UK Pension Transfer
Do you have previous working history in the UK?
Let us help guide you through your pension transfer with the very best in expert advice.
On this page you will find a complete overview of all the key points on a UK pension transfer, including details on QROPS and SIPPS. You can also use the form to request a free pension guide explaining all the finer details on the process. For any additional questions you might have, simply hit the ‘chat with us’ button in the bottom right corner.
You can also request a complimentary pension transfer pack to receive a current health check on your previous companies pension pot (including current funding and deficit levels), a transfer valuation for your pension and also an overall assessment of your situation.
Are you eligible for a pension transfer?
If during your working life you have spent periods in the UK and contributed towards a private pension scheme, you may be eligible to transfer your pension abroad. You may also be eligible if you are planning to leave the UK in the next 12 months.
What is a Pension Transfer?
A pension transfer is the process of transferring a UK based pension out of the UK into a Qualified Recognised Overseas Pension Scheme (QROPS). If during your working life you have spent periods in the UK and contributed towards a private pension scheme, however no longer reside within the UK, you may be eligible to transfer your pension abroad. Whether you are a British national that now lives abroad or a foreign national that has decided to return home, there are a number of benefits that may make a pension transfer the right decision for you.
In April 2006, it was decided that any individual that had contributed towards a private pension scheme in the UK, but that now resided abroad or intended to move abroad and become a non-resident for tax purposes, may transfer their pension into a QROPS.
A QROPS or Qualified Recognised Overseas Pension Scheme is a pension scheme that is both recognised and meets the requirements set by HMRC, thus permitting the transfer of an individual’s UK accrued pension into another jurisdiction.
No Lifetime Allowance – With a QROPS, you have no limit to how big your pension can grow. In the UK, the lifetime allowance is 1.25million, which will be reduced down to 1 million this year.
Tax-Free on Death – QROPS have no tax on death regardless of your age.
Consolidate Your Pensions – A pension transfer will allow you to group together multiple pensions if you have contributed towards more than one pension scheme during your time in the UK.
No UK Tax on Pension Income – Transferring your pension into a QROPS will eliminate your requirement to pay UK tax up to 45% on your pension income. It may even be possible to pay no tax at all depending on your country of residence.
A Lasting Amount – Unlike most pensions in the UK which are reduced down to half for your spouse when you pass away and then stop entirely following the passing of your spouse, the full pension amount can be preserved in its entirety with a QROPS.
Higher Lump Sum – Unlike the UK that restricts your tax-free lump-sum to 25%, you can take up to 30% tax-free with a QROPS if you have been a non-UK resident for 5 or more years.
Potential for Better Performance – Unlike a UK scheme which might be restricted to just sterling investments, a QROPS grants the ability to hold and invest the pension in any currency. It may also present investment options not available in a UK scheme.
Currency Avoidance – When you start to draw-down on your UK pension and / or take a lump-sum, every payment will need to be converted to the currency of your new location and as such, will be continuously exposed to the current performance of your required currency.
Take Control – Whilst a lot of pension pots are in a very good state, there are also a number with an unhealthy deficit and low funding level. A QROPS gives you the ability transfer your pension away from these pension pots and take control over your pension.
QROPS or SIPP?
When you transfer a pension, you have two options. You can transfer your pension into a Qualified Recognised Overseas Pension Scheme (QROPS) or into a Self Invested Personal Pension (SIPP). Both options are recognised and meet the requirements set by HMRC and offer varying benefits. Listed below you will find details on both types.
A Qualified Recognised Overseas Pension Scheme or QROPS as it is otherwise known is a recognised overseas pension scheme that meets the requirements set by HMRC. A QROPS is the most common pension transfer option for people transferring their pension out of the UK and grants the ability to move your pension away from the UK and into something which will potentially suit your circumstances a lot better as a non-UK resident.
A main benefit of a QROPS is the ability to hold and invest your pension in any currency so that it can better suit your circumstances outside of the UK. It can also grant you the ability to have more control over your pension compared to your previous workplace pension scheme, which in most cases won’t offer you any input in terms of investment and currency options. You can also take a higher lump sum compared to in the UK and will also be able to enjoy no lifetime allowance or limit on the extent your pension can grow.
A QROPS will tend to suit someone that wants to consolidate their pension plans into one vehicle and streamline both their investment strategy and retirement planning. A QROPS will also give you the ability to draw income flexibly, taking as much or as little income each year to suit your circumstances, with the ability to “turn” income on and off through retirement.
A Self Invested Personal Pension or SIPP as they are otherwise known is a pension transfer solution suited to those who want more control over their pension and how it is invested. A SIPP allows the individual to create a tailored pension investment strategy in an open architecture environment with the help of a financial adviser or similar professional.
The obvious difference and potential advantage to a SIPP is the variety of choice it grants the individual in terms of how the pension is invested. A SIPP allows you to pick from a number of different investments as well as investment types such as Equities, Bonds and funds, etc. You also have access to the whole market across the world.
Another advantage to a SIPP is that it allows you to take an income drawdown instead of having to purchase an annuity.
Overall, a SIPP is an option suited to those that want to take a more active role in the management and performance of their pension.
The process of transferring your pension will vary from case to case and also depend on the number of pensions you are transferring (if more than one). In general though, a pension transfer should normally take between 2-4 months. The steps to a pension transfer are as follow:
Step One – Normally this will involve a discussion with an adviser to gain an overview of your circumstances and establish if a transfer might be correct for you.
Step Two – The next step is to request a transfer pack and valuation from your UK pension provider. We can do this for you on your behalf and in most cases it will take between 3-6 weeks to receive a response. This will of course vary dependent on your UK pension provider.
Step Three – Once the transfer valuation and pack have been received, we will be able to generate a report detailing everything you need to know about the transfer, comparing the benefits of the transfer vs leaving your pension as it is and then ultimately whether we believe proceeding with a transfer to be the correct advice for you.
From here is it then at your discretion how you choose to proceed. The transfer valuation provided by your UK pension provider will usually be valid for around 2 months, giving you ample time to make a final decision.
If you would like to explore your pension transfer options further, simply complete the form on the right and we will be more than happy to send you some further information.