How might Brexit affect pensions of Britons in France?
One benefit of the EU which is protected in the exit deal for existing expats (we are assuming this goes ahead as planned) is the EU pension aggregation system.
This helps to ensure that people are not penalised for having used their EU free movement rights to live and work in different EU countries.
It means essentially that pension providers in the different states take into account the duration of your ‘EU career’ as a whole and then award you pro rata the pension resulting for the length of time that you worked in their country. However Britons who move to the EU after Brexit and have periods working in the UK and in EU countries may no longer benefit – this is one of many future relationship’ matters which need to be resolved.
Taxation of British pensions will mostly not change after Brexit as the UK-France double tax treaty is unaffected. One point also yet to be agreed is whether pensioners coming after the transition period might lose the benefit of exemption from French social charges on UK pension income if they no longer benefit from healthcare paid for by the UK.
Another concern is that people with British private pensions may find that their UK providers can no longer legally pay their pensions into a French bank account after Brexit. This is because the pension company needs to be regulated in the country where the payment is made – but currently this is solved by EU-wide rules.
The UK government and Bank of England have been talking to financial services providers in the UK to find solutions.
The UK government says it hopes the EU will reciprocate and believes “there is a shared interest in ensuring we avoid outcomes that impose unnecessary costs and disruption on individuals and businesses”.
An Association of British Insurers spokeswoman said the EU have not yet reciprocated to give reassurances over this.
“Some firms will be taking their own steps to address this, such as establishing authorised entities in Europe but this will not be a practical solution for all,” she said.
Franco-British honorary avocat Gerard Barron said in that scenario it would be possible for Britons to have pensions paid into UK bank accounts (should they have one) and transferred to France.
Should no solution be found, Britons in France expecting to receive private pension income would be well-advised to ensure they have a British bank account. While the UK remains in the EU Britons in France have an EU law right to open one without the need for a UK address.
Some Britons with significant pension pots opt to transfer them into a ‘Qrops’ (now also known as ‘Rops’) when they move to France. These are often based in highly-regulated financial centres in countries like Ireland, Malta and Luxembourg.
At present transferring UK pensions to a Qrops based in the EU or EEA is in most situations tax-free but a 25% UK overseas transfer charge applies on transfers to Qrops outside the EU or EEA (unless you are resident in the same jurisdiction).
It is possible this could be extended to transfers to EEA countries post-Brexit, so there could be a limited time to transfer without tax penalties.
This article is abridged from the Pensions section of our helpguide Brexit and Britons in France. It is available, priced €12.50, at selected French newsagents, via connexionfrance.com or by calling 06 40 55 71 63.
Reader's query answered by Hugh MacDonald
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