I want to move to France for retirement – but what would it mean for my pension?

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Question: I’m approaching my 60th birthday and considering moving to the south of France to enjoy retirement in the sun! Before making the move, I need to understand what it might mean for my pensions. I’m expecting to receive my state pension in six years, have a small defined contribution pension from my early career, and defined benefit pension, having been a teacher for the last 30 years. Can you help? Should I speak to a financial adviser about what the impact might be?

Answer: Sounds like a cracking retirement plan to me! Considering the impact moving abroad might have on your finances, including your pension entitlement, before making a final decision is also sensible.

Let’s take each of your different pensions in turn. The full UK state pension is worth just over £11,500 a year in 2024/25, although your actual entitlement will depend on a number of factors, including your National Insurance (NI) contribution record and your entitlement under the old (pre-2016) state pension system.

If you have missing years from your NI record, you can buy them in order to boost your state pension entitlement – although it’s important to check with the Department for Work and Pensions before doing this as not everyone will benefit.

The current UK state pension age is 66, BUT – importantly – is due to rise to 67 between 2026 and 2028, and then 68 between 2044 and 2046. Based on this timetable, your state pension age will be age 67, not 66.

You can check your state pension age here.

You can choose to have your state pension paid into any bank account you choose, anywhere in the world. One key thing anyone considering retiring abroad should consider is the impact it will have on increases to your state pension.

The UK state pension benefits from the ‘triple-lock’, meaning it rises by the highest of average earnings growth, inflation or 2.5%. However, if you retire abroad, your state pension may be frozen.

The state pension will only increase each year if you retire to a country in the European Economic Area (EEA), Gibraltar, Switzerland, and countries that have a social security agreement with the UK. As France is in the EEA, your state pension should still rise in line with the triple-lock if you choose to move there.

Your other pensions

As with the state pension, if you have a private pension – be it defined benefit (DB) or defined contribution (DC) – this can be paid to you wherever you are in the world. Anyone thinking about retiring abroad should speak to their pension scheme or provider first to check how they will pay your income. Some will only pay into a UK bank account, for example, while others might pay into an overseas account if you ask.

Some schemes may also charge you extra to pay your pension into an overseas account and your income could be paid in pounds sterling, exposing you to currency fluctuations.

As the Teacher’s Pension Scheme is an unfunded DB scheme, you won’t be allowed to transfer it to a DC scheme. Anyone who wants to transfer a DB pension worth £30,000 or more to a DC scheme, where this is allowed, needs to take regulated financial advice beforehand.

With regards to your DC pension, if you are concerned about currency movements, you could consider a ‘Qualifying Recognised Overseas Pension Scheme’ (QROPS). These are a type of overseas pension plan recognised by HMRC that can receive pensions built up in the UK.

You do not have to join a QROPS if you want to retire overseas – as mentioned above, private or workplace pensions can be paid to you wherever in the world you decide to retire.

If you join a QROPS established in the country you reside in, you’ll get your pension in local currency and so avoid the uncertainty of exchange rate rises and falls. It may also be easier to keep track of the tax changes in the country you reside, rather than having to constantly monitor the UK’s rules and regulations.

Note there are no QROPS in France as French law doesn’t recognise trusts. To avoid having an overseas transfer charge on a transfer to QROPS it would need to be to another country within the EEA, such as Malta. As you might have guessed, QROPS are complicated, so you should speak to a financial adviser before going down this road.

To the final point of your question, given the varied financial effects of retiring to a different country, it is worth considering seeking regulated advice before making the move to fully understand your options and receive recommendations based on your circumstances.

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