISA in the UK with its benefits.
Should I consider a QROPS in France
We do not see the advantage for using a QROPS account in France. They are more expensive than UK pensions and International SIPP accounts. They also offer less protection and security in the event of poor advice or management. This is because most QROPS accounts are based out of Malta or Gibraltar, which isn't regulated to the same extent as UK pensions.
Many Expat Financial Advice firms and advisers will still recommend a QROPS pension in France because it allows them to charge commissions and hidden fees, which do not necessarily have to be reported to the client. They cannot use opaque and confusing charging structures with UK regulated pensions, so they over sell the benefits of using a QROPS in France for Expats.
Best Practice | Assurance Vie vs International SIPP in France
Depending on your tax status, and your individual circumstances, we detail below the best practise for Expats in France
If your UK pension provider offers full-flexibility in draw-down, multi currency and continued investment management, then you do not necessarily need to consider doing anything or transferring your accounts
If your UK provider does not offer the above, consider transferring to an International SIPP to give you the freedom in retirement to access your money as and when you wish to.
If you have an S1 status, and intend to remain in France for the long-term, consider taking your UK pension as a lump sum and investing in an Assurance Vie. This works out better from a taxation perspective over the years, given the preferential tax-treatment applied to Assurance Vie accounts.
Our Verdict | Taking Financial Advice in France
Everyone has their own unique situation, tax issues and objectives. Whilst the above guide is for informational purposes, we strongly recommend speaking with an Expat Wealth Management company to ascertain the best route for you moving forward.
The Wealth Genesis is the first adviser to charge all clients the same one-off, flat wealth planning fee for UK pension transfers and investments.
We guarantee no commissions, sales or conflicts of interest with all of our advice. To discover how our expert advice team can help you, contact us using the form below:
Get Started with The Wealth Genesis
FAQs
-
Unfortunately, a lot of content and material online is geared towards selling products, whether it is a QROPS or an Assurance Vie.
Be sure that any adviser you engage with is classed as a fiduciary, and can only act in your best interests. -
You can do by requesting a ‘benefits statement’, or simply by speaking with them on the phone.
You want to make sure that your UK pension provider will continue to service your pensions as a resident in France. -
Most advisers will charge a percentage between 1% and 5% for the transfer. This is based on the size of your pension pot.
Make sure you know exactly what you are paying your adviser, to the pound and pence, before proceeding with any working relationship.
At The Wealth Genesis, we charge all our clients the same one-off flat fee of £3,000, irrespective of pension size. -
This depends on many factors, and most importantly your tax position and whether you’ve already taken benefits from your UK pension.
In some scenarios, it can be beneficial to take the entirety of your UK pension in France as an ‘income payment’, then reinvest the proceeds into an Assurance Vie, which will benefit from a favourable tax treatment.
