Hi Anne, you should indeed be entitled to the 7.5% tax rate (which comes closer to 6.75% after the special 10% allowance (capped) for overseas pensions). Assuming you don’t have an S1 (and presumably won’t have private medical cover either if you’ve a CV), there will indeed be @9% prélèvements sociaux on your lump sum. I assume you haven’t taken any previous amounts from the plan (as you will probably be denied the 7.5% treatment in most cases).
To reclaim the UK emergency tax (which will in all likelihood be applied) you need Form France Individual which I will try to attach below, + guidance. You need to have it stamped by your Impôts office as proof of French residence, and then you send it to HMRC. Then wait! There is a lot of guidance on this site if you search ‘Form France Individual’ on how to complete it, and steer it through the Impôts and HMRC as quickly as possible.
Dear George, thanks so much for your swift reply! I haven’t taken any of the pension previously so that should be ok. I’m not sure what an S1 form is however I have a carte vitale and therefore pay French national health insurance and I also have a complementary private health insurance through Crédit Mutuel.
Hi, you can get this form if another country (e.g. UK) becomes responsible for your social security, for example you start receiving a (UK) state pension or other ‘exportable’ benefit. Or you are a frontier worker. (e.g. work in the UK, reside in France. It’s unlikely if you have worked in France however worth checking out whether you may have a possibility now or in the future to obtain the S1 as it would handily eliminate the 9% prélèvements sociaux.
Ok, super thanks for that. I’m a transfrontalier Suisse so I’ll enquire, I’m wondering if that was the formula I filled in to do 39.99% working from home in France. I’ll ask my colleagues. Thanks so much for your replies. I have a chartered accountant and financial lawyer (both with the same company) who are willing to sign off on this, however I’ve just been told that my pension holder wants someone who is registered with the French equivalent of the FCA (AMA?) and they are not. It’s so frustrating as they are putting roadblocks at every turn. I understand if a British advisor needs to be with the FCA but a French one??! I’m literally a millimeter away from being able to do this.
I defer to those with actual personal financial planning expertise, but my understanding is that you only needed sign off for certain specific transactions involving Defined Contribution pensions, eg if there is guarantee of income involved. I assume you’re not talking about a Defined Benefit pension?
I could well be wrong but have you challenged the pension provider to justify why you need sign off at all (as opposed to best practices etc?) if this is a DC pension? I’ve taken various DC lump sums and made clear to the providers that I accept full responsibility for my actions and I do not need advice. Accepted by 3 providers so far…
My pension provider - Aegon - and my friend’s provider - Royal London - both asked whether we had taken advice and both were satisfied when we simply said “yes”
Unfortunately my pension provider wants the full name, address and me to sign and swear that the advisor is registered with the French equivalent of the FCA. I will now try and find a competent conseiller en gestion de patrimoine. Thank you to everyone who replied. I really appreciate the support!
If that provider did not provide any prior notification that they were now applying this extra requirement I am wondering if it would be worth challenging them on whst legal basis are they relying on to sdd this new extra requirement.
If there’s no statutory (ie law of the land) requirement that they can state clearly which law and paragraph within it, requires them to do this then it would only be a contractual change. And if that’s the case should have been notified to you at a minimum and you should have been given tbe option to reject or told what would = your acceptance (even tacit by not rejecting within, say, 4 weeks of first being made aware). As contractual changes have to be agreed on both sides to take effect.
If they can point to a statute although they may stretch things and try one or two on, as it’s a UK statute then as you’re a longstanding French resident I’d tell them it’s impossible for you to fulfil that requirement in the absence of UK firms in the market who sre authorised to advise French residents and vice versa. Would a complaint to the FOS work?
It never ceases to amaze me either, how keen finanxial providers are to keep hanging on to people’s money and keep it in their books and earning on it.
