Can I Transfer My Pension to Another Country? A Guide for UK Expats

Can You Transfer a Pension From One Country to Another?

Yes, a pension transfer to another country is a viable option for most UK expats. Depending on specific circumstances, the process typically involves the following phases:

• Determining eligibility: The first phase involves determining whether you meet the criteria that make you eligible for transferring your pension to particular schemes.
• Selecting a transfer option: In this phase, you should weigh the pros and cons of different schemes and choose the one that aligns with your goals.
• Adhering to the rules: After the transfer is completed, you must continue following your new scheme’s rules to prevent penalties.

Why Should You Consider Transferring Your Pension Abroad?

Transferring your pension may be a good option if:

• You want your pension(s) to be in the country where you live.
• You want to easily track any changes in regulations affecting your pension.
• You work abroad and are considering retiring in that country.
• You want to achieve greater tax efficiency.
• You want to consolidate multiple pension pots into one.
• Your priority is currency flexibility.
• You want access to global investment options.
• You want better estate planning.

Moving your pension abroad may not be suitable for expats who:

• Plan to return to the UK.
• Have smaller pension pots.
• Don’t have long-term residency plans.
• Live in countries with unfavourable tax regulations.

Available Overseas Pension Transfer Options for UK Expats

There are four pension transfer options for UK expats:

1. Self-Invested Personal Pension (SIPP).
2. Qualifying Recognised Overseas Pension Scheme (QROPS).
3. Qualifying Non-UK Pension Scheme (QNUPS).
4. International Private Pension Plan (40ee scheme).

Self-Invested Personal Pension (SIPP)

A SIPP is a UK pension that gives you more investment options and, therefore, greater control over your financial future. SIPPs are available to both UK and non-UK residents, and they can be an excellent option if you:

• Plan to return to the UK and want investment flexibility.
• Are looking for investment opportunities you can’t access through a standard pension scheme, like overseas shares, commercial properties, or trustee investment plans.
• Are a freelancer or business owner who wants to save for retirement.
• Want to take control over your pension and combine multiple pension pots.
• Are comfortable making important investment choices or can afford to hire a financial adviser to handle your pension.

An international SIPP could also be the right option for you if you no longer live in the UK but don’t want to transfer your pension overseas.

What if You Already Have a QROPS?

SIPPs now offer the same tax and investment benefits as QROPS but at a significantly lower cost. The once-advantageous benefits of QROPS, such as tax efficiency and investment flexibility, are now matched by SIPPs, making QROPS largely redundant for many expats—but not all. Transitioning to a SIPP can result in considerable savings on fees without sacrificing any of the key benefits.

If you’ve already received financial advice to transfer your pension to QROPS, Titan Wealth International offers a complimentary second opinion to maximise your pension strategy.

Qualifying Recognised Overseas Pension Scheme

A QROPS is an overseas pension scheme that allows British expats and other nationalities with UK pension rights to transfer their benefits abroad without incurring unauthorised payment penalties, provided it meets the standards of His Majesty’s Revenue and Customs (HMRC).

Historically, QROPS offered several advantages over UK pensions, particularly for expats. These included greater tax efficiency, higher pension commencement lump sums, and more flexible investment options. However, with improvements in UK pension schemes like SIPPs, many of these benefits are now available through other pension solutions.

Recent changes introduced in the UK Autumn 2024 Budget mean that QROPS pension transfers are now restricted to the jurisdiction where the pension holder resides.

For example, you can only transfer to a QROPS based in Malta if you live in Malta. These changes significantly reduce the availability of QROPS for expats, as most jurisdictions do not have local QROPS options.

As a result, alternatives like SIPPs or QNUPS are becoming more relevant for expats who want to optimise their pensions without the geographic restrictions now imposed on QROPS.

QROPS Eligibility Criteria

Transferring a pension to a QROPS is now more restrictive following recent changes to UK regulations. Here are the updated eligibility criteria to keep in mind:

• Age: You must be between 18 and 75 to transfer your pension to a QROPS.
• Residency Status: To transfer your pension to a QROPS, you must reside in the same jurisdiction as the QROPS. Additionally, you could be liable for UK tax if you return to the UK within five years of the transfer or withdraw funds within this period.
• Regulatory Compliance: The scheme you transfer to must be regulated and officially listed as a QROPS by His Majesty’s Revenue and Customs (HMRC).

These stricter criteria make QROPS less viable for many expats, particularly those living in jurisdictions without a compliant local QROPS. Alternative solutions like SIPPs or QNUPS often provide equivalent benefits without these limitations.

