Blevins Franks Financial Tips - Protecting your Financial Security Through Retirement

Retirement can last 30 years or more. To help us enjoy these well-earned years and have peace of mind, we all need to plan ahead, build up our savings and then protect them for our long-term future.  While the earlier we start doing this in our careers the better, it gets more important the closer we get to retirement.  And we need to continue taking steps to protect our retirement savings even after we’ve started drawing our pensions, regularly reviewing our arrangements to ensure we continue meeting our retirement goals. 

Before retirement
As retirement begins to get closer, it’s time to start planning how you want to spend your golden years and ensure you are on the right track financially. There may be steps you can take today to help make your retirement goal a reality.

 Questions to ask yourself include:

·      Will I be able to afford to retire when I want to?

·      What is the best strategy for withdrawing from my business or employment?

·      What options do I have for my pensions? Are they likely to change?

·      Will I be able to retain my existing wealth and assets?

·      Do I want to spend some or all of my retirement abroad?

Let’s say that you plan to retire within the next few years and move permanently to France. You may have concerns about whether you can afford your preferred lifestyle without having to sell existing assets. Perhaps you have a business to sell and are unsure how best to convert your years of hard work into a retirement nest egg. Then there are the complex residence and tax implications of living in a different country.

 Professional financial advice can prove invaluable here, especially with an adviser who understands France and can provide cross-border advice covering both countries. A good adviser will take a holistic view of what you have – your savings, investments, assets, pensions – together with what you want – your income requirements, estate planning wishes – and an objective assessment of who you are – your circumstances, timeline, goals, risk appetite – to design a personalised retirement plan for you. 

After retirement 

Being retired doesn’t mean you can forget about retirement planning. 

Regular reviews allow you to adapt your strategy to suit your changing circumstances and goals, such as incorporating new family members, addressing health issues or relocating. It enables you to keep up with the ever-changing tax and pensions landscape, including new opportunities that could work in your favour.  

 You also need to keep protecting your savings and retirement income from inflation. As the cost of living rising, the value of your money falls, so that in the long-term you could have considerably less spending power than you have today. 

 Your pension options

 Pensions are usually the foundation of retirement, so deciding what to do here may be one of life’s most important financial decisions. Pensions are complex, and with so much choice available, you must take great care.

 You might benefit from consolidating several UK pensions into one to provide a coherent, more cost-effective investment platform for your retirement income, but first establish what would be the most tax-efficient approach for a France resident. Receiving pension income in sterling also exposes you to conversion costs and exchange rate risk.

 Many British expatriates have chosen to transfer their UK pensions to a Qualifying Overseas Pension Scheme (QROPS) which have provided flexibility to take income in euros, more freedom to pass benefits to chosen heirs, and protection from further UK lifetime allowance charges.  But pension rules frequently change so you need to keep up-to-date, and in any case always take regulated, specialist advice before making pension decisions to protect your benefits and establish the best option for you.

 Keep an eye on the UK’s lifetime allowance (LTA). The UK caps how much you can hold in combined pension benefits (excluding State Pension) without paying extra tax. Once your funds exceed the limit, you pay a tax charge whenever you access your money – 55% for lump sums or 25% for income or transfers to an overseas pension.  This also applies to non-UK residents.

Retiring in France

If you plan to retire in France, review your retirement strategy early. You need to consider your residence status and cross-border tax implications and adapt your estate planning to suit France’s different succession rules. 

Careful planning is the key to minimising taxation and maximising the available opportunities so you can enjoy your dream retirement for as long as you need. For the best results, take specialist, cross-border advice.

All advice received from any Blevins Franks firm is personalised and provided in writing. This article however, should not be construed as providing any personalised taxation and/or investment advice.

