Why transfer your UK pension

Why transfer your UK pension?

Before you transfer your UK pension, you need to ask yourself the below questions:

    1. Where will you retire? What are the rules for pension transfers between the UK and the country I am currently in? Depending on where you are, the transfer rules are different, such as Australia.
    2. How much will you need in income
    3. What tax will you pay on pensions?
    4. Are you clear on the options available to you regarding your UK Pension Assets?
    5. Would you like to be in a position to make an informed decision?


Now that you have left the UK, you should consider the options available to you regarding your pension assets left behind in the UK.

You have three options:

    1. Do nothing. Leave the pension funds in the UK
    2. Transfer to a HMRC recognised overseas pension fund (QROPS)
    3. Transfer to an International or UK-based SIPP(Self Invested Personal Pension)
Leaving pension in the UK

The following may apply to you and your pension IF you leave the funds in the UK:

  • Income Tax up to 45%
  • Your beneficiaries may not be able to receive the total value of your fund after your death
  • Subject to Lifetime Allowance (LTA)* assessment, any savings more than the LTA limit will face an additional tax of between 25% and 55%
  • Subject to ongoing and fast-paced changes in UK pension legislation and tax rules
  • Funds are generally held in GBP, creating a potential future currency risk
  • 84% of UK Defined Benefit (Final Salary) schemes are underfunded, leading to several high-profile closures
  • No/Limited control of investments
  • Restricted growth options, typically only inflation-linked

Key reasons people transfer their UK pensions

  • Mitigate UK income tax your pension funds if left in the UK could be taxed up to 45% when you begin to receive benefits, even if you are living abroad.
  • 100% of your pension fund value can be passed to your beneficiaries.
  • Increased tax-free lump sum availability by up to 30%.
  • Early access to your pension at 55 years of age if needed, with no penalty on benefits.
  • If you are transferring into a QROPS, a crystallisation event occurs at the transfer point, meaning that the lifetime allowance rules will not apply thereafter.
  • 84% of UK final salary schemes are underfunded, meaning they do not have enough to pay the members the promised benefits.
  • The flexibility of Income. Once transferred to a private pension, you can take as much or as little as you need as an income.
  • Eliminate Exchange Rate Risk. If you live abroad, receiving your pension in GBP may mean the value fluctuates month to month in relation to the currency you are spending in.
  • Control of investment and growth potential.
  • Generous transfer values, often 30 times the annual benefits promised.
Key reasons to transfer your UK pension

What’s right for you?

Whether the solution for you is, a QROPS or an International SIPP will be determined by your circumstances and country of residence. Knowing what your options are and what the potential benefits could be for you is absolutely crucial.

You will need to understand your tax position now that you live abroad.

  • Are you worried about how much your retirement funds will be passed to your beneficiaries?
  • Do you simply need to understand the current position regarding your pension assets?

These will all be some possible questions we can provide and help you understand the answers. When looking for the answers to these complex questions, we always recommend speaking with a UK qualified financial adviser.

How can we help you?

If you would like to speak to one of our advisers, please get in touch today.

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