QROPS Overseas Transfer Charge

Recent changes introduced in the Autumn Budget 2024 have significantly tightened the rules around transferring UK pensions to a QROPS.

These changes, effective from October 30, 2024, remove the exemption from the Overseas Transfer Charge (OTC) for transfers to QROPS established in the European Economic Area (EEA) or Gibraltar unless specific conditions are met.

The updated guidelines outline the 25% OTC applies in the following scenarios:

1. Residency mismatch: You transfer your pension to a QROPS but reside in a different jurisdiction than the QROPS. For example, if your QROPS is in Malta, you must also reside in Malta to avoid the charge.
2. Exceeding the Overseas Transfer Allowance: The OTC applies to any transfer amount exceeding the current Overseas Transfer Allowance (OTA) set at £1,073,100.
3. Relocation within five years: If you relocate to another jurisdiction within five years of the transfer, the 25% charge may be retrospectively applied.

Exemptions from the Overseas Transfer Charge

The OTC will not apply if:

• You reside in the same jurisdiction as the QROPS at the time of transfer.
• The QROPS is an occupational pension scheme, and a sponsoring employer employs you under that scheme.
• The QROPS is a public service scheme, and you are employed by the organisation sponsoring the scheme at the time of transfer.
• An international organisation establishes the QROPS and that organisation employs you at the time of transfer.

Refunds of the Transfer Charge

If you move to the jurisdiction of the QROPS within five years of the transfer, the 25% OTC may be refunded. However, if you move out of that jurisdiction later, you could retroactively become liable for the charge.

Why These Changes Matter

The removal of the EEA/Gibraltar exemption significantly reduces the viability of QROPS for many UK expats. Transferring to a QROPS will likely incur the 25% charge unless you meet the strict residency criteria or other exemptions. These changes make alternatives like SIPPs or QNUPS increasingly attractive for expats seeking cost-effective, flexible pension solutions.

QROPS Benefits That Still Matter, And How SIPPs Have Caught Up

QROPS have traditionally offered unique benefits for UK expats, and while many of these remain valid, recent changes have significantly narrowed their applicability. Here’s an updated view of the benefits that still matter:

• Higher pension commencement lump sums: Depending on the jurisdiction of the QROPS (e.g., Malta, Gibraltar), it is still possible to access a tax-free lump sum of up to 30% of the pension pot, compared to 25% allowed in UK SIPPs. However, you must now reside in the same jurisdiction as the QROPS to qualify for this benefit.
• Tax efficiency: QROPS allow pension income to be taxed in the country of residence, which can be advantageous for expats in lower-tax jurisdictions. This remains a key benefit for those living in countries where double taxation treaties with the UK apply.
• Investment flexibility: QROPS are not bound by UK pension regulations, enabling access to a broader range of investments, including non-UK assets. While SIPPs have caught up significantly regarding global investment options, QROPS may still offer advantages in jurisdictions with favourable currency and tax structures, helping mitigate currency exchange risks.

The advantages of QROPS have been primarily matched by modern SIPPs, which now offer:

• Investment in a wide range of global assets.
• Tax efficiency for UK-based schemes.
• Flexibility for expats who plan to return to the UK or want to consolidate their pensions.

With the new residency-based restrictions on QROPS transfers, SIPPs have become a more accessible and cost-effective alternative for most expats.

Why Consider a QROPS Today?

While SIPPs now provide equivalent benefits for many expats, there are still specific scenarios where a QROPS might be more advantageous:

• Higher pension commencement lump sum: In jurisdictions like Malta or Gibraltar, QROPS can still provide a tax-free lump sum of up to 30%, compared to 25% for UK SIPPs. However, you must reside in the same jurisdiction as the QROPS to access this benefit.
• Tax efficiency for long-term expats: For expats permanently living outside the UK, QROPS may still offer favourable tax treatment on pension withdrawals, especially in jurisdictions with beneficial tax treaties.
• Protection against future UK pension investment restrictions: There is speculation that the UK government may impose rules requiring pension funds to allocate a percentage of their investments (5–20%) into UK-based assets. Historically, UK equities have underperformed compared to global markets. Expats with a QROPS may avoid this restriction, ensuring greater global investment flexibility.

Qualifying Non-UK Pension Scheme

A QNUPS is an overseas pension scheme that is recognised by the HMRC but not approved. This means that the contributions you make to a QNUPS aren’t subject to tax relief.

However, the pension scheme offers numerous benefits, including:

• Unlimited pension contributions.
• UK Inheritance Tax (IHT) exemption.
• More freedom in terms of investment options.
• Tax efficiency when passing on assets to beneficiaries.
• No maximum age for making contributions.
• Integration with Universal Life Insurance (ULI) or Indexed Universal Life Insurance (IUL) policies.