Blevins Franks Group is represented in France by the following companies:  Blevins Franks Wealth Management Limited (BFWML) and Blevins Franks France SASU (BFF). BFWML is authorised and regulated by the Malta Financial Services Authority, registered number C 92917. Authorised to conduct investment services under the Investment Services Act and authorised to carry out insurance intermediary activities under the Insurance Distribution Act. Where advice is provided outside of Malta via the Insurance Distribution Directive or the Markets in Financial Instruments Directive II, the applicable regulatory system differs in some respects from that of Malta. BFWML also provides taxation advice; its tax advisers are fully qualified tax specialists.  Blevins Franks France SASU (BFF), is registered with ORIAS, registered number 07 027 475, and authorised as ‘Conseil en Investissements Financiers’ and ‘Courtiers d’Assurance’ Category B (register can be consulted on www.orias.fr). Member of ANACOFI-CIF. BFF’s registered office: 1 rue Pablo Neruda, 33140 Villenave d’Ornon – RCS BX 498 800 465 APE 6622Z.  Garantie Financière et Assurance de Responsabilité Civile Professionnelle conformes aux articles L 541-3 du Code Monétaire et Financier and L512-6 and 512-7 du Code des Assurances (assureur MMA). Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of retirement schemes. This promotion has been approved and issued by BFWML. 

 You can find other financial advisory articles by visiting our website here

Blevins Franks Financial Tips - Investing Responsibly - Earning Returns While Helping the Environment and Society

The news was dominated recently by the COP26 meeting in Glasgow and the environmental issues affecting the planet and our daily lives.  It came at a time when many of us were already thinking about what changes we can make to play our part in improving the situation. The topic of ‘ESG investing’ – Environmental, Social, Governance – was highlighted over the fortnight and it is something many investors are keen to explore. 

The November COP26 (26th Conference of the Parties) was a global United Nations summit about climate change and how countries can bring it under control.  Large companies also need to play their part to reduce their impact on the environment, and this is where investors can be selective over which companies to buy shares in.

Interest in ESG investment has been growing noticeably over recent years. Investors are placing greater emphasis on the environmental and social impact of their investments, wanting to make sure the firms benefiting from their capital do not contribute to problems like climate change, inequality etc. They are increasingly seeking to manage to exposure to ESG factors, while generating sustainable long-term returns – responsible investing and performance can be complementary.  

It is estimated that around 20% of global investors have some ESG investments and almost 50% say they are interested. 

ESG investing 

This type of responsible investing prioritises financial returns alongside a company’s impact on the environment, its stakeholders and society.  Here are some simple definitions:

·      Environmental – The impact of a company’s activities on the environment: carbon footprint, greenhouse gas emissions, renewable energy usage, using a sustainable supply chain etc. Positive outcomes include managing resources and executing environmental reporting/disclosure, or avoiding/minimising environmental liabilities such as climate impact or pollution.

·      Social – A company’s impact on its employees, customers, consumers, suppliers and the local community: how employees are treated, racial diversity among staff and executives, LGBTQ+ equality, inclusion programmes etc.  Positive outcomes include increasing health, productivity, and morale, or reducing negative outcomes such as high turnover and absenteeism.

·      Governance – The way companies are run: how does the management drive positive change?  What are its business ethics?  Positive outcomes include aligning interests of shareowners and management, improving diversity and accountability, and avoiding unpleasant financial surprises, such as excessive executive remuneration.

In summary, ESG investing considers how a company serves its staff, communities, customers, stakeholders and the environment. 

These days, most public companies, as well as many private ones, are evaluated and rated on their ESG performance by various third-party providers of reports and ratings. These include Bloomberg, S&P Dow Jones Indices and MSCI.   

Institutional investors, asset managers, financial institutions and other stakeholders are increasingly relying on these reports and ratings to assess and measure companies’ ESG performance compared to peers.

ESG performance 

Investing responsibly does not mean you have to accept lower returns.  

ESG investing is building up a good track record, with noteworthy performance over the pandemic. During the market turbulence and uncertainty, many companies with strong ESG track records showed lower volatility than others  and investors turned to ESG for increased resiliency.   According to US financial services firm Morningstar, the last quarter of 2020 saw record sales of $152 billion and total assets invested worldwide reached $1.6 trillion. 

Analysis by Morningstar also found that, over a decade, 80% of equity funds investing in sustainability outperform traditional funds. ESG funds also show longevity – 77% of ESG funds that existed 10 years ago survived, compared to 46% of traditional funds.  

