What is a UK Pension Transfer?

UK Pension Transfer refers to the process of moving your pension savings from a UK-based pension scheme to an overseas pension scheme. This might be an attractive option for expatriates who have emigrated from the UK and wish to consolidate their pension savings in their new country of residence. The transfer is typically conducted to a Qualifying Recognised Overseas Pension Scheme (QROPS) or an International Self Invested Personal Pension (SIPP), depending on your personal circumstances and the regulations of your new country of residence.


What are QROPS?

A Qualifying Recognised Overseas Pension Scheme (QROPS) is an overseas pension scheme that meets certain standards set by His Majesty’s Revenue and Customs (HMRC). A QROPS can receive transfers of UK Pension Rights without incurring an unauthorised payment and scheme sanction charge. QROPS can be beneficial for UK expats as they offer flexibility, potential tax advantages, and the ability to consolidate pension assets.


What are International SIPPs?

International SIPPs, or Self-Invested Personal Pensions, are UK-regulated pension schemes that provide a wide range of investment opportunities. They are often used by expats as they provide the security of being regulated by the Financial Conduct Authority (FCA) in the UK, but also offer the flexibility to manage your pension overseas. As with QROPS, International SIPPs should always be established on a fee-only, non-commission basis.


What are the benefits of a UK Pension Transfer for expats?

Transferring your UK pension to a QROPS or International SIPP can offer several potential benefits for expats. These can include greater investment flexibility, potential tax advantages, consolidation of pensions into one scheme, holding investments in the currency local to you, and the possibility to pass the remaining pension fund to heirs free of UK inheritance tax. Remember to seek advice from a regulated financial adviser to fully understand these benefits.


How does the UK Pension Transfer process work?

The process starts with a consultation with a financial adviser who will assess your circumstances and advise on the suitability of a transfer. If you decide to proceed, the adviser will handle the paperwork, liaising with your UK pension scheme and the receiving scheme.


Are there any drawbacks to a UK Pension Transfer?

While there are benefits, there can also be drawbacks to transferring your UK pension. These can include exit penalties from your current scheme, potential tax implications, and the risk of transferring to a poorly managed scheme. A financial adviser can help you understand these potential pitfalls.

Can I transfer any type of UK pension?

Most defined contribution pensions can be transferred, but it is generally not advisable to transfer a defined benefit (also known as ‘final salary’) pension due to the valuable benefits they provide. Some pensions, such as those in unfunded public sector schemes, also cannot be transferred. Always obtain qualified and informed advice before making a decision on any pension transfer.

What tax implications should I be aware of when transferring my UK pension?

The tax implications of a UK Pension Transfer can be complex and vary depending on your personal situation and the country where you are resident. In some cases, you might have to pay an Overseas Transfer Charge. It’s crucial to seek professional advice to understand the potential tax implications.

Can I reverse a UK Pension Transfer?

Generally, once a pension transfer has taken place, it cannot be reversed. This is why it’s crucial to obtain professional advice and ensure that the decision to transfer is the right one for your individual circumstances. It’s important to consider all factors, such as the benefits of the current scheme, the potential advantages and drawbacks of the new scheme, tax implications, and your long-term retirement plans.

How long does a UK Pension Transfer take?

The timescales for a UK Pension Transfer can vary. On average, according to research carried out by the Financial Conduct Authority (FCA), it takes about 16 days to complete a pension transfer. However, this is only a guide, and the actual time can be longer in some cases. Particularly, defined benefit transfers have been known to take over six months on average. Therefore, it’s important to start the process well in advance of when you’ll need the funds, and to be prepared for potential delays​​.