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DISCLAIMER
The following information is intended as a guide only, and no guarantees are made as to its current authenticity. It is, of course, as accurate as possible, in the view of the writer. It is important to note, however, that changes are occurring in the pension system both in the UK and in France, so before acting on any advice or information you receive from this article or elsewhere, it is essential to check out your entitlement with the appropriate bodies. This article hopes to provide useful guidelines, and to supply links to or contact details for government authorities rather than to provide definitive rules.
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Pensions in France or the UK - a controversial topic
The topic of pensions whether it be in France or the UK is both complex and controversial. The state of pensions in the UK has been raising heated debate for years now, and with proposed changes in the pipeline, this situation looks set to continue for some time to come. However, what is the situation that you will find yourself in if you decide to retire in France? (Retirement in France, Retirement in Perpignan.)
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Retirement in France
France has a great appeal for many who wish to make the most of their retirement years, with its warm climate, calm atmosphere and easy, healthy way of life. What could be better, after decades of hectic running around earning a living in the UK, than to settle for a life in the sunshine, a fresh croissant for breakfast and a glass of locally made wine in your hand as the sun goes down each evening? (Life in France.)
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Can you have a UK pension paid to you in France?
This idyllic lifestyle, however, will cost a certain amount of money to sustain, and no one, however frugally and quietly they live, can exist on fresh air alone. Many who retire to France, or who come to France before retirement age, will have amassed some degree of entitlement to a UK pension. The first question they ask then, is whether or not it is possible to have a UK pension paid to them in France, and how this might operate.
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Yes, you can have a UK pension paid to you in France
The answer to the first question, is yes. It is perfectly possible (and legal) to have a UK pension paid to you in France if you have an entitlement from the UK and have since become a full time resident in France. It is important in this context to differentiate between state, private or occupational, and government pensions. (Government pensions are largely those paid out on behalf of the civil service and armed forces.) All types are easily transferable to France, but there are some strange differences in the taxation of different types of pension which become important later in this article.
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Entitlement to a UK state pension
To be clear about what your individual pension entitlement will be on retirement (as long as you are not within four months of retirement age) you should request a forecast from the Inland Revenue (www.hmrc.gov.uk). There has been a recent (May 2006) government white paper that proposes further changes to the system by which pension entitlements are determined, and details of this are available on www.dwp.gov.uk/pensionsreform. It is strongly advised that you acquaint yourself with these proposed changes and keep abreast of developments as this can determine whether or not you need to pay voluntary class 2 or class 3 contributions.
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Boosting your UK pension
If you are still a number of years short of the official state retirement age, it may prove beneficial to make voluntary national insurance contributions to boost your pension when it does become payable. This is a complex and subjective topic, and should be studied with the help of a pensions adviser.
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How to claim a UK state pension in France
This procedure is governed by whether or not you have at any stage made any state pension contributions in France. If you have been employed in France since arriving here (Jobs in France), or have set up your own business (Owning Gîtes and Chambres D'Hotes (B&Bs) in France), you will have made compulsory contributions via URSSAF. These contributions will have been generating pension and other social security rights. Your initial point of reference to claim your state pension should then be the French social security office to ensure that you receive the full benefit available. If you last worked and were insured in the UK, you should receive an application form from the UK pension service around four months before you reach retirement age. For details of how to claim through a French (or other European) social security institution you can visit the Europa website, on http://ec.europa.eu/youreurope/nav/en/citizens/living/social-security/index.html.
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How is the pension entitlement decided between the UK and France?
The amount to which you are entitled is worked out by each country in which you have worked and paid contributions, and set against the amount to which you would have been entitled had you been in that country full time. The countries involved will decide how much your contributions would entitle you to within their own system, and will send details to any other involved country. You then receive an appropriate proportion of your entitlement from each country.
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How can the UK state or government pension be paid if you live in France?
A UK state or government pension can be paid directly into a French bank account, although this may not always be the case with an occupational or private pension (see below). It is also only payable in sterling, so if being paid into a French bank account you will have to pay the conversion charges. It will also have to be paid according to individual regulations and agreements. If you still have a UK bank account and prefer that your pension be paid into this, then this is also possible.
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How can UK private or occupational pensions be paid if you live in France?
Private or occupational pensions are often drawn at a much earlier age than the state pension, early retirement unfortunately not being an option under the state system! Most pension providers are entirely flexible about paying your pension to a French bank account, although they are not usually willing to pay the transfer or conversion expenses. If you maintain a UK bank account it may be preferable to build up a more substantial sum and then transfer and exchange currency at convenient intervals.
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Taxation of UK pensions in France
This is where things start to get a bit tricky. Government pensions are not taxable in France but are taxed at source in the UK. (As mentioned previously, government pensions are largely those paid out on behalf of the civil service and armed forces.) Private or occupational pensions are taxable in France and can be paid gross from the UK. The UK state pension is treated not as a government pension, but as a private pension, and is taxed in France. All pension income, whether government, private, occupational or state, must be declared on your French income tax return. If this sounds a little contradictory to you, then you are not alone. Here are some points that might help:
a) Private pensions, or occupational pensions, are paid by the pension funds of individual companies. Bizarrely, UK state pensions are treated this way, even though there is no state pension fund.
b) Even though you pay tax at source on government pensions and also declare them on the French tax return, you do not pay tax in France on those pensions. These payments are however used to push any other income you may have into higher income tax brackets.
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And what about health care for pensioners in France?
Prior to pension age, you can use form E106 (available from the DSS) to provide temporary (two years worth) health cover while you are living or staying in France. If you have been working in France and paying into the benefits system in place there, you will receive a Carte Vitale which entitles you to a percentage of your health care costs (the same as French nationals receive). The shortfall can be made up by paying into a Mutuelle, or private insurance policy. If you receive only a UK state pension, (or if you will later become eligible to receive an EU pension) you should request a form E121GB, and this will help you to become registered with health care in France. Even after state retirement age you should still consider purchasing a Mutuelle "top-up" policy. Your basic health care provisions will be free, but this will not cover the full cost of treatment. (Health Care in France: a French Hospital Experience.)
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Further information on UK pensions
The subject of pensions is complex, and subject to change. For up to date information, ask for leaflet SA29, "A Guide to National Insurance Contributions Benefits and Medical Services in the European Economic Area". It is available from the Department for Work and Pensions (www.dwp.gov.uk).
Additional articles which may be of interest:
Tax in France
Banking in France
Living in France
Letting property in France
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About the author
Joanna Simm moved to the Languedoc area of south-west France in October 2004 having found her property through French Property Links.
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