Investment planning 

You do not need to spend hours researching a company’s ESG track record and scores, or comparing its share price with other companies to try and work out which ones to invest in.   As with other capital investments, you can buy funds which invest in highly rated companies. This also reduces risk as it provides much more diversification.  

Apply the same investment principles with ESG investing as with all other capital investments: 

1.     Establish your objectives and time horizon.

2.     Obtain an objective analysis of your appetite for risk. 

3.     Have a mix of assets and sectors in your portfolio to reduce the risk of one area performing badly.  

4.     When considering a new investment, analyse how it fits in with the rest of your portfolio and impacts its risk weighting. 

5.     Conduct regular reviews, around once a year.  

 You can choose to use a financial advisory company that incorporates responsible investing within its advisory services. Some companies now look at ESG considerations, as well as traditional assessments, as a part of the overall investment considerations when assessing suitability of investments for clients.  

So responsible investing does not have to involve more work on your part, and you can invest as you normally would, without compromising returns or your risk weightings – but with the difference being which companies benefit from your investment capital.  You don’t need to focus all your portfolio on ESG funds – indeed, you need a good spread of assets to reduce risk – but it is one step you can take to help protect our environment and society. 

All advice received from Blevins Franks is personalised and provided in writing. This article, however, should not be construed as providing any personalised investment advice.  The value of investments can fall as well as rise, as can the income arising from them. Past performance should not be seen as an indication of future performance.

You can find other financial advisory articles by visiting our website here

Blevins Franks Financial Tips - UK Based Financial Advice and Services Post Brexit - Four Important Considerations

As we move towards the end of 2021,Brexit is no longer a novelty, but we are still learning exactly how we are or may be affected.  While in many ways day-to-day life hasn’t changed for British expatriates, there are some inconveniences – some minor, some not so minor. 

One Brexit consequence that is causing concern and difficulties for many UK nationals in France, is financial advice and services – we are receiving a lot of questions about it. 

The Brexit trade deal did not cover financial services, which meant the previous ‘passporting’ regime came to an end on 31 December 2020.   While post-Brexit negotiations could change things in the future, you do need to establish if your financial planning – and adviser – will stand up to the challenges that Brexit brings today. Here are four key considerations.

1.     The end of passporting

If you have a good relationship with your UK-based financial adviser, you may understandably wish to continue using them, despite now living in a different country. However, you need to make sure they can legally continue to advise you now that the UK is no longer an EU member state. 

Until the end of 2020, UK-based financial businesses could ‘passport’ out of the UK and into Europe – but since 1 January 2021, this no longer applies.  

‘Passporting’ enables cross-border transactions between EU member states through shared financial regulation. It was previously possible because the UK Financial Conduct Authority (FCA) was bound by the same rules and standards as other regulators in the EU. Now the UK has left the EU, the regulation of financial activity and consumer protection no longer lines up on both sides. So, unless a mutual deal is agreed on financial services in future, the EU no longer permits ongoing passporting arrangements for UK financial businesses and advisers.

Some UK financial firms have put arrangements in place to be able to continue working in an EU country post-Brexit, but others have not. Many expatriates with EU residential addresses have received letters from UK banks, financial advisers and investment institutions advising that they can no longer support them.   

2.     The limits of UK advice

If you still retain UK investments, a UK-based adviser may be able to continue supporting you there. But if you hold savings and investments with an EU-based institution, they may no longer accept instructions, such as top-ups, from a UK adviser. The financial regulator in France, for example, had confirmed it would be illegal for French banks and insurance firms to do business with a provider who is not authorised in the country post-Brexit. Similarly, while the Central Bank of Ireland enabled a three-year grace period for servicing existing insurance contracts, it will not allow unregulated entities to renew or create new policies from 2021.

We can expect similar positions to be taken by other EU regulators seeking to protect consumers in their country, so this could limit the planning opportunities for expatriates using UK-based advisers.

Also, check if there are any practical challenges to keeping a UK-based adviser. Do you have to travel to the UK for meetings and paperwork requirements? Consider how this would work in situations where you need funds quickly or are unable to travel through illness or travel restrictions.

