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PENSION

What foreign retirees in France should know about their pension rights

For those planning their dream retirement in France - and pensioners who are already here - there are some things to be aware of when claiming your home country's pension. Here is what you need to know

What foreign retirees in France should know about their pension rights
An elderly couple walks on the beach in Narbonne-Plage, in the south-west of France (Photo by PASCAL PAVANI / AFP)

As France debates pension reform, many foreigners, including retirees, living in France have wondered whether any of the proposed changes could impact them.

While people who are already of retirement age likely will not be personally affected by any changes to their pension as a result of the proposed reform, there are some things that retirees in France should still be aware of – including a potential French government benefit they may qualify for.

READ MORE: Ask the experts: What foreigners living in France need to know about French pensions

Here is what you need to know;

Government aids for older people

For foreigners who have been living legally in France for at least 10 years there is a state aid for elderly people called the Allocation de Solidarité aux Personnes Agées (ASPA).

Some have confused this benefit for being a pension, but in reality it is a top-up benefit – intended to help elderly French citizens who receive a very low state pension.

It is also available to foreigners in France, but only those who have been legally resident in France for at least 10 years. In general, to qualify you must be at least 65 years old.

As of July 2022, this state aid (which is means-tested) can offer up to a maximum monthly income of €961.08 for an individual. The amount offered will depend on your income, including any pensions you receive from other countries.

You can find more information at THIS French government website.

The French government also announced plans to offer grants for home improvements such as installing a stair lift or widening a doorframe to allow wheelchair access for older people and those with decreased mobility.

When applying, the applicant must be able to demonstrate that they are an independent retiree and need (this could be based on income, age, health, etc) to adapt their housing in order to make it more accessible.

The amount of assistance offered will be means-tested based on financial status. Some examples of work that might qualify for assistance might be: adapting the bathroom (for example, adding grab bars or enlarging the door);  replacing the bathtub with a shower; installing a bathtub with a door; installing a stair lift; and adding access ramps to the home.

READ MORE: New French State aid to help older people make home improvements

The French government also offers various tax reductions and exemptions for older people living in France – especially those on modest incomes. There’s an income tax allowance for over-65s, and a reduction on taxe foncière for homeowners over 65 before an exemption kicks in for those aged 75 and over, depending on income level. You can learn more about other old-age benefits HERE.

What to know about claiming your foreign pension 

If you have retired to France you can (in most cases) still claim your pension from the country you were working in. There are some exceptions, however, if your country lacks a social security agreement with France.

READ MORE: Pensions: What should I expect if I worked in both France and a non-EU country?

For most people, their foreign pension will be paid in the currency of their home country, so if isn’t the euro bear in mind that fluctuations in exchange rates will affect how much money you get each month.

You may need a bank account in your home country, as some nation’s require that state pensions be paid into bank accounts issued in their country. For example, many Brits in France have run into this issue, as UK pensions usually must be paid into UK-based bank accounts. 

READ MORE: Brexit: How to avoid bank account closures by opening a French bank account

For Brits living in France, pensions are often an area of particular concern. Maeve Hoffman, a partner at Spectrum IFA Group, told The Local in a previous interview that one post-Brexit issue people have been running into is that they can access their pensions “but options have been limited.”

Many Brits bought and paid into flexi-access pensions, with the goal that they would be able to have more options when drawing down the funds.

“There were many changes in recent years to pensions in the UK to give people more options, like the flexi-access drawdown,” she said.

“Basically, people bought into these pensions with this intention and now are being told ‘you cannot access it anymore.’”

Offering a hypothetical scenario, Hoffman said “say you have enough money this year, you can leave the pension where it is, but next year you might want to take more money out for a big trip.”

The flexi-access drawdown would allow you to “control it from a tax perspective and from the tax flow – that was a big selling point for pension reform in the UK.”

However, post-Brexit some pension companies in the UK have stopped offering this to EU residents. 

“The problem is that it’s random, it is up to individual pension companies to interpret the laws and see how it applies to them,” added Maeve.

READ MORE: Brits in France: What you need to know about your pension

For American retirees living in France, tax expert Jonathan Hadida, who works for Hadida Tax Advisors, a company specialised in tax consulting and helping Americans living in France to be tax compliant in both countries, advised that people should still report their US pensions on their French tax returns.

