The UK are imposing at 25% tax on pension transfers out of the UK meaning this is really no longer an option.
Most SIPP’s aren’t suitable for French residents but I am working with a few providers to see if we can get a solution that isn’t trust based to give people some options.
At the moment there are a number of UK pension providers that won’t offer draw down contracts or annuity to a French resident as it is new business and they don’t hold the correct licenses.
Hi Chris, still subject to the 25% OTC unfortunately for any transfer to the EEA.
There may be a SIPP available or someone that will allow you draw down from a pension.
While you’re in the UK you have the option to move around. I know Hargreaves Landsdown will let you flexi drawdown. There are limitations on the investments though as I am told.
It’s best to check with providers before you change residency.
Hi Chris, your options remain the same as you are not transferring the UK pension?
Can be paid out in France and taxed there. Double tax agreement applies. France has a tax rate on 6.75% net if you take all the pension as 1 single lump sum, or 1 lump sum and an annuity.
There’s been lots of threads on this ‘prelevement forfeiture’.
Edit - I do yield to @Dave_Lawson on this, of course!
Yes… great point! Make sure you look at the tax options at the time!
@ChrisMann especially before you access the pension or 25% tax free… might be more tax efficient to wait until you get to France. Especially if you get an S1
I’m not planning to withdraw a lump sum I would just take money out every so often (e.g. monthly) to top up my state pension income.
So assuming my UK provider allows me to do drawdown after becoming French resident, I would just have to pay French income tax on the portion of my income over the French allowance (e.g. at 11% for income over €10,778)?
What about UK annuities, are they still available to French residents?
Sorry I don’t quite follow this - why more tax efficient to wait until after the move?
Yes I will most likely have an S1 as I will be retraité and won’t have worked in France.
I don’t plan to start drawdown until after I move to France in any case - my move will happen after my mother dies and I have an inheritance from her with which to buy a property, and I will continue working in the UK until that point.
No probs. You’d pay 11% on drawdowns in france up to approx 27K euro and 30% after that. That will include your state pension of course.
Otherwise if you take it all at one point, you will pay 6.75% only. All assuming you will have the S1 in place for the France tax year you take the lump sum.
OK understood. But doesn’t the UK only allow a 25% withdrawal tax free, or does being French-resident get round that? And presumably I would need to reinvest the money in some suitable French savings scheme (is this where the Assurance Vie kicks in)? But then wouldn’t income withdrawn from that in France be hit with the 11% tax rate in any case - so 6.75% plus 11%?
I should have said 11% on anything between the France tax free allowance and 27K - so 11% on between about 11 and 27K, 30% after.
OR…
6.75% ONLY on the single withdrawal - the flat rate exempts the full withdrawal amount from Income tax.
If you take the UK tax free allowance BEFORE you become France tax resident then you get the 25% UK tax free allowance. Then you’d pay the France income tax 11 or 30% on any withdrawals AFTER you become tax resident. The 6.75% flat rate will not be available as you will have already made a withdrawal.
So yes, you might save some tax starting withdrawals when you are in the UK. All depends on the maths! If you are going to be in a 30% tax bracket in France then avoiding that by paying 6.75% might make sense - if not you might gain by withdrawing the UK tax free amount first, before you move to France.
Whatever you choose, withdrawals can be invested elsewhere in the UK if you wish, no need to actually move the money to France. Keep your bank and savings accounts open. You can also split the pots if you wish.
Thanks for all the other info, will read and digest… and it sounds like professional advice will be needed once I know the exact details at the time I make my move.
I have two UK private pension pots and have messaged the providers to ask if they permit drawdown for French residents or not.
…just heard back from the provider who holds the lion’s share of my pension funds and they will only make drawdown payments to a UK bank account. So I would need to keep my Nationwide Building Society account going (which I was planning on doing anyway).
Nationwide say on their website that they are happy to let most EU residents (except those in the Netherlands and Italy) keep their accounts, but you can’t open a new one.
Hi Chris, if you want an annuity I’d buy one with the pension money before you leave the UK. I haven’t found an annuity yet that will take a French resident for new business since Brexit.
If interest rates stay higher then it could be a good option… especially as you have no beneficiaries you don’t need to select a payout on death…
Either way you are welcome to book a call with me closer to the time and I’ll help you decide the best approach.
Best to investigate before the move… 25% tax free and buy an annuity might be better than pulling it all out and paying tax on it… lots of variables could change so the advice is likely to as well
Hello Chris, it would also be worth checking out the three tax-free Livret savings accounts offered by French banks. The Livret A, LDDS and LEP. The maximum amount that you can put in each varies and the largest has the lowest interest rate, but they are instant access, no risk and best of all, no tax or social charge liabilities. Livrets, plans et comptes d'épargne | Service-Public.fr Assurances Vie aren’t quite the havens that they once were.
I have two small old workplace pensions that I’m planning to merge & use to buy an annuity early next year (to coincide with the original pension date, being my 65th birthday). Both schemes haven’t received any funds for years & form a total pot of about £34K.
I had my free advice session with Pension Wise just last week, which really didn’t tell me anything I didn’t already know about the options available but it did flag up the fact that some annuity providers won’t deal with non-UK residents. They were relieved to hear that I had a UK bank account to receive the money.
My question is…how big is your list of providers who don’t deal with us non-UK based people?
@Badger So far I hadn’t found one that would… I had a client with a safeguarded benefit called a guaranteed annuity rate and was very good. I told him to take the annuity and at first refused. After lots of persuasion and 6 months they done it…. That was Aviva.
If anyone finds one I’d be interested in talking to them.
You might be left with flexi access drawdown or taking as a lump sum.