Q: I’m an Irish expat, planning to retire abroad, for example in Spain or France, what are the options for collecting my Irish pension?
As an Irish expat, you can still draw your Irish pension if you leave it behind in Ireland. However, it will incur up to 4.75% in management fees and government levies annually, will be subject to Irish inheritance taxes (CAT) upon your death, and you may be subject to currency conversion risks when you transfer it to your new local currency.
It would be financially wise to transfer your Irish pension to a recognised offshore, or overseas, pension scheme (ROPS). This way, you can find a tax neutral or tax beneficial jurisdiction, which will reduce your tax burden and minimize the erosion of your Irish pension. Currently, the Irish pension custodian approves certain ROPS in the following countries:
Malta, Australia, New Zealand, the Isle of Man or Gibraltar.
The favored jurisdiction of Irish expats for moving their Irish pensions abroad is Malta. Transferring your Irish pension to a European ROPS in Malta means you would avoid all Irish taxes & levies altogether, and pay only Spanish or French income tax on your ROPS. This is because Spain and France have a Double Taxation Agreement (DTA) with Malta, where Spanish and French tax laws take precedent. You can also receive your pension in Euro and avoid any foreign exchange risk.
There are various criteria and restrictions relating to transferring your Irish pension offshore, drawn from Irish legislation and from Revenue guidance. In essence, an Irish expat must declare that he is not transferring his benefits for the purpose of circumventing Irish pension rules, ie. tax evasion. For this reason, we are increasingly seeing transfer requests blocked by the Irish pension scheme administrators following negative guidance issued by the Irish Revenue, particularly where the Irish expat is not resident in the same jurisdiction as the chosen ROPS.
Therefore, at Hoxton Capital we look at each case on an individual basis, because feasibility can vary according to the type of Irish pension scheme you are a member of, the history of decisions made by the Irish custodians of your Irish pension scheme(s), the jurisdiction of the receiving ROPS, as well as your choice of country in retirement.
The good news is that we are experienced in supporting our clients in moving their Irish pensions overseas, and other retirement planning advice. Get in touch here to schedule an exploratory discussion.