The new UK pension rules that came into effect in April 2015 give you more choice, but specialist advice is so much more important for those who live in France and have ‘left’ pensions behind in the UK when they moved here. We take a look at what the rules mean when it comes to pensions for British expats in France.
Do the new rules apply to me?
The new rules apply to those aged 55 and over with ‘defined contribution’ schemes. For example, individual or group personal or stakeholder pensions, Self-Invested Personal Pensions (SIPPs), some Additional Voluntary Contribution (AVC) schemes, Executive Pension Plans (EPPs) and Small Self-Administered schemes (SSASs).
There are an increasing number of companies who are not offering the new freedoms of pension choice and therefore your only option may be to transfer to a company that does but beware that this could lead to loss of benefits!
Importantly, the rules do not apply to defined benefit (final salary) schemes, public sector pensions, state pensions or annuities, though there may be greater flexibility for annuities in future.
What are my options now?
Take the whole fund out as cash in one go. Beware of the tax implications in both France and the UK.
Take regular income through income drawdown. You draw directly from the pension fund, which remains invested. Or you can take ad hoc amounts when you need it.
It should be possible to take the 25% tax-free lump sum and take taxable income through income drawdown at a later date. Remember, the lump sum is only tax free in the UK and there is a tax charge in France. So for those planning to move to France, it is well worth looking at the timing of taking your 25% to reduce the tax payable and compare and contrast options for potentially lower tax in France.
Take a secure regular income through buying an annuity.
Be aware that taking all of the cash could leave you short of funds later on just when you need them.
By Jennie Poate
The information on this page is intended only as an introduction only and is not designed to offer solutions or advice. Beacon Global Wealth Management can accept no responsibility whatsoever for losses incurred by acting on the information on this page.
