Date: 11th January 2017
Following a decision from the UK government in December 2016, it will more difficult for French expatriates to repatriate their savings funds from the UK when they retire in France.
The decision is the result of a reform passed in the UK in 2015 which provides that pension savings cannot be withdrawn before 55 years old without paying a charge. French law on the other hand allows for the withdrawal of those funds without paying charges under certain circumstances (passing away of a relative, end of unemployment allocation…). Because of these differences between the UK and French legislations, the French savings products are now considered incompatible with the UK legislation. The UK tax authorities have indeed updated the list of the foreign savings funds recognized by the UK tax authorities. The owners of those savings funds included in the list are allowed to repatriate the investments made in the UK without being charged.
Since all the French (and Italian) savings funds have been removed from the list, French expatriates are now faced with a choice: either repatriate their funds to France by paying a tax or wait to reach the minimum retirement age in the UK (55 years old), but then they would be exposed to currencies’ movements or tax complications.
This decision from the UK government and the consequences for the French expatriates underline the pressing need for a Pan-European Personal Pension Product ( PEPP). Whereas financial services and capital benefit from free circulation, the cross-border distribution of Pension funds between the Member States is still subject to obstacles within the Single Market because of the lack of harmonization. A Pan European Personal Pension Product would help to remove those obstacles.