A French pension is known as a Plan d’Epargne Retraite Populaire (PERP). Private pensions are a relatively new concept in France. In 2003 the PERP was introduced as an individual savings contract with the objective of supplementing French public pensions. They have the following characteristics:
- The contract takes the form of an insurance policy
- It is a flexible regular premium savings plan that also allows single premium investments
- The policyholder is not allowed to access the pension until the national retirement age is reached
- On retirement, it is possible to take a tax-free lump sum in France of up to 20%
- Contributions into this scheme benefit from tax relief up to the level of 10% of annual salary
- Applicants may deduct unused ceilings retroactively over the previous 3 years
- Upon retirement, pensions are paid in the form of annuities and taxed as income.
PERPs and UK pension transfers to France
Prior to 2017, a number of French PERPs had been accepted onto the HMRC list of recognised overseas pension schemes (ROPS). As of December 2016, the UK government removed all French PERPs from its ROPS list.
In a wide-ranging cull of schemes across countries, HMRC decided that a French pension or PERP did not satisfy the necessary requirements to be considered as a QROPS. The rules for the treatment of pensions in France were deemed to be inconsistent with current UK legislation. In the UK, members are allowed access to their pension fund after the age of 55. In France, the statutory retirement age is set at 62 years. French residents benefit from a 20% lump sum on retirement, whereas in the UK the figure is 25%. Furthermore, early withdrawals from pensions before the retirement age are authorized in a number of exceptional circumstances:
- Death of the spouse
- The end of unemployment benefits
For a QROPS to be accepted by HMRC, they now need to mirror the structure of a UK pension scheme. There were too many inconsistencies between the pension laws of France and the UK; the result was the delisting of French schemes.
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