A relatively low cost of living and the absence of a traditional inheritance tax (although a 10% Stamp Duty applies to Portuguese-sited assets inherited by non-direct heirs) make Portugal an appealing destination for UK expats. If you intend to retire there, understanding the feasibility and implications of transferring your UK pension to Portugal is a crucial aspect of expat financial planning.
This article will explain whether it is possible to transfer a UK pension to Portugal. It will provide an overview of applicable transfer rules, available transfer options, and the tax treatment of foreign pensions under Portuguese law, helping you make informed and strategic decisions concerning your retirement plans.
What You Will Learn
- How does the Portuguese pension system work?
- Which UK pensions are eligible for transfer?
- Is it possible to transfer a UK pension to Portugal?
- Which pension schemes can UK expats transfer to under current HMRC rules?
- What is the tax treatment of foreign pensions in Portugal?
How Does the Portuguese Pension System Work?
The Portuguese pension system is based on the following three pillars:
- State pension: Administered by the Portuguese government, the state pension is an earnings-related benefit available to individuals who have made sufficient contributions to the nation’s social security system. A means-tested, minimum-rate pension may be granted to individuals with limited or no contribution history, including those who have not participated in the workforce.
- Occupational pension plans: Occupational pensions are voluntary and sponsored by employers. They involve contributions exclusively by the employer or by both the employer and the employee. Employee contributions may be eligible for tax relief, subject to applicable limits and regulatory conditions.
- Personal pensions: Individuals seeking to supplement their retirement income may contribute to personal pension schemes using after-tax income.
As of 2025, the legal retirement age in Portugal is 66 years and seven months (set annually based on life expectancy and confirmed by government order), and is due to rise to 66 years and nine months in 2026.
Future increases toward age 67 are indicative only and depend on demographic reviews rather than fixed legislation. The normal minimum pension age in the UK is currently 55, rising to 57 in 2028. However, the UK State Pension age is 66 and is scheduled to increase to 67 between 2026 and 2028.
Which UK Pensions Can Be Transferred Abroad?
The first step in considering a pension transfer to Portugal is assessing your current UK pension scheme as the type of pension you hold determines whether a cross-border transfer is permissible.
The following types of UK pensions are generally eligible for transfer:
- Private sector defined benefit (final salary) schemes
- Defined contribution (money purchase) pensions
- Funded public sector pension schemes, such as the Local Government Pension Scheme
Unfunded public sector pensions—including those for police officers, NHS workers, or teachers—cannot be transferred overseas. They may only be moved to another defined benefit arrangement within the UK.
In addition, if your defined benefit pension has a cash equivalent transfer value (CETV) exceeding £30,000, UK regulations require you to obtain advice from a Financial Conduct Authority (FCA)-authorised Pension Transfer Specialist before any transfer can proceed.
The UK State Pension is also not eligible for a transfer to an overseas scheme. However, you may claim your State Pension while residing in Portugal and receive the funds directly in your Portuguese bank account.
Since Portugal is a member of the European Union (EU), UK State Pension uprating continues under current UK rules for residents of the EU, EEA, and Switzerland, in line with increases awarded to UK residents.
If you wish to claim your UK State Pension and receive it in Portugal, you should contact the International Pension Centre.
How Can You Transfer a UK Pension to Portugal?
His Majesty’s Revenue and Customs (HMRC) allows individuals to transfer their UK pensions abroad only if the receiving scheme is a qualified recognised overseas pension scheme (QROPS). A foreign pension scheme is granted QROPS status when it satisfies specific criteria regarding tax treatment, regulatory oversight, and conditions governing pension age and benefits.
Once approved, a scheme is included on HMRC’s official list of recognised overseas pension schemes (ROPS), allowing transfers to proceed without triggering unauthorised payment charges or other punitive taxes.
At present, HMRC’s list of recognised overseas pension schemes doesn’t include any Portuguese pensions. This indicates that none of the pension providers in Portugal currently meet the recognition requirements set forth by HMRC.
The QROPS list is reviewed and updated on the 1st and 15th of each month. While it remains possible that Portuguese schemes may be added in the future, there are currently no indications that such additions are imminent.
Can You Transfer Your UK Pension to a QROPS in Another Country?
Until 30 October 2024, expats were permitted to transfer their UK pensions to a QROPS located within the EEA or Gibraltar and access their funds in Portugal without incurring tax penalties.
Under the current HMRC regulations, you are exempt from the 25% overseas transfer charge (OTC) only if the QROPS is established in the same country in which you are tax-resident, or if the transfer is made to an employer-sponsored QROPS that meets the relevant exclusions.
If you transfer your pension to a QROPS in Malta, Germany, or any other jurisdiction outside your country of residence, you will be liable for a 25% OTC on the amount transferred (subject to your Overseas Transfer Allowance, currently £1,073,100).
