British Airways’ pension represents years of service and a promise of financial security in retirement. The New Airways Pension Scheme (NAPS) stopped accepting future accruals in April 2018. This final salary pension scheme used to give guaranteed retirement income based on your salary and service years.

Many NAPS members want to know if transferring their British Airways pension scheme makes financial sense. The decision becomes more complex when you live in or plan to move to France. The Cash Equivalent Transfer Value (CETV)—a lump sum offered for your defined benefit pension—stands as a significant factor to think about. The NAPS scheme also has specific death benefits, like guaranteed income for spouses, that might not transfer with your pension.

You need to manage your pension well to ensure long-term financial stability and get the most from your retirement income. Your personal circumstances, retirement goals, and financial needs will determine if a British Airways pension transfer works best for you.

Understanding the British Airways Pension Scheme

British Airways’ employee benefits history includes the New Airways Pension Scheme as a key component. Your retirement planning decisions depend on understanding how this scheme works and where it stands today.

What is the New Airways Pension Scheme (NAPS)?

British Airways created NAPS in 1984 as a final salary occupational pension scheme (also known as a defined benefit scheme). Your pension benefits came from a formula that linked your pensionable service and pay, which made it a valuable retirement asset. NAPS operated outside the State Second Pension until April 2016. The scheme stopped accepting new members on April 1, 2003, and closed completely to future accrual on April 1, 2018.

Why the scheme was closed in 2018

A massive funding deficit led to NAPS closure. The scheme had racked up a £2.8 billion deficit by March 2015. BA discovered that keeping NAPS open would push the cost of future benefits up to 45% of members’ pensionable pay in 2018. This was four times higher than what other UK airlines typically contributed.

BA pumped £3.5 billion into NAPS since 2003, but the financial strain proved too much. The airline paid £750 million in pension contributions during 2017 alone. BA still needs to fund accrued benefits through annual payments between £300 million and £450 million until 2027.

What happens to your benefits now

Active members received deferred pension status after the closure. You now have several choices:

  1. Keep your pension in NAPS and receive increases based on Scheme Rules.
  2. Claim your pension at your Normal Retirement Age (Plan 60 or Plan 65), or start drawing it earlier.
  3. Trade part of your deferred pension for a lump sum when you start drawing.
  4. Move your NAPS pension value to another HM Revenue and Customs-approved scheme.

Your existing benefits stay protected and adjust with inflation, even though you’re not building new ones. Taking a pension with British Airways under NAPS remains a safe choice since defined benefit schemes rarely default or reduce benefits.

The scheme needs your current contact details, especially if you’ve left BA. You should claim your benefit within six years of your Normal Retirement Age or risk losing it.

Why Consider a Pension Transfer to France

Your British Airways pension remains static after the NAPS closure. Many BA employees who live in France are learning about transfer options to make their retirement planning better. Let’s take a closer look at why moving your pension to France might make sense.

Lack of future accruals in NAPS

The NAPS scheme closed to future accruals in April 2018. Your existing benefits stay protected and adjust for inflation, but they won’t grow anymore. This situation leads many members to look for other pension options that could grow beyond their preserved benefits.

Desire for more flexibility and control

Moving your British Airways pension brings several advantages that you won’t find in the traditional scheme:

  • Greater flexibility: An International SIPP lets you access retirement savings your way—as a lump sum, ad hoc withdrawals, or regular payments, unlike a traditional pension’s fixed monthly income.
  • Investment freedom: You can access various investment opportunities, including funds, stocks, ETFs, and bonds to build a diverse portfolio.
  • Estate planning: A transfer opens up more options to pass benefits to your heirs.

Expat Wealth At Work stands ready to help if you want to transfer your British Airways pension or need better pension management.

Managing currency and tax implications

Your pension’s move to France creates practical financial benefits:

  • Currency management: International SIPPs let you hold your pension in major currencies, including euros. This feature helps reduce exchange rate risks when you withdraw your pension.
  • Tax efficiency: French residents pay tax on UK pension income in France instead of the UK, thanks to the double taxation agreement between both countries.
  • French tax treatment: Pension income attracts 9.1% social charges in France (7.4% for pension income under €2,000 a month/€3,000 per couple) unless you have EU Form S1.

