How to Transfer UK Pension to France

What kind of UK pension fund do you have?

Firstly you need to determine whether you even have a UK pension and, if so, which type.

Generally your UK pension will be one or more of the following: a workplace scheme, a personal pension or a self invested personal pension (SIPP).

If you are a company director, senior executive or a close relative of either you may also have a small self administered scheme, or SSAS.

Workplace Pension

You are very likely to have a workplace pension if you have ever had a UK employer since 2012, when it became compulsory to auto-enrol employees into pension schemes.

Depending upon who you worked for and when, your workplace pension will be either a final salary, that is, defined benefit (DB) or a defined contribution (DC) plan.

Your contributions receive tax relief at your marginal rate of income tax and the pension provider invests your money for you.

It is possible that you have accumulated a few workplace pensions if you’ve changed employers in the UK now and then.

Personal Pension

A personal pension is one you open yourself, independently of your workplace. Usually these take the form of DC schemes.

Contributions to personal pensions are eligible for tax relief in exactly the same way as defined benefit pensions and your money is invested by the scheme provider.

Small Self Administered Scheme (SSAS)

Small self administered schemes (SSAS) can only be set up for senior executives and company executives of private firms, or their close relatives.

Up to 11 people can invest funds in any single SSAS.

While the trustees are responsible for the investing decisions, individual contributions to an SSAS enjoy the same tax relief as other pensions.

SSASs grant far more investment flexibility than the other schemes described above.

Self Invested Personal Pension (SIPP)

A SIPP is a type of defined contribution pension fund which gives you greater control over how your pension funds are invested.

You receive tax relief on your contributions but take charge of all investment decisions and also have more say over how much you pay into the fund and when.

Some of the many benefits of SIPPs include, but are not limited to:

• Flexible drawdown, which is greater freedom to access your pension how and when it suits you
• Ability to consolidate the many existing pensions you may have gathered throughout your working life
• No obligation to purchase an annuity out of the pot
• Ability to choose the international currency, such as Euros, that is relevant to where you choose to live and spend your pension income
• Better estate planning flexibility, with the ability to pass on your full pension pot to a loved one

If you’re thinking of spending your retirement years in France, and are still under the age of 75, a good first step in financial planning can be to consolidate all your existing pensions into one pot in the form of a SIPP.

You can use the Pensions Tracing Service online to help you locate any lost pensions.

Upon reaching retirement age SIPPs give you the choice of either purchasing an annuity from the pension pot, in return for a guaranteed income for life, or enjoying the freedom of keeping your savings invested and withdrawing money as and when you want.

SIPPs are not subject to inheritance tax so you can pass any money left in yours to loved ones free of tax.

A SIPP is more modern, portable and flexible than an older style UK pension scheme.

It can easily be converted into an expat-friendly overseas scheme for retirement in the European Union and beyond.

Who can transfer their pension?

Transferring your pension overseas isn’t possible for everyone.

If, for example, your UK registered scheme is an NHS, government or overseas service plan then pension transfers won’t be available.

However, if you are able to transfer your pension there are two main options for you to discuss with a qualified independent advisor: an international SIPP or a qualifying recognised overseas pension scheme (QROPS).

Which overseas pension scheme is best?

It is essential to note that unless your current UK advisor is additionally licensed and qualified in Europe, legally they cannot advise you. You can always speak to me for the best advice in line with your risk profile and individual financial situation.

Both QROPS and international SIPPs offer multi-currency flexibility and accessibility that no UK registered pension scheme allows.

Additionally, there are tax efficient long term investment alternatives to pensions in France which could be better for your circumstances.

Qualifying Recognised Overseas Pension Scheme (QROPS)

A QROPS is an overseas pension scheme which can accept transfers from a UK registered scheme.

They are ideally suited to British expats and also to foreign nationals who have worked in the UK and who hold £150,000 or more in retirement savings.

The QROPS scheme is recognised and regulated by His Majesty’s Revenue and Customs (HMRC), who maintain a regularly updated list of worldwide providers on their website.

