Private pension & IFA

[listless eric]

I paid into a small private pension fund in the uk when self employed. Having passed the significant age of 55 recently I rang the uk number just to see how I might access it (drawdown) should I decide I wanted to.

I was told that as I was now in the french tax system that I would have to find an IFA in France to contact the UK society on my behalf to request any drawdown or other option.

Is that really how it works ?

having browsed other posts here on the subject those in similar positions seem to be using uk advisors etc with no barriers.

[cooperlola]

Well, I don't know much about IFAs here in France but this is what I do with my UK occupational pension:

My pension provider has a TAPS system whereby a bank which they have appointed (Citibank at the moment) converts the sterling into Euros and it is paid directly into my bank each month over here.  Since the UK tax office knows I live here (as I told them when I moved, as one should), I declare it on my annual return here in France and it's taxed here.  Bingo.  No IFAs involved.  If your pension provider cannot do the exchange then there are companies who do this but the do vary in reliability/cost/reputation etc but it's a subject much discussed on here if you do a search.

I'm sure others will have different advice but that works very easily for me.  You can leave some or all of your money in a UK bank in sterling if you wish, but it must all be declared in France if this is where you now live.

[Benjamin]

Welcome to the forum eric.

It's difficult to see why a pension company would advise that you need a French IFA.

Go and see an IFA in the Uk and see what they say. You may need an IFA with an understanding of the French taxation system as part of their compliance regime. Come back if this doesn't work and I'll give you the name of a UK IFA who understands both systems (not in open forum you understand).

[listless eric]

Thank you for both your replies. They tend to reinforce my feeling I was being given erroneous information regarding having to use a french based IFA.  I'll listen to what others have to say but I now feel more confident about taking my pension company to task on this.

[Mikep]

I imagine you were given that advice because the French system treats personal pensions differently - for example, a "tax-free" lump sum is now taxable in France, which will affect your decision making. Your UK IFA wouldn't normally know about such differences.

However, it's not too complicated - if you are prepared to do a bit of reading, there's no reason why you shouldn't manage the fund yourself and use a provider on an "execution only" basis. I use Alliance Trust to hold my funds (they work on a small fixed-fee, rather than a percentage), and make all the decisions myself on where to invest (international investment trusts) and what income to take. I've been doing it for fifteen years and the fund is still worth what I started with, after taking a reasonable income and despite the efforts of bankers and politicians.

There is a suggestion that the French are starting to think about counting personal pension funds towards wealth tax, if you're anywhere near the threshold.

[listless eric]

Thanks that's useful information as I was  hoping I could work out my own best options without paying too much for advice and it's a comparatively small fund I'm dealing with.

As mentioned ,it's early days yet and I've only just made contact with the UK society my pension fund is with. Is it everyone's experience that it is indeed the case one cannot instruct a UK society directly and that one has to use an IFA of some sort to act on one's behalf ,as I was told ?

Just for background information the chap on the phone had to keep checking what information he was allowed to give me as I was a "french tax resident " ,even though I had the most basic general questions.

[Mikep]

Insurance companies aren't really geared up for income drawdown - they just want you to give them your fund, and they'll give you a meagre annuity in return - then you die, and they get to keep the cash. That's how come they're rich, and we aren't!

I had accumulated personal pension funds with Sun Life, Scottish Life and Skandia, and I moved them all to a drawdown provider - initially Winterthur, and then again to Alliance Trust because I wanted a low, fixed annual fee. The transfer process was tedious because it was new to Winterthur at the time, but once complete with Alliance it runs very smoothly. I just have an investment portfolio which happens to be inside a pension wrapper - I decide which investments to make, and which to sell each year to generate cash for the annual pension payment. I found over many years that I can draw about 6% per year of the fund capital value without long-term depletion. However, there's always a danger that if you draw too much, the fund will run out before you do. I don't use an IFA at all.

There are some incidental benefits - you should have reasonable cover against inflation, and your spouse gets to use the whole fund if you go first. She can even take it in cash less a tax charge.The insurance companies would normally only give her a half pension, if that - provided you've opted for a lower annuity in the first place.

Be very careful about charges if you think of moving to QROPS.

[AnOther]

Let's get one thing straight shall we, it's your money and you are under no obligation whatsoever to consult anybody when deciding what to do with it nor do IFA's have special  powers or qualifications to administer it by proxy. The fact you live in France is utterly irrelevant.

The insurance company are covering their backs and regardless of whether you use an adviser or not the insurance company will want you to sign a disclaimer before releasing the funds.

[Théière]

[quote user="AnOther"]nor do IFA's have special  powers or qualifications to administer it by proxy. [/quote]

Now I agreed with you up that point, they do have special qualifications.

In defence of the person answering the telephone, if they are not licenced to give advice on foreign affairs then they have to be very careful answering even generic questions in case you are a mystery shopper for the FSA or witch magazine.

You can deal direct (execution only) business but shopping around is worth it if you can obtain a slightly better deal. Insurance companies looking to attract money for investments offer slightly better terms as they may have a deadline for a purchase they will be making so need your money.

Make sure you tell them you smoke 100 cigs a day and drink 24 units every week, that way they will figure you'll die sooner and offer you a bigger annuity if that's what you want [;-)]

[Russethouse]

 Good IFA's are indeed qualified and often specialize in different aspects of the market for which they take exams to prove their understanding.....

[Benjamin]

This is what Wikipedia says (not always deadly accurate) about IFAs.

http://en.wikipedia.org/wiki/Independent_Financial_Adviser

[AnOther]

A less than ideal choice of noun perhaps but if you drop qualification and keep the 'no special powers' that is what I meant.

In other words you don't need them and there is nothing you cannot do yourself if you confident and so moved.

[Russethouse]

The lilkihood is that most people will do this once in their life time where as an IFA will do its all the time -