French tax rules allow you to take your whole pension fund as a lump sum and pay just 7.5% tax with an uncapped 10% allowance, under certain conditions. This rate compares favourably to progressive income tax rates that start at 11% from €10,085 and peak at 45% for income over €158,122.

Key Factors to Evaluate Before Transferring

Making smart decisions about your British Airways pension transfer requires a review of key factors to determine if moving your pension to France matches your financial goals.

Cash Equivalent Transfer Value (CETV)

The CETV shows the lump sum you could get for your defined benefit pension rights. NAPS members can ask for up to two guaranteed CETVs every twelve months. These values stay guaranteed against market changes for three months from when the statement is issued. A transfer means you give up your guaranteed scheme benefits in exchange for this cash value. You should wait until after your first CETV’s three-month guarantee expires before asking for a second one.

Death benefits and survivor provisions

The NAPS scheme has valuable survivor benefits that protect your loved ones. Your spouse or civil partner automatically gets a pension worth two-thirds of what you earned while paying higher contributions. The Trustee can pay this pension to financially dependent partners of unmarried members. Children under 16 (or up to 23 if they’re in full-time education) might qualify for allowances equal to one-sixth of your deferred pension.

Setup and ongoing costs

The minimum fund values needed are typically around £70,000 to make transfers worthwhile given the advisory and administration costs. Your overall pension value will be affected by setup fees and ongoing management charges when you transfer.

Investment risks and market exposure

Transferred pensions face investment fluctuations, unlike the guaranteed NAPS scheme. Your retirement income could be affected by market volatility, so you need to review your risk tolerance.

Tax treatment in France vs UK

French residents usually pay tax on UK pension income in France rather than the UK under the double taxation treaty. French income tax rates go from 0% up to 45% based on how much you earn. You might qualify for a fixed 7.5% tax rate in France if you take your entire pension as one lump sum under certain conditions.

Top Pension Transfer Options for NAPS Members

British Airways pension holders in France have two main ways to transfer their pensions. Your financial situation and retirement goals will determine which option works best.

QROPS: Benefits and limitations

QROPS (Qualifying Recognised Overseas Pension Schemes) lets you move your UK pension to an HMRC-approved scheme abroad. This option works well for long-term French residents who want tax benefits and the flexibility to receive payments in euros instead of pounds. All the same, QROPS has some drawbacks. Most UK to overseas pension transfers now face a 25% tax charge. French tax authorities might not view QROPS as a proper pension scheme, which could lead to tax issues.

International SIPP: Features and advantages

Many expats now prefer International Self-Invested Personal Pensions (SIPPs) because of their practical benefits. An International SIPP gives you:

  • Investment freedom with many options like funds, stocks, and bonds
  • Regulatory security with UK Financial Conduct Authority oversight
  • Cost efficiency with lower fees than QROPS

These UK-based pensions help you combine multiple pension pots. You also get flexible drawdown options and can handle multiple currencies.

Comparing QROPS vs SIPP for expats in France

International SIPPs offer better advantages to most NAPS members living in France. SIPPs avoid the 25% overseas transfer charge that QROPS requires. UK regulation provides more protection, and SIPPs cost less to set up and manage. You get similar investment choices and withdrawal options.

Let’s talk about your needs and find the best options for your financial future. Book your free consultation now to plan your secure retirement in France.

Conclusion

Moving your British Airways pension to France is one of the most important financial choices you’ll make. Your NAPS benefits stopped growing after the 2018 closure but remain valuable for your retirement. You need to look at all your options before changing your pension setup.

The French tax system can work better for certain pension transfers than UK taxation. Your pension becomes easier to manage when it matches the currency you use daily. But you should weigh these advantages against what you’d give up—the guaranteed income and survivor benefits from your NAPS pension.

British expatriates in France have made SIPPs their top choice. These international SIPPs give you more flexibility and control over investments at lower costs than QROPS options. The lack of a 25% overseas transfer charge makes SIPPs even more attractive.

Your personal finances, retirement plans, and comfort with risk should guide your final choice. This pension reflects your years of service and is the lifeblood of your retirement security. Let Expat Wealth At Work help you take charge of your pension today!

Expert guidance is a wonderful way to get through these complex decisions, especially when you have large sums of money and permanent pension transfers to think about. The process might look overwhelming, but knowing your options will enable you to make smart choices that support your retirement dreams and financial future in France.