For example, you still need to report a 401K distribution. However, under Form 20-47, you report (to the French) that it is foreign pension from the United States. Then, France will give you, under the tax treaty, a deemed credit equal to the French tax.

“Basically, it’s reported on your French tax return for rate purposes, and you get a credit for the tax,” Hadida said. “And at the end of the day you wind up paying no French tax.”

In general, Americans living in France should be aware that citizenship-based taxation limits some investment options in France and that there are some fiscal rules to be aware of when it comes to private pension plans based in the United States. You can learn more HERE.

READ MORE: Ask the experts: What do Americans in France need to know about investments and pensions?

If you are Australian, you should beware the ‘pensions trap’ resulting from the lack of an international social security agreement.

The lack of a bilateral social security agreement has made it so that many Australians of retirement age who live in France cannot claim an Australian old-age pension, even if they have spent their lives working and paying taxes in Australia. You can find the full details here.

A final key point is for foreigners who receive a state pension from their home country, you may need to have access to a bank account in that country to collect the funds. 

This article is a general view of the pension system and does not constitute individual financial advice. If you are are unsure about your pension rights, seek independent financial advice.

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BRITS IN EUROPE

Brits in Europe won right to vote for life in UK but questions remain

After years of campaigns and promises British citizens living abroad finally won the lifelong right to vote in UK general elections in April 2022. But campaigners say more needs to be done to allow all those Britons abroad to be able cast their votes easily.

Brits in Europe won right to vote for life in UK but questions remain

What’s in the law?

The Elections Act 2022 introduced several changes to the current legislation on electoral participation. Among these, it removed the rule by which British citizens lose their voting rights in the UK if they have lived abroad for more than 15 years

The new rules also abolished the requirement to have been previously registered in the UK electoral roll to become an overseas voter. In addition, the registration in the electoral roll will now last up to three years instead of only one year.

It is estimated that these changes could increase the number of overseas voter registrations by some 3 million. But the way new measures will be applied in practice is still to be defined.

READ ALSO: ‘Mixed feelings’ – British citizens in Europe finally get right to vote for life

Defining the practicalities

Under the new law, Britons living abroad will have to register to vote in the last place they were registered in the UK. This means that people who have never lived in the UK will be ineligible to vote, regardless of how long they have been overseas, while those who left when they were children will be able to use a parent or guardian’s address.

But given that the UK does not require residents to register with local councils, how to prove previous UK residence? “Typical documents accepted as a proof of residence are Council tax or utilities bills, but not everyone will have them or will have kept them in an international move,” says Fiona Godfrey, co-founder of the British in Europe coalition.

Ballot papers are pictured in stacks in a count centre as part of the 2019 UK general election. (Photo by ANDY BUCHANAN / AFP)

Other questions concern how people will effectively cast their ballot. UK citizens overseas will be able to vote by post or by proxy or in person at their polling station if they are in the UK at the time of the election. However, few people are likely to travel to the UK for an election and in the past there have problems and delays with postal voting.

The Electoral Commission has recommended that overseas electors appoint a proxy to vote on their behalf. But who could that be for people who have been away from their constituency for a long time?

New secondary legislation will have to answer these questions, defining how to be included in the electoral roll and how to exercise the voting right in practice.

According to British in Europe, the government should present draft legislation in the first half of the year so that the parliament can adopt it before summer and registrations of overseas voters can start in the autumn.

British in Europe survey

British in Europe are currently running a survey to understand the difficulties UK citizens abroad may face in the registration and voting process, as well as their intention to participate in elections.

The survey asks for instance which documents people can access to prove their previous residence in the UK, what problems they had voting in the past, and if and how they plan to vote in the future.

“We need to get an up-to-date picture of British citizens living around the world and have information to make recommendations to the government, as it prepares secondary legislation,” Godfrey said. “If millions of people will exercise their voting rights, there will be consequences for council registration offices, post office and authorities that will manage the process, among other things” she argued.

The right to vote concerns only UK parliamentary elections and national referendums, not elections in the devolved administrations of Scotland, Wales and Northern Ireland, or at local level.

The survey is open to UK citizens living anywhere in the world and is available at this link.

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