You can avoid pension scams by checking if the scheme you are interested in is certified by HMRC before you transfer to a QROPS.

At the time of writing there are no local QROPS providers in France, however a QROPS based elsewhere in the European economic area, EEA, particularly Malta, can be an excellent choice for a French resident.

A Malta-based QROPS offers various attractive tax benefits, greater access to overseas investments and potential avoidance of the UK Lifetime Allowance restriction.

QROPS transfers are not to be undertaken without qualified advice. The pension transfer process to any recognised overseas pension scheme is a benefit crystallisation event and can be complex and convoluted.

International SIPP

An international SIPP could be more appropriate for some British expatriates than a QROPS if the pension fund is under £150,00 and, therefore, nowhere near the lifetime allowance.

iSIPPs can be quick to set up and are structurally identical to domestic SIPPs. Both are regulated by the Financial Conduct Authority in the UK.

This option allows you to keep your pension pot in the UK whilst receiving pension payments in Euros. In this way, you can reduce currency risk caused by fluctuating exchange rates.

Before you can decide whether a QROPS, an international SIPP or a long term investment pension alternative is suitable and safe for you it is essential to seek professional advice from an international advisor.

I am not only fully conversant in UK tax legislation requirements but have years of experience and expertise in transferring UK pension funds overseas and am an expat myself.

Alternatives to overseas pension schemes

Long term investment platforms, such as an Assurance Vie, can be considered as a pension transfer alternative for French residents.

International and French versions are both available, with each providing their own advantages. Deciding which one, if any, is most beneficial for you will depend upon your individual financial position and future plans.

What is an Assurance Vie?

These are technically not pensions but beneficial schemes for investing your pension as one lump sum.

They are often the most tax efficient option when you intend to remain in France for a long time. The major tax benefits begin after a period of eight years and continue to increase over time.

Your money can grow tax free in one of these long term investment platforms, until you begin to make withdrawals. With careful management they are highly adaptable to a range of financial goals.

An Assurance Vie is available through insurance companies, banks or straight from your financial advisor but there are, of course, certain pros and cons to weigh up before you decide.

The best option for you can only be determined through professional advice which takes your individual circumstances and retirement plans into account.

I am ideally situated to help you understand all the tax implications, both with the UK tax charges and the French tax authorities, when it comes to moving your pension fund.

Useful Information

Can I cash out my pension?

If you are a UK tax resident it is possible to take out a pension commencement lump sum of 25% tax free from your pension fund. However, your tax treatment will change when you leave the UK.

So, if you are planning to move to France soon it might be beneficial to withdraw your tax free pension commencement lump sum whilst you remain a UK tax resident.

You can always speak to me either before or after leaving the UK in order to help you decide your most tax efficient course of action when it comes to cashing in or transferring your pension.

Will I pay tax on my UK pension in France?

Despite the double taxation agreement between France and the UK advice must always be sought to ensure you only pay tax at the lowest possible tax rate.

It may be better to transfer your pension if you can. Otherwise you could face an unnecessarily high tax bill.

A long term investment product, such as an Assurance Vie, is an alternative to a French pension which can dramatically reduce your tax liability whilst you save.

Can I transfer my UK pension to Europe?

When retiring to France your choice of how to transfer your pension is likely to be between a transfer to a QROPS, an international SIPP or withdrawing the entire lump sum into a long term investment product instead of a pension, such as an Assurance Vie.

See above for a discussion of the options available for transferring your pension when moving to an EEA country such as France.

Can I transfer my State Pension to France?

No, a pension transfer for a UK state pension to anywhere in the European economic area (EEA) is not possible under current UK pension rules.

However, even though you cannot transfer your state pension, you can have it paid into a French bank account and withdraw your pension benefits in Euros. This is subject to the same currency exchange rate warning as above.

How to transfer UK pension to France FAQs

Please note

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

Overseas pension transfers can be complex. Make sure you take financial advice before you transfer your funds.