Transferring a UK pension to France
We live in an increasingly mobile, international world; it’s commonplace to want to move your pension along with you to avoid the complications of keeping track of pension schemes in more than one country. If you’re living in or planning a move to sunny France, you may want to transfer your UK pension scheme to your new home territory.
In this article, we will cover…
- Can I transfer my pension to France?
- Which pension types do transfer rules apply to?
- What are alternatives to transferring a UK pension to France?
- What are the benefits of transferring?
- What are the risks of transferring out?
- Can I transfer my pension from France to the UK?
- Speak to a pension transfer advisor today!
Can you transfer a UK pension to France?
It’s no longer possible to:
- transfer a pension scheme from the UK to France
- transfer a UK pension into a PERPS (Plan d’Epargne Retraite Populair)
The rules surrounding transferring pensions from the UK to France have changed since 2017 when HMRC removed French pensions from the list of QROPS (Qualifying Recognised Overseas Pension Schemes).
If you wish to transfer your UK pension to a French pension, which is not in the recognised QROPS scheme, your pension provider may either refuse to make the transfer, or you will be hit with a hefty 40% transfer tax.
However, there are potential alternative options for those looking to transfer a UK pension to France. For example, one such option is to transfer out of the UK tax net and into a European QROPS, which could in turn pay your pension into a French bank account.
Which pension types do transfer rules apply to?
HMRC’s decision to stop accepting French pension schemes as part of its approved QROPS applies to those looking to transfer a UK state pension, private UK pension, an employers’ pension scheme, or a SIPP to France. But whatever the type of pension you would like to transfer, there may be alternative options for transferring a UK pension scheme to France.
Alternatives to transferring a UK pension to France
There are many viable alternative ways to transfer your pension fund and some of them could be an option for you.
There is usually no tax imposed on a transfer into a QROPS scheme within the European Economic Area (EEA). Thus one alternative to transferring your pension fund to France is to get the help of an expert pensions advisor to transfer within the EEA.
You can then make regular payments directly out of your European pension into a French bank account. Your pension funds within the EEA will not be taxed on growth or death. This could mean that you end up paying 7.5% less in taxes on your retirement benefits than if your pension were to remain in the UK. Thus, transferring your pension into a European scheme could still be an excellent way to save thousands of pounds while simplifying management of your pension.
What are the benefits of transferring?
If you are a resident in France and would like to transfer your pension out of the UK into a QROPS scheme, you may be wondering what benefits you could gain from the transfer:
- Flexibility to invest your pension in a wider range of assets
- Freedom to take out your pension in the Euro, which you will need in France
- Freedom to pass benefits to heirs of your choice
- Opportunity to pay less tax than you might in the UK
In addition to this, France has a Double Taxation Agreement (DTA) in place with the UK which covers inheritance tax. This could drastically reduce the inheritance tax (IHT) you might have to pay on property and other assets as it helps you avoid the UK’s 40% IHT.
However, if you still hold a UK pension, it could face a tax of up to 45% on death. Speak to one of the expert pension transfer advisors we work with to discover how you could benefit from transferring your pension out of the UK.
What are the risks of transferring?
If you transfer to a QROPS within the EEA in order to then transfer the pension funds into a French bank account, you must remain in France or the EEA for five years after the pension transfer. Choosing to move again before the five year period is over could result in a pension exit tax being applied retrospectively.
Brexit uncertainties could change pension transfer rules
The finance and pension transfer rules are forecast to change post-Brexit. This could add an exit tax of 25% on pension transfers out of the UK and into Europe. So with the uncertainty of Brexit on the horizon and the potential application of an exit tax, most pension experts would likely recommend making pension transfer arrangements sooner rather than later.
Can I transfer my pension from France to the UK?
You may be a British citizen living and working in France, but wish to return to the UK and transfer your pension along with your move from France to the UK. It can be sensible to adapt your financial planning according to your country of residency.
Since the UK QROPS rules changed to exclude French pensions, there are fewer options for transferring your pension. Transferring a pension out of France to the UK is a complex area which requires thorough knowledge of national and international law. Only a specialist will be able to guide you through the changing transfer landscape and show you best alternatives for transferring your pension.
Speak to an expert pension transfer advisor today!
Taking advantage of opportunities for French residents could possibly help reduce taxation and offer increased pension management flexibility. However, before you make any decisions regarding a pension transfer, you should weigh up the advantages and disadvantages with regards to taxes or fees paid on your pensions and assets in all relevant countries.
The pension transfer experts we work with have detailed understanding of the process and have helped many people successfully manage to transition their finances out of the UK and into France. They can help you establish the best approach for your goals and situation.
If you would like further advice on the question of transferring your pension, call us on 0808 189 0463 or make an enquiry.
We don’t charge for connecting you to a pension transfer specialist and there’s absolutely no obligation or marks to your credit rating.