You may request a refund if you relocate to the country where your QROPS is established within five years of the transfer date.
Can You Transfer to a Non-QROPS in Portugal?
Transferring a UK pension to a non-QROPS in Portugal is considered an unauthorised member payment under HMRC rules. Such a transfer would normally incur an unauthorised payment charge of 40% on the amount transferred. If the total value of unauthorised payment exceeds 25% of the pension fund within a 12-month period, an additional 15% surcharge may apply. The scheme itself could also face a scheme sanction charge of up to 40% (reduced to 15% if the member’s 40% charge is paid).
In addition, since such transfers fall outside the scope of UK regulatory oversight, you would not have access to statutory protection through the UK Financial Services Compensation Scheme (FSCS), and the UK Pensions Ombudsman would not normally have jurisdiction over disputes concerning overseas schemes.
Which Schemes Can Accept Pension Transfers?
Since there are currently no QROPS in Portugal, UK expats may consider transferring their pensions to an international self-invested personal pension (international SIPP) (often marketed as an “international SIPP”). Despite the name, this is simply a UK-registered SIPP operated by a provider authorised and regulated by the UK Financial Conduct Authority (FCA).
One of the key benefits of transferring to an international SIPP is the ability to continue contributing to and growing your retirement fund from abroad—an option not generally available if you retain a UK workplace or another private, employer-sponsored pension arrangement.
Another notable advantage of an international SIPP is the option to consolidate multiple pensions into a single, professionally managed scheme. Doing so may simplify management and access from overseas, improve investment efficiency, and eliminate duplicate fees.
Advantages of an International SIPP
The table below provides a concise overview of other benefits of transferring your UK pension to an international SIPP as a UK expat in Portugal:
| Benefit | Explanation |
|---|---|
| Broader investment options | International SIPPs enable you to invest in a wide range of assets, including bonds, stocks, property, ETFs, and unit trusts. This allows for investment diversification and effective risk management, subject to the SIPP provider’s permitted investment list and FCA rules on permitted assets. |
| UK regulatory protection | SIPP operators must be authorised and regulated by the FCA, providing a high standard of governance. FSCS protection may apply to the operator (currently up to £85,000 for covered activities), but not to all underlying investments. |
| Tax relief on contributions | You may qualify for tax relief on your SIPP contributions, provided you meet certain conditions, such as having relevant UK earnings, or (subject to HMRC limits) qualifying for relief on contributions up to £3,600 gross per year for up to five UK tax years after leaving the UK. |
| Flexi-access drawdown | You may withdraw up to 25% of your SIPP fund free of UK income tax, while the remaining balance remains invested to support continued growth. However, if you are tax-resident in Portugal when you take this payment, it will normally be taxable there as pension income. |
| Efficient currency management | You can choose to denominate your holdings in euros (Portugal’s local currency) or maintain multi-currency portfolios to mitigate foreign exchange risk and enhance portfolio stability. |
| Cross-border portability | As UK-based pension products, international SIPPs are not jurisdiction-specific. They offer portability, allowing individuals to relocate without incurring penalties or breaching compliance requirements. |
| Cost efficiency | International SIPPs can offer lower administrative and investment-related fees than many QROPS, but charges vary by provider. QROPS may include non-standard share classes or adviser commissions of 2–5%, so total costs should always be compared before transferring. |
How Can UK Expats Enhance Their Retirement Savings?
High-net-worth UK expats may consider establishing or contributing to a qualifying non-UK pension scheme (QNUPS) to enhance and supplement their retirement savings. However, transferring an existing UK-registered pension into a QNUPS would normally be treated by HMRC as an unauthorised payment and consequently subject to unauthorised payment charges and possible surcharges.
QNUPS are defined under UK inheritance tax regulations and recognised for IHT exemption purposes, but they are not HMRC-approved pension schemes—so the standard UK pension tax benefits associated with approved foreign pension schemes (such as QROPS) do not apply.
Although QNUPS are not considered standard pension transfer vehicles and have numerous limitations, they may, in some circumstances, play a supplementary role in wider estate- or succession-planning for internationally mobile individuals.