3.     The advantages of local knowledge

As well as the legal and practical implications, consider whether an adviser based in a different country is best placed to help you take advantage of opportunities available to you in France. For example:

·      Do they fully understand the intricacies of the French tax regime and how it interacts with UK taxation?

·      Do they have in-depth knowledge of the French residence, domicile, tax, succession law and reporting rules?

·      Do they know about – and have access to – tax-efficient solutions that offer significant benefits to France residents?

·      Who will pay the bill or face the consequences if they get things wrong?

While UK-based advisers may be experts on the ins and outs of the UK system for residents there, it is unlikely that they have the same in-depth knowledge for another country. 

4.     The suitability of UK planning

Remember: financial planning that is tailored for a UK resident is unlikely to remain suitable once you become resident elsewhere. If you have not yet moved to France, review your arrangements before you do to minimise taxation when changing residency and make the most of tax-efficient opportunities in France.

If you are holding on to UK savings and investments, beware that they can lose their tax benefits once you are living abroad. And once they cease to be EU/EEA assets and you are no longer a UK resident, they could potentially attract a higher tax bill, in either or even both countries. 

Meanwhile, France residents have access to locally-compliant alternatives that can offer other advantages besides tax-efficiency – such as multi-currency and estate planning flexibility – so explore your options. Depending on your circumstances, many British expatriates in France have found that reviewing and adjusting how and where they hold their capital has significantly improved their tax position. 

It has never been more important to ensure your financial affairs are both compliant and suitable for your life in France. Secure financial peace of mind by talking to an experienced, locally-based adviser.

Blevins Franks Group is represented in France by the following companies:  Blevins Franks Wealth Management Limited (BFWML) and Blevins Franks France SASU (BFF). BFWML is authorised and regulated by the Malta Financial Services Authority, registered number C 92917. Authorised to conduct investment services under the Investment Services Act and authorised to carry out insurance intermediary activities under the Insurance Distribution Act. Where advice is provided outside of Malta via the Insurance Distribution Directive or the Markets in Financial Instruments Directive II, the applicable regulatory system differs in some respects from that of Malta. BFWML also provides taxation advice; its tax advisers are fully qualified tax specialists.  Blevins Franks France SASU (BFF), is registered with ORIAS, registered number 07 027 475, and authorised as ‘Conseil en Investissements Financiers’ and ‘Courtiers d’Assurance’ Category B (register can be consulted on www.orias.fr). Member of ANACOFI-CIF. BFF’s registered office: 1 rue Pablo Neruda, 33140 Villenave d’Ornon – RCS BX 498 800 465 APE 6622Z.  Garantie Financière et Assurance de Responsabilité Civile Professionnelle conformes aux articles L 541-3 du Code Monétaire et Financier and L512-6 and 512-7 du Code des Assurances (assureur MMA). Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of retirement schemes. This promotion has been approved and issued by BFWML. 

You can find other financial advisory articles by visiting our website here

Blevins Franks Financial Advice - Tax Efficient Investing in France - the Benefits of Assurance-Vie

When you look at the headline rates of tax in France, you can understand why many people consider France to be an expensive country to live in, tax-wise.  What they often do not realise, however, is that they may be able to take advantage of compliant opportunities to protect their assets from various French taxes – so much so they may even end up paying less tax in France than in countries like the UK.  With the right structures in place, you could significantly lower your tax bill.  

What was tax efficient in the UK is generally not tax efficient in France.  For example, ISAs and Premium Bonds are taxable in France. 

One very useful arrangement for lowering French tax on your investment income is the assurance-vie.  This specialised form of life assurance allows you to hold a wide range of investment assets and is highly tax efficient for residents of France, especially if you hold your policy for over eight years.  

Both French nationals and expatriates find assurance-vie to be very valuable for providing tax-efficient income (particularly useful in retirement) while also protecting their wealth for their loved ones. 

French tax benefits of assurance-vie

1.     Income and gains can roll up tax-free within the policy

2.     Withdrawals are taxed very favourably

3.     Substantial allowance from year 9

4.     Succession tax savings for your heirs 

5.     Wide range of investment options 

6.     Consolidation of investments in one policy

7.     Estate planning benefits

1) Income and gains

 If you do not take any withdrawals, there is no income or capital gains tax to pay, regardless of how much the capital has grown or how much interest has been earned within the policy. 
 

