With careful planning and expert advice, retired life across the Channel is a realistic option for many Francophiles, says Kate McNally
France remains high on the ‘favourite places to retire’ list, despite having recently been in the grips of the European economic crisis. True, retired people don’t have to worry about rising rates of unemployment, but public funding cuts and increasing living costs may have made a few people think twice – the country is now in sixth position on the list, down from fourth place a couple of years ago. Still, a favourable climate and quality of life, combined with lower property prices and accessibility to the homeland, continue to seduce many British retirees into opting for the French good life in their later years.
The majority aren’t disappointed. France is at heart a socialist country (irrespective of who inhabits the Elysée Palace) and older generations are well looked after. This includes retired expats, as long as you have got your cross-Channel house in order, financially and legally, and are willing to integrate into local French society.
Before you go…
Pensions – whatever you do, take expert financial planning advice regarding any pension, as presumably these will be your principal source of funding.
The UK basic state pension can be paid direct in euros into a French bank account without incurring transfer fees, or you can opt to keep it in a UK account. In this case, an international account may be the best option to reduce transfer fees. Regulations for private and company pensions are different, and it is important to check out your individual situation to see what options are best for you regarding French and UK tax implications.
Always bear in mind that your situation and pension regulations may change, so be careful that your options are relatively future-proof; if that’s possible in pension terms! Seek advice from trusted financial services professionals experienced in both the UK and French pensions markets.
Health cover – as a retired national of an EU country, you will have the same access to the state-subsidised part of the French healthcare system as your native neighbours but, as with everything in France, there is some requisite paperwork to put in place. This is much easier to do if you get an S1 Form from the Department of Work & Pensions before leaving. The S1 proves that you have reached retirement age, have paid the required number of social security contributions and are receiving a state pension.
If you have taken early retirement, you may be eligible for a temporary S1 Form until you reach official UK retirement age. If not, apply as soon as possible at the local CPAM office (Caisse primaire d’assurance maladie) for basic CMU (couverture maladie universelle) health insurance cover. If you intend to work in France, however, you will be automatically eligible for state healthcare as you are paying social charges on your earnings.
The French healthcare system is recognised as one of the best in the world. However, only a percentage of medical costs are paid by the state; approximately 70% of doctor’s fees, 80% of hospital charges, for example. On your arrival, you will need to take out a top-up insurance policy, known as a mutuelle. Make sure you seek professional advice as private health insurance is a big market in France. You want a policy adapted for your specific health needs or prospective problem areas, and different companies offer different formulae, more or less interesting. The workings of the mutuelle payment system aren’t simple either – based on confusing percentages – so make sure you understand exactly what these percentages equate to in terms of how much you are refunded, or you could find yourself paying out significant sums of money for certain treatments or operations.
And note the word ‘refunded’. In France, the health system works on the basis that you pay for treatment upfront and are refunded soon after, by the state for their share and by your mutuelle for theirs. There is, however, always a small proportion of the state share paid by the individual, and, depending on your mutelle cover, a small or less small proportion of the non-state share to pay too. Hence, as the years tick by, it may be worth increasing your private health insurance cover.
France retains a strong family social structure, which has its good and bad points for retired expats.
The downside of this ‘family first’ emphasis is that your French peers will socialise a lot with their families and, therefore, are less available to go out to play, which can be frustrating when your own family are across the sea.
On the upside, however, it means that older generations have a recognised place in society, and are often very active in the community, particularly in the various voluntary but powerful roles of the ‘élus’ (the elected) within France’s intricate web of local politics and associations. In some expat strongholds, retired UK nationals are equally active in these roles, and it is an excellent way to integrate and take part in your adopted community.
But even for the non-élu retired population, there are plenty of activities to choose from in France. As well as the ubiquitous pétanque on offer in every village square, there are numerous clubs and associations covering a wide leisure spectrum, from bridge and cultural debate to walking and wine-tasting. Ask at the local mairie and communité de communes/d’agglomération for a list of clubs and associations in your area.
It is easy to dismiss the importance of speaking the native language when sifting through French property brochures and imagining a retirement full of saucisson, Sancerre and sunshine. But unless you are one of life’s Greta Garbos, you will rapidly feel isolated and homesick if you aren’t able to communicate with your French neighbours. Even if you are retiring to an area where there are numerous expats, it is important to have a basic grasp of the French language to get by in daily life.
The better your French, the more activities will be open to you, and you will have more chance of enjoying an enriching retirement. Improved language ability also provides greater security and adaptability in future years, if, for example, you move into a retirement or care home. If you think this may be a possibility for you or your partner at a later stage, look into the options sooner rather than later to get your name on any lists.
Staying in touch
For many retired expats, good links with family and friends in the UK are important. With modern technology, this has become much easier in recent years, but it is worth checking that your new home is in an area with good internet access for quality Skype and Facetime connections. The value of seeing and hearing your loved ones regularly cannot be over-estimated.
Equally, many people want access to English news and television programmes. Satellite and cable TV options are increasing all the time in France as the telecommunications and media markets continue to muscle and merge. Consequently, as in the UK, there are numerous inclusive TV, internet, fixed and mobile phone packages to choose from. It’s a good idea to seek out a ‘comms savvy’ local who can help you find the best value-for-money option for you.
If the prospect of retiring to France proved so enticing that you couldn’t wait, you may well be among the many early retired expats looking to top-up your pension income.
Whether offering rental accommodation in summer or freelancing on the other side of the Channel, make sure you understand the legal implications of working in France.
If your primary residence is in France, any income, whether earned in France, the UK or elsewhere, must be declared, together with your pension income, on an annual French tax declaration form. Earnings are not taxed at source in France.
Bear in mind also that if you are married or in a civil partnership, your earnings are taxed jointly, that is lumped together and divided by two before the tax bracket is applied. Any dependents living with you are also entered into the equation, so total household earnings are divided by three or four, and so on.
For most people, this method is advantageous, notably if one partner is a high earner, but check out the tax maths with a French accountant before rushing to get hitched if you are in a long-term relationship!
It appears that changes are on the horizon in EU quarters next year regarding cross-border inheritance tax, but as things stand at the moment French succession laws apply to any French property, and other assets, owned by a UK national residing in France; while any UK-based property is subject to UK succession laws.
Reportedly, from 2015, EU legislation will permit expats to choose to submit all their property and assets, even those based in a different EU country, to the succession laws of their country of nationality.
The main point of difference currently is that under French inheritance law, the deceased’s estate must be left in equal share to his or her children. A child can decline an inheritance (in the case of estrangement or if the deceased parent leaves debts, for example), but a parent cannot disinherit his or her child. Clearly, this can have implications for a surviving spouse or partner.
Seek legal advice from experts in French and UK inheritance law to find the best way to protect the interests of all your family while minimising death and capital gains taxes.
It may all seem a little daunting at first, but if you’ve decided to retire to another country, you are unlikely to be put off by a spot of red tape and planning. Speak to the experts, learn the lingo and then put up your pieds and enjoy a relaxing retirement à la française!