ULI and IUL policies provide life insurance coverage combined with a tax-efficient savings component, allowing for long-term financial protection while growing assets within the QNUPS structure.

Can You Benefit From a QNUPS?

A QNUPS is a good choice for:

• Those who cannot transfer their pension to a QROPS or SIPP.
• Individuals who want to use their pension assets to invest in properties abroad.
• People who want to minimise the effect of UK inheritance tax.
• Individuals seeking greater flexibility and tax efficiency in their retirement and estate planning by integrating ULI or IUL policies.

This pension scheme is also attractive to UK residents who have maximised their tax-relieved UK pension contributions (£40,000) and want to secure their future through additional retirement-saving vehicles, including life insurance solutions that offer both protection and growth potential.

QNUPS Eligibility Criteria

There are no eligibility restrictions for transferring your pension into a QNUPS, but you should double-check the taxation rules of your country of residence. Every jurisdiction has its own regulations, and if you live in a country with unfavourable tax laws, you may have to pay high tax rates.

International Private Pension Plan (Section 40ee Scheme)

International Private Pension Plans (IPPPs) are designed for expats who need global mobility. Such plans were originally established for employees of multinational companies who weren’t suitable for standard solutions.

Today, they aren’t limited to mobile employees—individuals who need cross-border solutions and flexible pension plans can also benefit from IPPPs.

The Section 40(ee) Scheme allows you to transfer your pension with no tax penalties and take advantage of the following:

• No cap on benefits.
• No investment restrictions.
• Lump-sum payment options.

Taking advantage of the Section 40ee Scheme requires fulfilling specific criteria. Titan Wealth International has experienced financial advisers who can help you meet the criteria and transfer into an IPPP. If you’re not eligible, the advisers can explore other pension schemes that better align with your goals.

Can I Transfer My Pension to Australia?

You can move your pension to Australia, but you need to meet specific requirements.

Australia has a pension fund known as superannuation, which is similar to the UK’s defined benefit pension—employers contribute to every employee’s fund. You can transfer your pension to a superannuation fund, but it has to qualify as a QROPS to comply with the UK pension regulations.

If you try to transfer your pension to a superannuation fund that isn’t a QROPS, you could face an unauthorised payment charge of up to 55% of the transferred amount.

Keep in mind that if you’re transferring a defined benefit pension into a superannuation, you have to be at least 55 years old. This age requirement exists due to the following factors:

That doesn’t mean you should wait until you’re 55 to start thinking about retirement and seeking advice. Titan Wealth International can research your options and recommend a potential temporary solution until you’ve met the conditions for the transfer.

Some options, like SIPP, may also allow you to hold Australian dollar investments. So, even if you can’t access your pension benefits yet, there are reasons to start gathering information on the pension transfer process to Australia.

What Is the Right Option for You?

Every situation is unique, and the best transfer option for you depends on your:

• Current pension scheme.
• Desire for more investment freedom.
• Country of residence.
• Willingness to take risks.
• Retirement expectations.
• Planned country of retirement.

If you are confident managing your own investments or intend to work with a financial adviser and want investment flexibility, you could benefit from transferring your pension into a SIPP. On the other hand, a QROPS could be a more fitting solution for expats who don’t plan to return to the UK and are concerned about taxes.

Navigating your options can be complex, so it’s best to get expat pension transfer advice. A regulated and experienced adviser can analyse your current situation and help you maximise your pension benefits.

If you opt for Titan Wealth International, you will receive a personalised report that will clarify the advantages and potential downsides of a transfer, which includes long-term benefits, tax implications, and recommendations.

Pension Transfer Fees

Transferring a pension might involve multiple fees, such as:

• Exit fees: Some pension providers charge exit fees for transferring a pension. For example, leaving some older defined contribution pensions, personal pensions, or stakeholder pensions can include exit fees. Some QROPS may also charge exit fees. These fees could be a percentage of your pension or a fixed amount. Modern SIPPs and QNUPS usually don’t have exit fees.
• Administration fees: Both your current and future pension provider could charge administration fees for handling your transfer.
• Pension transfer advice fees: Getting professional pension advice is always recommended and sometimes required by law. Pension transfer specialists may charge a flat rate or by the hour, or they can charge a percentage of the transfer amount.
• Management fees: Your pension provider will charge you annual management fees. Your new pension scheme could include higher management fees than your old one.

Factors To Consider When Transferring Your Pension

Before opting for a pension transfer, consider the following factors: