Hi everyone, at the end of next year I qualify for my UK occupational pension, which comprises a closed Defined benefit scheme and it’s subsequent replacement Defined contribution scheme. Getting professional and trusted advice is proving problematic as the big players like Blevins Franks advise, because the DC pot is small ( not to me!) they say their fees would make it unattractive financially for me to get them to deal with it. Combine this with the wide berth all IFA’s seem to take regarding advice on DB schemes following the Liz Truss mini budget, and I am wondering if the group has experience of trusted advisors competent in UK and French taxation law that don’t charge exorbitant set up and management fees that will leave me with little left in my pot!
Post Brexit experience only please as a lot has changed since then!
OH was in a similar position post Brexit and found none! UK ones would not advise non-residents, and French one would not provide advice on UK funds.
Unless they are licenced to do so, they cant.
What did he do with the DC one , if he had one ? I see I have 2 choices, leave the DB one and cash the small DC and pay tax at the going rate ( not eligible as prefait forfaiture as it is only part of an overall pension pot) or cash in both the DB and DC and pay 7.5% tax and social charges under the prefait forfaiture . But I would love to know what alternatives there might be. My worry with paying the tax and social charges on the whole pot, is loosing the inflationary increases of the db scheme and if I live another 20 years, and make the cash in last that long, I would have been better off keeping the DB scheme going
Exactly.
Can you even cash in the DB scheme?
You can, but having re-read the govt’s pension wise website moneyhelper, it is restricted to very small pension pots, so that isn’t an option for me. Now thinking I might be able to defer the DC , and take the DB, effectively just kicking the DC element further down the road
I remember my manager doing just that for a single chap to get a better annuity than the workplace pension provided ( before the life office stopped us doing it) in his case he trippled his amount but that was very rare and fund transfer timing had a lot to do with it.
Is the DB index linked?
Yes it is. It is not large but a welcome addition to my state pension the following year. The problem seems to be the Defined contribution scheme as this cannot be used to buy a SIPP or an annuity by a non uk resident. If I cash it in as a one off lump sum, it is considerably more than our current yearly income , so I’m wondering if the quotient taxation that can be applied to one off lump sums , by spreading the liability over 4 years, might minimise the tax I pay on it, otherwise a straight single year tax on it would be at 40%!
I am already NT classified by HMRC, so they shouldn’t deduct any tax from it.
No, you can’t cash in the DB scheme without an adviser. And considerably fewer advisers than before, are now willing to touch DB work. It wasn’t just Liz Truss it was made a mess long before her.
Well, not if it’s more than 30,000 pounds. There is a concession that lets you take the money without taking so-called “advice” if it’s only up to that much and not more - it’s called a “trivial commutation”. However a receiving fund may well refuse to accept it, if moving within the UK, even though it strictly speaking does not have to have advice.
You can still technically contribute into or transfer into to a fund you opened whilst you were still a UK resident even if you’re not now a UK resident, even though again, some providers might not be happy if they were aware you were no longer a UK resident. But you can’t get the “advice” needed for a larger sum, if you’re not a UK resident.
Rinse and repeat - you’ll never get out of that loop. Personally in the case of some schemes, you should need to have “advice” to stay in them, and not just to leave them, there are a few bad DB’s around.
When the advice requirement was brought in, for good reasons given the poor quality of advice, the people that made the rules seemed to have forgotten that some people who built up funds in the UK might later decide to retire abroad. And now financial advisers must refuse anyone who’s not a UK resident as their licence/permissions/insurance won’t cover them. Daft really. You’d think they’d have a cutout exempting foreign residents from the requirement.
PS I wouldn’t assume such rules won’t come in for DC schemes at some point, either… so I’d want a solution and not just rely on being able to still do it later.
PPS Moneyhelper does have a free advice service, you could make a free telephone appointment with them. They might mention the thinking is that unless there is some other very negative factor in you staying in the scheme you’d be unlikely to be better off moving out of a DB if it’s index linked :-).
I wouldn’t have considered coming out of the DB scheme if living in the UK and the DC pot wouldn’t have been a problem as it would have been used up entirely if I took the 25% tax free lump sum available to UK residents. Unfortunately none of that applies to me now as a French tax resident. I have looked at the money helper site, and will talk to them but due to the risk of giving bad advice, I know they will, from the outset , refuse to help for fear of saying the wrong thing. My pension administrators have already said that whilst, if over £30,000 , it is a stipulation that financial advice has to be taken before moving the DC pot, they cannot insist if no valid advice is available. At the moment, I’m thinking of taking the DC pot and spreading the tax liability over 4 years to minimise the tax. This would mean I would have to pay 11% tax and social charges on top, which is preferable to paying 30 or even 40% tax if it was taxed as one year’s income. I think, with proof of income over the previous 3 years showing this lump sum would be an exceptional one off, it can be taxed under the quotient system in France.
It was Liz Truss, who’s disastrous mini budget caused gilt prices to collapse and consequently the value of DC pensions to loose up to a third of their value. As the DC pensions reach maturity, they were generally converted out of more risky investments and into guilts as these were considered a low risk option. Anyone with a DC pension pot maturing towards the end of last year would have been severely affected. I’m hoping, that now there has been a move away from guilts, that my DC pot , when cashed in early 2025, might have recovered some of it’s value in the 2 years since that budget.
I don’t think Liz Truss will ever move away from guilt… 
I have no sensible advice to offer but wish you good luck in sorting it out! Getting good financial info that covers both France and UK seems to be extraordinarily difficult - as you say the big boys like Blevins Franks who presumably know the answers won’t talk to you unless you have a big pot of cash for them to play with.
I have a (still unanswered) question about receiving royalty income from Canada post-retirement and so far all the law firms who supposedly deal with the affairs of people moving from UK to France either didn’t reply to my enquiry or said “we don’t know, can’t help you…”
This must be very frustrating to find yourself in a sort of advisory no-mans-land, with nobody seemingly able or wanting to advise, or only at a cost in fees that is disproportionate…
I’m in a similar situation. I looked at taking a transfer value from a DB scheme just prior to moving to France, as ridiculously high values were then on offer, but kept it in the scheme on the basis that if somebody will guarantee me and my wife (if I go first) a pension for life, bear all the investment risk, costs of management, index linking etc, then leave DB things as they are. Obviously for the regulatory reasons others have suggested above, it would be difficult if not impossible to do the same as a non UK resident. The DB does have a partial lump sum option, but not unfortunately a100% lump sum option.
I also have a DC scheme which I am drawing down over 5 years, to use up nil/low rate bands of French tax (and no prélèvements sociaux either as I’m not in Assurance Maladie). I took a 25% lump sum UK tax free a few years back, so can’t now use the 7.5% route. If I didn’t have that I would have definitely used the quotient system for a lump sum as a French resident. A quotient estimate calculation was not too difficult to work out manually, using the Impôts Simulateur on their website.
Best of luck going forwards…
How are you drawing down the DC pot? I thought you had to buy an annuity with it or transfer to a SIPP, none of such options are available to me as not a UK resident
In the he found that Canada Life would offer him an annuity as they were passported to deal with Frence residents at that time. Don’t know if they still are.
Truss is a sociopath. If she had any understanding of what damage she did in both the mortgage and pension markets, she wouldn’t still be showing her face in politics and offering up her worthless opinion as no one wants to hear what she says. She was useless in every government role she occupied. I still cringe when in conversation with Sergei Lavrov, she refered to the Baltic states as The Balkans!
I too am a non UK resident. Standard Life permit me to draw down what I want, when I want, and leave the balance invested. I don’t know if this flexibility is scheme specific or provider specific. I never looked into the annuity option as it didn’t appeal at all, but their scheme website says I could also buy an annuity if I wanted.