2) How withdrawals are taxed

When you take withdrawals, they are taxed very favourably.  Only the growth element is taxed, rather than the whole withdrawal.  For example, if the whole portfolio of assets within your assurance-vie has grown by 7%, and you are taking a withdrawal of €25,000, you only pay tax on €1,750 and €23,250 is tax free!   

For new policies set up after 27 September 2017, the tax rate on withdrawals is 30% (the standard tax rate on investment income).  This includes both 12.8% income tax and 17.2% social charges.  The income tax rate is lowered to 7.5% for income from contracts which are more than eight years old and relate to contributions not exceeding €150,000. You can also elect to pay the scale rates of income tax instead, which can work out cheaper even with social charges.  

Note that the 30% fixed rate only applies if your policy is approved for French tax purposes. If you have a non-EU assurance-vie you will pay the scale rates of income tax plus 17.2% social charges, regardless of your premium.  Policies from companies in the Isle of Man, Channel Islands – and now also the UK – are therefore at a disadvantage. 

3) Annual €4,600 tax-free allowance

Once you have owned your policy for over eight years, your first €4,600 –  €9,200 for a married couple – of growth withdrawn every year can be tax-free. This doesn’t apply to social charges but is still a very favourable tax break.  

4) Reducing succession tax

An assurance-vie could also help lower your succession tax liability.  

In particular, considerable tax savings can be made if the policy was established with lives assured under age 70.  Each individual beneficiary will receive a €152,500 exemption, after which they pay a flat tax rate of 20% (when the taxable part of the assurance-vie is under €700,000) and 31.25% on any excess over €700,000. 

If you are over 70 when you set up your policy, your heirs are still better off with your assurance-vie as, although they pay the usual succession tax rates, they receive a €30,500 allowance. 

5-7) Other assurance-vie benefits

 Depending on your policy, you can usually hold a wide range of investment options within your assurance-vie, with flexible currency options. 

You can bring many different investments together under one roof making it easier to manage, and combine your tax and investment planning in one exercise.  

Purchases and sales within the policy are normally transacted at little or no cost, so you can change your investments as your circumstances change without incurring extra costs.  

Investments within an assurance-vie can also be easier to distribute to your nominated heirs on your death, making their life easier. 

It is important to note that there are different types of assurance-vie policies available, and you need to make sure you choose the one that will provide the advantages you are looking for.  Tax rules and rates in France also change frequently so your adviser needs to be up-to-date on the latest regulations in France and what actually works for British expatriates living here.  

Finally, your tax and investment planning should be based around your situation, objectives and estate plans, so it is essential to take personalised advice.

The tax rates, scope and reliefs may change.  Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change.  Tax information has been summarised; an individual must seek personalised advice.  

Blevins Franks Group is represented in France by the following companies:  Blevins Franks Wealth Management Limited (BFWML) and Blevins Franks France SASU (BFF). BFWML is authorised and regulated by the Malta Financial Services Authority, registered number C 92917. Authorised to conduct investment services under the Investment Services Act and authorised to carry out insurance intermediary activities under the Insurance Distribution Act. Where advice is provided outside of Malta via the Insurance Distribution Directive or the Markets in Financial Instruments Directive II, the applicable regulatory system differs in some respects from that of Malta. BFWML also provides taxation advice; its tax advisers are fully qualified tax specialists.  Blevins Franks France SASU (BFF), is registered with ORIAS, registered number 07 027 475, and authorised as ‘Conseil en Investissements Financiers’ and ‘Courtiers d’Assurance’ Category B (register can be consulted on www.orias.fr). Member of ANACOFI-CIF. BFF’s registered office: 1 rue Pablo Neruda, 33140 Villenave d’Ornon – RCS BX 498 800 465 APE 6622Z.  Garantie Financière et Assurance de Responsabilité Civile Professionnelle conformes aux articles L 541-3 du Code Monétaire et Financier and L512-6 and 512-7 du Code des Assurances (assureur MMA). Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of retirement schemes. This promotion has been approved and issued by BFWML. 

