What you should know about British Pensions in France
If you are reading this article, you almost certainly live in France or intend to move to France and you want to understand the treatment of British pensions in France. You really do not need an unwelcome tax bill, or to find out that if you had taken an action, you would have avoided a particular tax bill payment. For example, did you know that when you access your tax-free lump sum in France that it is NOT tax free. That is why professional advisers call this lump sum element the Pension Commencement Lump Sum (PCLS), because they know that it can be taxed in many countries such as France.
The next problem is how you can receive post- Brexit pension advice about British pensions in France!
You will be pleased to find out there are multiple regulated solutions available for you. The most surprising one is that, not only can you speak with your current UK pension adviser post-Brexit, provided their Professional Indemnity Insurers allow this, but there are a range of specialists who focus on British pensions, even in France. You just need to ensure you are talking to the “real thing” and not someone claiming to be a “wealth manager” or “pension expert”; often, they are nothing of the kind as there is no regulation on the terms that people use to describe themselves or their unregulated companies.
So, the first rule?
Ask these questions of your adviser whether they are in France or not:
Does their PI cover specifically cover British pensions advice (for example some in the European Union do NOT cover pensions from other countries)?
You should ask to see their certificate of qualification for pensions advice (never do business with an adviser who does not have an authorised certificate in their own name)?
Does their regulated company hold terms of business with your current pension provider (most EU based advisers will not hold terms, and thus they force you to transfer your pension even when it is not necessary to do so, and often to more expensive pension products such as QROPS or SIPPs)?
See our NOTES section at the end for more comprehensive details on these matters.
The second rule of receiving pensions advice
It is not about the pension!
It is about what your goals and ambitions are, along with your attitude to risk, and you need to consider your investments as well as your pensions; this was true pre and Post Brexit living in France or moving to France.
In other words, you need a review, and ideally you should be seeking that review with advisers that are qualified and regulated in both territories (you need the local advice about what is available just like you need the specialist advice from the UK side. The Aisa Group have advisers in both the UK and France, qualified to both UK and French standards. Who better to contact about your UK pensions in France and investment Post Brexit?
The firms in France and in the UK operate under both regulatory setups and they have access to a securities Portfolio Manager which is part of the same group and passports within the EEA.
What is the Overseas Transfer Charge?
The OTC is a 25% charge on transfers from UK registered pensions to QROPS if the investor is not resident in the EU/EEA or not resident where the pension is being transferred to(there are different rules for offshore employer schemes). This also applies if you leave the EU/EEA within 5 years of a transfer.
Can I still pay into my UK pension if I live abroad?
You may be able to do this for up to 5 years, but they would need to be to a pension you were already a member of before moving abroad. The amount will depend if you have relevant UK earnings or, if not, it is capped at £3,600 pa.
What if I access my UK pension and return to the UK, can I still pay into the pension?
You should be very careful about accessing your UK pension if your intention is to return to the UK and contribute in future. You may be restricted by the MPAA to £4,000 pa contributions.
What are QROPS and are they a good idea in France?
QROPS are recognised overseas pension schemes that can accept transfers from UK registered pensions? However, most are created using trusts. Trusts are not recognised in France and so additional tax advice should be taken before considering a transfer.
Should I transfer to a QROPS if I move abroad?
In the majority of cases, it is unlikely that a QROPS will be a suitable option. However, there may be circumstances where this is considering- depending on Double Tax Treaties, the Lifetime Allowance and the pension rules where you currently reside.
Lifetime Allowance(LTA)- What is it?
There is a limit as to how much you can hold in a UK pension without being taxed on a transfer abroad or when you access the pension.
What is the LTA limit?
It is currently £1,073,100 (2022-23), though there are previous protections that may provide for a larger LTA.
Can I move a QROPS back to a UK pension and is it a good idea?
Yes, and many are doing so where their plans have changed or where the initial transfer to a QROPS was found to be inappropriate.
There appears to be a misconception, particularly among FRENCH based advisers, that UK advisers cannot advise FRENCH residents on their UK/British pensions. It may be due to a lack of understanding or a deliberate attempt to encourage people to transfer their UK pensions to alternative arrangements for the purpose of generating commission for themselves.
The end of FRENCH passporting services into the FRENCH by UK advice firms means that UK advisers cannot market their services within the FRENCH or travel to the FRENCH to offer their services. It does not prevent those with UK pensions contacting their UK advisers in the UK to advise them about their current UK pensions- provided their Professional Indemnity Insurers allow this.
In fact, given the UK requirement to achieve a professional level standard of qualifications it is far more likely that a UK based firm will be better placed to understand your UK pensions and advise you accordingly. Further, the MiFID rules for the FRENCH do not actually cover pensions at all- a myth further exploited by FRENCH based advisers looking for business by moving UK pensions.
That being said, if you have pensions left in the UK- Post Brexit- you really ought to have a review of these, in conjunction with your other pensions and investments. The Aisa Group have advisers in both the UK and the France, qualified to both UK and FRENCH standards. Who better to contact about your UK pensions Post Brexit?