French healthcare - should I swap to S1 on retirement?

I’ve been fully resident in France for more than 5 years and have my titre de séjour and carte vitale. I pay tax only in France. I am a micro-entrepreneur (ME), registered to run a gîte and creative storytelling courses, and my healthcare is currently administered by CPAM.

I have had several major surgeries in the past 5 years and no longer operate the gîte. I will become eligible for full UK state pension in April. If I retire then, I will have additional income from investments/private pension and will pay tax and cotisations as required.

I’m seeking pros and cons of whether I should I apply for an S1, so the UK becomes responsible for my health care costs, or whether I just remain within the French system. With the health issues I’ve had, as I paid into the UK system for decades it seems more ‘fair’ that the UK should take over the costs. But is there any difference, for example, in what I will pay in French cotisations, or is it the same whether I’m covered in France or under the S1? I know people here with S1s who are not paying any cotisations at all and they used professional advisors - are they wrong? I thought cotisations were payable on income even with an S1, but would appreciate any clarification. Many thanks.

If you have been working and paying cotisations in France for 5 years I do not think you will qualify for an S1 when you retire and start collecting your UK pension. I did not, and I believe the reason was because it is the last country in which I worked before retiring that was responsible for my healthcare in retirement so in my case that is France. But I suppose it is possible that this was an EU agreement and Brexit may have changed things?

Are you talking about cotisations you pay on earned income or are you talking about the CPAM healthcare cotisations on unearned income that non working people pay to URSSAF? If you continue to earn an income as a micro entrepreneur for example then as far as I know you continue paying the same URSSAF cotisations regardless. If you are talking about CPAM cotisations on unearned income then I thought that anybody who has an S1 is exempt from these.

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I don’t think that is quite right @sandcastle. I have an S1, am well past retirement date, and have never worked in France so my position is straighforward but it has always been made clear to me that cotisation sociale is still payable on all unearned income. I don’t pay it on earned income of course. Since I have very little unearned income it is not a big issue but I thought I’d better put the record straight on that one!

EDIT : What the state does with the cotisation is up to them but I’m fairly sure it supports a lot of things, not just CPAM?

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If you mean the social charges CSG and CRDS are used, I once read an explanation of how it is used, what percentage is earmarked for each of the very varied and various social purposes. I expect the information is somewhere to be found on the public service pages if you wanted to know. I seem to remember being intrigued by some of the uses although I have forgotten what they are now but I think the DOMTOMs get support, for one.
But, I do not think of social charges as cotisations. To me cotisations are specifically the payments that are collected by URSSAF specifically for healthcare, rather than the social charges that the tax office charges. The rules about social charges are confusing to me, but the rules on cotisations ie health care contributions less so, if I am correct, depending on your level and sources of income you are liable to cotisations if you are directly affiliated to PUMA, but if you have an S1 you are not classed as directly affiliated because your affiliation comes via the S1.

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That makes sense, @Sandcastle. The fact that they are both referred to as cotisations is rather confusing! You are quite right - the rules about the application of Cotisation Sociale via Impots are quite complicated for people with S1s and there is quite an ongoing dispute about the extent to which they are charged on the different forms of unearned income and, of course, although not directly affected by Brexit they effectively have been… sigh…

I’m with Sandcastle on this one. Making regular cotisations to a caisse is not the same as the social charges (CSG/CRDS + prélèvement sociale) that are levied annually on various bits of declared income.

If you have paid into the French system then France will be your competent state, and you will get your pension from them (including the Uk pension I believe). You will not be eligible for an S1.

You will still have to pay tax and social charges on declared income.

Once retired, if you then set up a new professional activity you will have to pay cotisations on that. Otherwise not. We have S1s, but make sure that our earned turnover in France is below €23,000 so we remain non-professional and pay no cotisations to a caisse. But we pay tax and the prélèvement sociale on it.

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You need to have paid in for a defined number of years before you’ll get any French pension but you can get a pension relatively early (aged 62) depending on your business registration.

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I’m just wondering if @linz is actually entitled to a pension from France if she’s only been here 5 years and (presumably) only paid a small/moderate amount into URSSAF ??

I admit this is an area about which I know nothing… and I’m intrigued to find the answer.

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Thank you so much for your reply. Re your second paragraph, I’m not really sure what I’m talking about. If I stop the ME business and retire completely, I’d like to know how much I would pay in cotisations on the income I receive from pensions and investments. But I admit I’m using the term cotisations loosely, to include any other social charges - everything other than income tax. So basically I’m trying to find out, what would I pay on my retirement income (in addition to income tax, which is easier to work out)? From what you say, this would be CPAM cotisations on unearned income.

Sorry if it’s a daft question, but is ‘unearned income’ effectively pension payments and withdrawals from investment funds? It seems an odd term to me because it was all earned at some point ! :slight_smile:

Thank you, that’s really helpful. I’d quite like to close the ME business down, but keep open the option to do a bit of work here and there. I thought I might still need a formal structure to do this - but if I keep it below 23k I can just declare this income on my annual tax return?

That’s a moot point. Generally speaking, pension payments classify as earned income but interest on investments doesnt. There is an ongoing argument as to whether private pensions are seen as pensions by the French authorities since such a thing doesn’t exist here but so far my pension receipts have been treated as earned income on my tax returns

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Funnily enough, I’ve just received a letter telling me I do have an entitlement to a French pension. If I take it now, it’s a modest lump sum; if I wait 2 more years, it almost doubles (but still a lump sum) and if I wait another 5 years, I’d be entitled to a modest monthly sum. I’ve been ME for less than 5 years, but was employed in France for 2 years a gazillion years ago when I was in my early twenties and somehow they still have a record of this!

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Oh right, this is getting more complicated than I thought - thank you!

Yes, it seems I do have a small pension entitlement, even though I’ve been registered as ME for less than 5 years - I just received a letter on this (see my reply to Tim17). I’ve also managed to accumulate a small entitlement though, due to having been employed in France for 2 years a very long time ago.

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Good heavens… that is certainly interesting.
Perhaps the French Pension folk are the ones to ask about your Health Cover.

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This states it’s a minimum of 10 years for a regular pension -

If you’ve got a Social Security number then it’s easy to track all your years of working even decades ago.

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Yes, might be worth a try, thank you.

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OH did a day’s work in a vineyard many years back. For a friend who liked to stick to rules so took everyone’ details. 10 years later he received a letter with a 30cemtime pension lump sum!

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OK, thanks. Yes, they’ve set out all my years of working in the recent letter - I was surprised to see they had all my income correct for the late 70s, including a book I translated, outside of my normal employment at the time. This was pre computerised records, though it’s obviously all been input since… but I had assumed that I had been given a new social security number this time around as I didn’t realise they had my old details on record. So maybe in fact it’s the same number they allocated all those years ago.