Qualifying Recognised Overseas Pension Schemes (QROPS) are increasingly becoming the pension planning vehicle of choice for British expats living in France.
It’s that time of the year again, la rentrée. The summer vacation is over; we are back to work and returning to some normality. Along with la rentrée comes a desire to address matters that we have been putting off for some time. Among these, of course, is the ‘big issue’ of modern times….what to do about our RETIREMENT. For those retired or retiring across the Pond, QROPS in France offer a solution to meet your pension planning needs.
There are an estimated 300,000 British expatriates currently residing in France. Many others make their way to these shores each year; retirement in France thus has its attractions!
Make the most of your UK pension by using a QROPS when retiring to France
Recent changes to UK pension legislation mean that expatriates in France may avoid the various restrictions imposed by the UK Government on how pension benefits can be taken on retirement by transferring their pensions to Qualifying Recognised Overseas Pension Schemes. Pensions that can be transferred into a QROPS in France include personal and occupational pension schemes.
Who is eligible for a QROPS pension transfer?
To transfer your pension out of the UK, you must have already left the country for tax purposes or intend to leave soon. Once tax resident in France, you can transfer your pension fund out of the UK into an overseas pension scheme in the same way that you would transfer between pension providers within the UK. Those eligible for an overseas pension transfer therefore include:
- A UK national moving to France
- Any national who has built up UK pension benefits and is now resident or intending to become resident in France
The schemes offer a certain degree of flexibility in terms of how and when you can take benefits. These include:
- You can take up to 30% of your pension fund tax-free on retirement. This is higher than the current UK limit.
- A lifetime income can be provided by way of income drawdown, a fixed annuity, or a combination of both.
- In most cases, you are also able to draw down a higher annual pension income than you would if you were to retire in the UK.
QROPS help solve the problem of currency risk by allowing you to invest your pension and take income and benefits in a currency of your choice.
- There is a greater choice of investment options, allowing you to access funds managed by any of the world’s leading investment groups.
- Assets held in the scheme fall outside of your estate for Inheritance Tax purposes if you die while living overseas. This means your wealth is protected for future generations, which is in stark contrast to the potential 55% tax charge on death, were you to leave your pensions in the UK.
After the August shutdown, la rentrée arrives with a bang. September is a time for change; take advantage of this opportunity and revisit your retirement planning.