French QROPS - UK pension funds transfer to a PERP
The introduction of the QROPS (Qualifying Recognised Overseas Pension Schemes) in the Pension Simplification reform (2006) by HMRC has made it possible to transfer UK pension funds outside the United Kingdom.
A French PERP meets the requirements of the QROPS and therefore allows a UK pension fund to be transferred into a PERP (Plan d'Epargne Retraite Populaire).
Who is eligible for a QROPS transfer?
In order to be eligible for a QROPS, you must meet the following conditions :
- You are currently living, or planning to live overseas
- You are not returning to UK for at least 5 consecutive fiscal years
- You have not purchased an annuity yet
- Your scheme has not already been in drawdown
Which QROPS should you choose?
In France, the only QROPS recognised by HMRC is the PERP.
Its numerous advantages, including lower costs, made it a very popular QROPS (even compared to QROPS in Malta, the Island of Man, or the British Virgin Islands).
Benefits of a transfer to a PERP
Neutralising the risk of the currency exchange rate fluctuation.
If you plan to live in France for your retirement, the PERP is a great solution to avoid any exchange rate fluctuation which could affect your savings.
Indeed, if Sterling was to decrease, it would not affect your pension since it will then be served and valued in Euros.
Large range of financial and real estate products
A PERP allows you to invest in almost all types of financial products and the possibility to invest on french real estate market (REIT).
There is flexibility to choose many contracts with different ways the funds can be managed, giving you flexibility to choose the opportunity that best suits your investment goals.
By transferring your UK pension funds to the French QROPS, you will avoid tax in UK (including inheritance tax) and be taxed under the French jurisdiction.
If you are French resident, each new contract payment offers you tax benefits for the current fiscal year.
Lump Sum, and salary schemes options
During the savings stage you can get back 100% of your savings in some exception cases.
- Case of invalidity
- Death of your husband/spouse
- Case of compulsory liquidation
- Case of over-indebtedness
- End of your unemployment benefit
In the UK, the only exception case which allows you to get 100% of your savings is the case of serious illness.
When you arrive at age of retirement, you have the choice between several options of payout.
- Life annuity
- Fixed guaranteed annuities
- 20% as lump sum, the rest as life annuity
- 100% lump sum for the first purchase of a principal residence (under conditions)
Elements to consider before transferring your UK pension
Except the case of first purchase of a principal residence, you have no possibility to get more than 20% of the savings at the age of retirement as a lump sum payment under a PERP.
With a UK pension fund, 25% of the savings can be recover and up to 30% with QROPS from other territories.
Age of retirement
In France, the legal age of retirement is 62 years old.
In other words, you will have to wait for your 62d birthday to receive your annuities. With a UK pension you could have had to wait only until 55 years of age.