IANAL but there are at least 2 posters here who might be able to suggest a way of pointing out that if it’s physically impossible for you to obtain “advice” as there are no advisers available to you as a French resident in a position to provide “advice” acceotable to the UK, tbis is not your fault. As both French advisers (because the funds are in UK) and UK advisers (because no authorisation to advise French residents) will reject you as a client they are not authorised to advise. And as the requirement is physically impossible for you ro provide due to qualifyibg providers simply not being available in the market it should not be made on you.
Good morning everyone. This is my 1st post so I hope it is in the right place. My name is Rob & I am 62 so have a 2030 UK Pension date now. I wont be getting the full UK Pension but I am amazed to be getting anything so am quite happy. I have 3 Private pension pots & assumed that I could buy an Annuity but post Brexit that is not possible(I just found this out). The pots I have are Phoenix for £36K Prosperity Pension Plan with Profit, Aviva £27K Transfer Plan & finally Aegon £22K which is a Trustees Proposed S32 Buyout Plan. The last 2 have outperformed the 1st one & I wanted to add to them(or at least consolidate the others into 1) but was told because of their types it is not possible. I have obtained some advice from French banks but none mentioned the Prelevement Forfeiture at 6.75% which appeals to me. I have read on here that if I do this HMRC will give me an emergency tax code & I can claim it back via a form FFI. I do not have a form S1 but I do have a Carte Vitale & Sejours as well as a mutual for the 30%. Have I understood correctly that I just pay the 6.75% & there are no social charges on top? Does the money have to stay in France afterwards if I do this(or is France just happy to get the tax)? Would you recommend consolidating the 3 pots & doing this once or do I have to do it in 3 stages? I’m happy to pay the emergency tax & claim it back. I’m getting a bit nervous at the height of the FTSE100 so want to potentially make a decision soon. Any help would be gratefully received. Many thanks in anticipation. Best regards Rob.
Hi Rob
You might want to take some professional financial advice here from experts - I’m a UK Accountant not a French qualified adviser - there are many like Blevins Franks you may want to check with so these are “watch outs”:
first as you do not have an S1 you will pay tax on 90% of the value, but more importantly social charges (social charge of ~9%)
second, consolidating may make things easier for you but could cost. Depends what you do with the cash when you execute. If you are moving to (say) French Assurance Vie you will likely have stock market risk anyway
third, you need to be careful how you execute. The approach you mention are for one time liquidations of the fund which may be best- don’t do it in stages in each fund
fourth, and linking back to the expert part - you need to check if there are any guarantees or promises with each fund that could be quite valuable to you (like guaranteed return rate or income)- do not charge into giving these up without checking it
finally - having been through this for myself and a loved one recently you are going to find the process quite bureaucratic as the UK providers all have different rules on getting your money out. Some easier than others - but it can take weeks or even months to liquidate or transfer…
Hope this helps as the social charge point and “what am I losing points” can be important
Hi Rob, welcome. I wouldn’t recommend any consolidation - in fact I’m trying to split pension pots. Reasons are
if an actual small pot (<10K) much less emergency tax, if larger still less emergency tax - it’s the mega pots 100K + which get hit. You can do the arithmetic, once your pot hits 1/12 of the higher rate tax 50K, any more is at higher rate and shortly after onwards to 45%. Sure, you get the tax back, and some say HMRC even prioritise refunds for the large pots - well, some might not believe that one…
More flexibility on when to cash out (you have to take each pot in one go, but not all at the same time). Helps in managing the French tax because lump sums are included in your total france income, so can start pushing you into extra tax brackets in France.
as an add on to flexibility, if you don’t have to take everything at once, why not delay cashing in some pots if you can until you get your S1 which removes the social charges. admittedly 2030 for you? You could explore the private health care route to obtain SS exemption but you’re already in the system and how far might one want to go for 9% - guess it depends on the size of the pensions…
You mentioned getting out of the market at a high, but you can keep some pension pot’s invested in pretty safe deposit type funds QMMF’s and remember - once cashed out, the pensions are going to have 20 or 30% tax on the capital return outside of the pension wrapper, versus the 6.75% whilst kept in the wrapper. Probably less tax if in a French AV, but then they may be more expensive fee wise than your existing pots and get less return (trading 212 is giving 3.85% on GBP cash deposits for sterling, and 2.2 for euro), but hey, I’m not going to know about that as I am not a financial adviser! As you know! But these 4 points are something I would want to be discussing with a financial advisor if I chose to have one.
