Assurance vie and retirement

[Steve Troyes]

Originally Posted by RobF

For active share trading, you should look into a PEA (Plan d'Epargne en Actions). It's a tax-protected brokerage account which allows you to invest up to 132,000 euros. If you make a withdrawal in the first 2 years the account is open, the plan closes and you're taxed on any capital gains at a rate of 22.5% plus social charges at a rate of 12,30%. If you make a withdrawal in years 3-5, the plan closes and you're taxed on any capital gains at a rate of 19% plus social charges at a rate of 12,30%. If you make a withdrawal in years 5-8, the plan closes, you pay no taxes on capital gains, but you still owe social charges at a rate of 12,30%. After 8 years, you can make tax-free withdrawals and keep the plan open. You'll still owe social charges.

You do have to invest a high percentage of your assets in EU equities, which may or may not be relevant to you.

All the banks and on-line investment companies have PEAs. Fortuneo and Boursarama have good fees.

If you take out a PEA via a Insurance company instead of a bank you do not have the restrictions on EU equities. And in answer to an earlier question some Assurance Vie providers in Irelend will accept transfers of existings holdings depending on the amounts involved.

[Corvo]

Originally Posted by Steve Troyes

If you take out a PEA via a Insurance company instead of a bank you do not have the restrictions on EU equities. And in answer to an earlier question some Assurance Vie providers in Irelend will accept transfers of existings holdings depending on the amounts involved.

Thanks for all your help and ideas, this looks like it could be interesting.

[Jim Wheeler]

As a newbie to the forum I’ve read this thread with interest, particularly Parsnip’s helpful comments about Assurance Vie. My wife and I will shortly be moving from UK to France for a long term stay, probably lifelong. We are currently selling our house in UK and plan to rent in France for at least the first two years. From the proceeds of the house sale, we plan to use around 220,000 Euros as income earning investment. The options we are considering are a) to buy two small apartments in UK and let them for rental income or b) to invest in an AV scheme or c) a combination of both. The first, (a), would seem to produce a slightly better net return after allowing for UK tax, management fees and insurance, but would their be French tax to pay for funds transferred from UK to France? There could also be CGT in UK to pay if we should decide to sell the apartments later on, depending how the UK property market might move. The second, (b), was suggested by a UK owned financial management company, who have recommended a minimum contract period of five years and would charge 1.7% management fee + 800 Euros pa fee from the insurance company for that period, with the management fee dropping to 0.7% after five years. This seems very high compared to the figures Parsnip quoted for management fees of online AV schemes but maybe I am missing some points? I’ve had a look at the Fortuneo and Linxeo websites but my French is not good enough yet for me to feel confident I have fully understood all the jargon. Any comments to help us make our decision would be gratefully received.

[parsnips]

Hi,
There would be no additional french tax levied on rents received from theUK, but they are taken into account for the rate you pay on french taxed income and can raise the rate somewhat. I have had a little experience of renting in the UK while living in France , and found it very stressful and not very profitable. The two main problems are tenants and agents. While you may be lucky enough to find perfect examples of both, the chances are that you won't , and if there are problems , you can't just pop round to sort things out. The experts advise that you should not put the major part of you capital into buy -to -let, it should only form part of a big portfolio. I have also read recently ("Moneyweek") that the times are particularly unpromising for this at the moment.
For Assurance Vie , in my view it is a very good investment if you deal direct online , but not so good if you have layers of commission and fee takers between you and your money.
The deal you quote sounds very expensive , and that is without mention of the entry fees (up to 5% of your capital) which the agent appears not to have mentioned - or perhaps did so quickly so you wouldn't notice.
I suggest you obtain applications from "fortuneo" and perhaps "Linxea Vie", and get a french speaker to translate the key points for you.It is not really all that difficult to subscribe(-I once talked someone through it on the phone) In the meantime, I will see if they issue documentation in english.
I assure you that I am not an agent , only a satisfied customer.

[Jim Wheeler]

Thanks, Parsnips. Your information is much appreciated. You do not mention a minimum period of contractfor for AV, as suggested by the agent. Would there be a binding contract with the provider for a minimum period or is it simply a case of the benefits not being optimised if we were to withdraw from the scheme early? It wouldn't be our intention to do so but we are both pensioners and you never know when crisis might crop up in the future. I'll take your advice and get the application documents printed off so that a better French speaker can run through them for me.

[parsnips]

Originally Posted by Jim Wheeler

Thanks, Parsnips. Your information is much appreciated. You do not mention a minimum period of contractfor for AV, as suggested by the agent. Would there be a binding contract with the provider for a minimum period or is it simply a case of the benefits not being optimised if we were to withdraw from the scheme early? It wouldn't be our intention to do so but we are both pensioners and you never know when crisis might crop up in the future. I'll take your advice and get the application documents printed off so that a better French speaker can run through them for me.

Hi,
There is no minimum term , but only after 8 years do you get the full tax advantages. You can withdraw some (or all- not recommended-you lose the term related benefits if you close the plan altogether) of your investment at any time without withdrawal fees.

[tinabee]

Originally Posted by parsnips

Hi,
There is no minimum term , but only after 8 years do you get the full tax advantages. You can withdraw some (or all- not recommended-you lose the term related benefits if you close the plan altogether) of your investment at any time without withdrawal fees.

As a happy Fortuneo customer I can confirm that once you get the hang of their on-line system it is pretty easy to make deposits AND withdrawals.

During the first 8 years of the AV contract, you can think of it as a super-savings account whereby you only pay tax on the interest when you withdraw money, rather then when you receive the interest.

If you want to invest in property as well - you could look at a French leaseback scheme . . .

[parsnips]

Hi,
In Assurance Vie, although I advise putting the bulk of your money in the guaranteed € fund (100% safe), you can in some contracts also invest in property holding funds , which give you profits without the usual landlord's hassle.

[shimself]

I haven't trawled through all this thread, so I might be repeating something

I retired here 3 years ago, I have no connection whatsoever with the (loathsome) banking saving industry

add Monabanq to the list of online assurance vie.
also Bienprevoir have some more speculative offerings (structured products) which can be wrapped into an assurance vie.

I have read and it seems to be the case that Fonds en Euro this year and next are capped by government at 3.75%

Irish Life International (who have not gone bust and are being taken over ny some Swedish firm) write french Assurance Vie contracts in English. The advantage is that the choice of funds is far far wider than available from the French providers (ETFs for a start). The set up cost is something like 1% a year for 8 years. Do your own sums on running costs, but it seemed to me that overall they were competitive with the lower cost internet companies mentioned in the thread. The online ads about "are you an expat with have X amount to save??" seem to be for their agents. I expect you could negotiate a discount on the 8% (or refund or booster or bonus they call them)

I did have an assurance vie with Aviva but the agent misled me as to how it worked and Aviva were unhelpful, so I cancelled it.

There is the weird tontine arrangement from Conservateur, which has excellent published results, but when I found myself surrounded by salesmen sniffing blood in the water and unwilling/unable to answer my questions I walked away. They say, because we have your money guaranteed for 10 years or more we outperform, I say wow it's that easy amazing nobody else does it.

francetransactions dot com (i'm too new to post clickable links) seems to have a decent comparison table.

With rates at 3.75% you can save money in an assurance vie for just 6 months and beat what you get at the bank (providing the set up costs and admin costs are negligible)

Steve

[shimself]

Originally Posted by parsnips

you can in some contracts also invest in property holding funds , which give you profits without the usual landlord's hassle.

such as?