The table below outlines potential features sometimes cited for QNUPS, with important caveats on jurisdiction and tax treatment:
| Feature | Explanation |
|---|---|
| Unlimited contributions | There are no statutory limits on contributions to a QNUPS. However, significant or irregular contributions may attract scrutiny from HMRC and could be viewed as an attempt to evade UK tax obligations. |
| Flexible access to funds | Access rules depend entirely on the jurisdiction and the scheme deed. Some jurisdictions, such as Malta, may permit earlier access (for example, from age 50), but this is not a UK-recognised pension benefit and may be taxable in both the UK and Portugal. |
| Tax-free lump sum (jurisdiction-specific) | Claims of being able to withdraw up to 30% tax-free are jurisdiction-dependent and not recognised by HMRC. Any payment would generally be taxable in Portugal if you are resident there, regardless of the local QNUPS rules. |
| No HMRC reporting | Unlike QROPS, which are subject to a 10-year HMRC reporting obligation, QNUPS do not have mandatory reporting, but providers must still comply with UK anti-avoidance and information-exchange rules (including CRS and FATCA where applicable). |
What Is the Tax Treatment of Pensions for UK Expats in Portugal?
UK expats in Portugal who receive benefits from UK-registered pension schemes, such as international SIPPs, may, in principle, be subject to taxation in both jurisdictions. However, the UK-Portugal double taxation agreement (DTA) allocates the primary taxing rights between the two contracting countries and ensures that tax residents of either country are not taxed twice on the same income.
According to the DTA, most private pensions and annuities are taxable only in the country where you are tax-resident. Government service pensions—typically from unfunded public sector schemes such as those for teachers, NHS staff, or civil servants—remain taxable only in the UK, unless the work was carried out in Portugal and you are now both a Portuguese resident and national.
Assuming you have become tax-resident in Portugal, your pension income will generally be subject to Portuguese personal income tax (IRS) at progressive rates up to 48%, plus any applicable surcharges. The specific income bands change each year, but rates for 2025 are:
| Income | Tax Rate |
|---|---|
| Up to €8,059 | 13% |
| €8,059–€12,160 | 16.50% |
| €12,160–€17,233 | 22% |
| €17,233–€22,306 | 25% |
| €22,306–€28,400 | 32% |
| €28,400–€41,629 | 35.50% |
| €41,629–€44,987 | 43.50% |
| €44,987–€83,696 | 45% |
| Over €83,696 | 48% |
If you are resident under Portugal’s Non-Habitual Resident (NHR) regime (for those who registered before 2024), foreign pension income may instead be taxed at a flat rate of 10%. New entrants after 2024 fall under the successor expatriate regime with standard progressive rates and certain limited deductions.
Note also that any 25% “tax-free lump sum” taken from a UK pension is not automatically tax-exempt in Portugal and is usually taxable there as pension income.
Book a Complimentary Discovery Call
Book a complimentary discovery call with one of our experts to discuss whether a UK pension transfer to Portugal, or an alternative such as a SIPP, could be appropriate for your circumstances.
We’ll help you understand:
- The potential benefits and risks of different pension transfer options.
- The UK and Portuguese tax rules that apply to pension income and transfers.
- How your residency status, retirement plans, and currency considerations may affect your choices.
This is an information session only; it will not include a personal recommendation. If regulated financial advice is required (for example, for a defined benefit pension transfer), we will explain how this can be provided by an FCA-authorised adviser.
Key Takeaway
HMRC only allows tax-efficient transfers of UK pensions to overseas schemes that are recognised as Qualifying Recognised Overseas Pension Schemes (QROPS). As there are currently no Portuguese schemes on HMRC’s ROPS list, UK expats are generally presented with the alternative option of transferring their pensions to UK-registered SIPPs (often marketed as “international SIPPs”).
This article explored the key features of international SIPPs, focusing on regulatory protection under UK law, investment flexibility, and the ability to consolidate multiple pensions into a single plan.
The article also introduced Qualifying Non-UK Pension Schemes (QNUPS) as a specialised estate-planning structure rather than a pension transfer vehicle, highlighting their potential uses alongside key tax limitations. Additionally, it outlined the tax treatment of UK pension benefits for expats resident in Portugal, referencing the main provisions of the UK–Portugal Double Taxation Agreement (DTA).
As a UK expat, retiring and managing your UK pension overseas requires careful consideration of available transfer options, local tax treatment, and long-term residency implications.
Accordingly, where a UK defined benefit pension transfer is contemplated, clients must obtain pension transfer advice from an FCA-authorised pension transfer specialists before any transfer can proceed. Titan Wealth International works alongside such UK-regulated advisers and locally qualified Portuguese tax professionals to help clients structure and implement cross-border retirement solutions in a compliant manner.
Our pension planning specialists at Titan Wealth International are well-equipped to assess your financial and residency circumstances and develop a personalised pension strategy aligned with your retirement and broader financial objectives.
The information provided in this article is not a substitute for personalised financial, tax or legal advice. You should obtain financial advice and tax advice tailored to your particular circumstances and in respect of any jurisdictions where you may have tax or other liabilities. Titan Wealth International accepts no liability for any direct or indirect loss arising from the use of, or reliance on, this information, nor for any errors or omissions in the content.
