If you have lived in the UK, built up a pension and are now relocating to or back to France, there are options allowing you to access your monies without incurring excessive tax. Within this blog we will discuss:
- Options available for accessing your pension
- Tax implications of unlocking your pension
- How to cash in your pension
- Options of investing these funds upon pension release
- Costs of taking your pension monies
Don’t hesitate to get in touch if you would like more information.
Background – Encashing my pension to France
Upon relocating from the UK to France, once settled it should be a priority to evaluate the options available to you and make the best-informed decision possible.
Some key areas to consider include:
- Tax efficient pension income withdrawal
- Negate Currency Risk – i.e invested in GBP and drawing down in EURO
- Ongoing management of pension fund in line with your short, medium and long term requirements
Pension Options – Encashing my pension to France
Upon considering the above areas as well as many other factors it is imperative to find the best solution to meet your requirements. When transferring out of a UK pension you are only allowed to transfer to another recognised scheme. This, in essence, leaves 2 options (other than staying in your existing UK pension scheme):
- International SIPP
- QROPS
Both of the above schemes allow for the transfer and consolidation of UK pensions to a single personal pension structure. Both, have specific advantages and disadvantages dependant on your own unique circumstances.
As this blog is focussed on the transfer and encashment of UK pensions when moving to or back to France we shall focus on the QROPS. It is important to note if you not planning to, or end up not encashing the full amount then often the International SIPP is the more appropriate solution.
French Tax – Encashing my pension in France
France, unlike elsewhere in Europe taxes pension lump sums at 7.5%, plus social charges of 7.4% (under certain circumstances this can be avoided by completing an S1 form)
These fees also apply when utilising the “25% tax-free lump sum” in the UK and bringing the funds into France. It is important to ensure you are a French resident before proceeding with the transfer and subsequent encashment. Otherwise if still UK resident you are liable for UK tax and the entire process is an expensive waste of time.
Costs – Encashing my pension in France
As always it is important to analyse and identify all the associated costs and not just the headlines. Apart from the tax there are transfer and advice fees, QROPS setup, annual trustee fees and QROPS encashment fees. Harrison Brook works off a fee–based model unlike the majority of expat financial advisers. We are completely transparent with all fees throughout the process. You can find more information on fees on our website here.
Post Pension Encashment – What are my options?
Again there are a large number of factors to consider, some general ones include:
- Age
- Amount
- Do you have other retirement funds
- Short, Medium and Long term objectives
- Reasons for encashment
Often we would look to utilise local tax efficient solutions such as Assurance Vies, which can be a fantastic retirement planning tool. Assurance Vie allows you to invest over the long term (8 years or more) to enable you to take the income or profits from the investment at a preferential rate in retirement. Or, you may already have plans for the money such as a house or children’s University.
Speak to one of our advisers today and get a consultation to discuss what the best route forward is.