Hope that helps, and I completely second @PaulRobson ‘s other points particularly the checking of guarantees (if you are so lucky to have some).
Yes also don’t forget the little known “small pots” taxfree concession in the UK.
In your lifetime you can take up to 3 pots each of max £10k, completely tax free (so far as the UK is concerned). No more than 3 pots can use this concession, and each must have no more than £10k in it. So the optimum is that the max should be in each pot if you’ve got it.
Some providers eg Hargreaves, know how to process this and if you declare upfront you want to take the pot using the small pots concession, their paperwork will sort it. You still have the right to this regardless if convenient for your provider the important thing is to keep it clearly declared that you are taking the pot on this basis. I’d cc: HMRC in upfront and probably even call them ahead if the provider sounds like they will mess you around on this.
Nothing stops you splitting a larger pot into smaller pots to take advantage of this - though if it wasn’t Hargreaves as I know they are competent to keep the pots separate so you can choose to have the concession on each, I’d consider arranging for pots with different providers to be taken in case paperwork of any other provider could fail to keep them separate.
Telling you about this used to be one way UK IFA ‘s would earn their fees as little known.
Thanks again everyone for your detailed replies. I really should contact one of the companies suggested by you. For the time being I’ll probably leave everything as it is, I don’t particularly need the money for anything right now but I was disappointed I couldn’t buy an annuity. Thanks again. Best regards Rob.
Obviously all our needs are different but if there is any chance at all that you’d need to get your hands on these funds on a predictable timescale I would recommend drawing them down & putting them somewhere with simpler access.
My own experience of crystallising two small pension funds held by two different UK providers was chalk & cheese. Neither were quick or predictable in the time taken, but one was unnecessarily obstructive.
On top of the above you also have the time taken by HMRC to repay the emergency tax that they will take. As myself & others have reported on other threads this can take many months, if not years.
When you say one provider was unnecessarily obstructive, Badger, wondering what form did this take?
Agree with you that if funds could be wanted for use in, say, 2 years, best to start working out a strategy that will take the likely extreme delays that could occur, into account.
Also for the OP, I can’t recall if anyone mentioned it above but if she waited 2 years till official UK pension age, is there any chance she could be eligible for an S1 from the UK? Her last employer/work would have had to be the UK though I believe. The S1 would exempt the pension lump sum from some social charges.
I did wonder that myself (about applying for an S1) but I thought I had read in another article(possibly on here) that you were exempt if you had your own private health pension to cover the 30% you are not covered by the Carte Vitale(isn’t the insurance effectively the same as having an S1?). Many thanks as always.
They were just generally shambolic. They sent emails to tell me they were going to send an email with a password protected attachment, with the password being in another (but unprotected) attachment sent with the first email. They sent incorrect passwords, or the password from a previous ‘secure’ email. Luckily they were so rubbish about it that I ended up being able to guess the passwords, having seen the first one.
They would then insist on sending the same comms via snail mail, which would arrive weeks after they were dated (on the letter itself, there were never any comprehensible dated postmarks). By the time these arrived the whole process had moved on, & they were deaf to my pleas to stop sending me unnecessary bits of paper.
Dealing by 'phone was a tedious nightmare & I had to start the whole process a second time despite a call during which I was assured that everything was in hand! One call handler did ask if I wanted to complain so I said yes. Without me doing anything further this generated a ‘goodwill’ payout of a few hundred £, which was helpful but just went to prove that they waste a lot of money in drawing out the process, incurring unnecessary staff time & postage.
For the record I’ve said it elsewhere on this forum that the culprits/incompetents/charlatans involved in this mess were ReAssure, to whom my original policy with Barclays Life had been transferred, via a couple of other takeovers in the 20+ years that they held the pension money.