You can find other financial advisory articles by visiting our website here

Planning for Retirement - It Is Never Too Early To Start Thinking About How You Will Finance Your Golden Years

Whether you are nearing retirement or it is several years away, it is never too early to start thinking about how you will finance your golden years. Even if you are already retired, you should regularly review your arrangements to ensure you continue meeting your retirement goals. It might be that you enjoy spending time in France or Monaco and would like to retire in the sun, now or a few years down the line. Or maybe you are already living here and are unsure what your options are. Whatever your situation, what do you need to think about to secure the retirement of your choice?

Why retirement planning matters at any age 
By Rob Kay, Senior Partner, Blevins Franks

Approaching retirement

Even if retirement is a way off, there are certain things you need to consider – the earlier the better – to make sure you are on the right track financially. There may be steps you can take today to help make your dream retirement a reality.

Questions you should ask include: 

·      Will I be able to afford to retire when I want to?

·      What is the best strategy for withdrawing from my business or employment?

·      What options do I have for my pensions? Are they likely to change?

·      Will I be able to retain my existing wealth and assets?

·      Do I want to spend some or all of my retirement abroad?

Let’s say that you plan to retire within the next five years and move permanently to France. You may have concerns about whether you can afford your preferred lifestyle without having to sell existing assets. You may not want to have to downsize your home, for instance, as you would like this to eventually pass on to your family. Perhaps you have a business to sell and are unsure how best to convert your years of hard work into a retirement nest egg. Then there are the complex residence and tax implications of living in a different country.

Here, professional financial advice can prove invaluable. An adviser can take a holistic view of what you have– your savings, investments, assets, pensions – together with what you want – your timeline, income requirements, legacy wishes – and an objective assessment of who you are – your circumstances, goals, risk appetite – to design a personalised retirement plan for you. 

Already retired

If you have already reached retirement age or stopped working, that doesn’t mean you should forget about retirement planning. After all, you could be retired for thirty years or more! 

Regular reviews allow you to adapt your strategy to suit your changing circumstances and goals, such as incorporating new family members, addressing health issues or relocating. It also enables you to keep up with the ever-changing tax and pensions landscape, including new opportunities that could work in your favour.  

Your pension options

Pensions are usually the foundations of retirement, so deciding what to do here may be one of life’s most important financial decisions. Pensions are complex anyway, but with greater freedom and choice than ever – and an increase in sophisticated pension scams – you must take extreme care.

You might benefit from consolidating several UK pensions into one to provide a coherent, more cost-effective investment platform for your retirement income. However, this may not be the most tax-efficient approach if you live in France. By receiving pension income in sterling, you would also be exposed to conversion costs and exchange rate risk.

Britons resident abroad have the option of transferring UK pensions to a Qualifying Overseas Pension Scheme (QROPS). Doing so can unlock advantages you do not always get with UK pensions, such as flexibility to take income in euros and more freedom to pass benefits to chosen heirs. Transferred funds would also be protected from UK lifetime allowance charges and future UK pension rules that may adversely affect you – an increasing possibility after Brexit.

If you transfer UK pensions to an EU-based QROPS as an EU resident, you can currently do so tax-free, but transfers outside the EU/EEA invite a 25% UK tax penalty. Once outside the bloc, the UK government could potentially widen this taxation net to capture EU-based QROPS in the future. 

Transferring is by no means a one-size-fits-all solution and the benefits of a QROPS can vary greatly between providers and jurisdictions. Be sure to take regulated, specialist advice before making any significant pension decision to protect your benefits and establish the most suitable option for you.

Retiring abroad

If moving permanently to France is on the cards, it is especially important to review your retirement strategy early. Not only will you need to consider your residence status and cross-border tax implications in a post-Brexit world, you will need to adapt your estate planning to suit the very different local succession rules. 

In any case, careful planning is the key to minimising taxation and maximising the available opportunities so that you can enjoy the retirement you want for as long as you need. For the best results, take specialist, cross-border advice.

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.

You can find other financial advisory articles by visiting our website here