Can You Transfer Your Pension to a Spouse as a UK Expat?

While UK pension rules generally prohibit direct transfers during lifetime, there are several alternative strategies that may allow your spouse to benefit from your pension, either through personal contributions made on their behalf or through inheritance.

This article will explore the viable transfer options, relevant tax implications, and specific rules governing different types of UK pensions, including the State Pension and private schemes. We’ll also explain how your pension entitlements may be transferred or divided in case of divorce proceedings.

Can You Transfer a Pension to Your Spouse?

Your UK pension cannot generally be transferred directly to your spouse. The only circumstances where your spouse may obtain rights over your pension are through a court order in divorce, or by inheriting benefits after your death.

However, you may enhance your spouse’s financial security in retirement by contributing to their pension fund during your lifetime. This strategy also offers tax planning benefits, such as reducing your overall tax liability by transferring a portion of your income into a lower tax bracket.

Contributions made on behalf of a spouse can also help build their retirement savings, provided they remain within the annual contribution limits.

How Much Can You Contribute to Your Spouse’s Personal Pension?

All contributions to private pension schemes—whether made by the pension holder, their employer, or a third party (such as a spouse)—count toward the individual’s annual tax-free pension allowance.

The allowance is up to £60,000 (or 100% of relevant UK earnings, whichever is lower). For many expats without UK earnings, the effective limit may be £3,600 gross unless carry forward applies.
Contributions above this limit may be subject to income tax and additional tax penalties. If the spouse has no earnings, they can still contribute up to £3,600 annually.

Individuals with total taxable income of over £200,000 and whose adjusted income (earnings from employment, investments, property, and other sources) exceeds £260,000 are subject to the tapered annual allowance (TAA). Under this rule, the allowance is reduced by £1 for every £2 of adjusted income above £260,000, down to a minimum of £10,000.

If your spouse has unused pension allowances from the previous three UK tax years, it may be possible to ‘carry forward’ those allowances and make larger contributions in the current year.

However, this is only available if they were a member of a UK-registered pension scheme during those years and have sufficient UK taxable earnings to support the higher contributions. For many expats without UK earnings, the practical limit will remain £3,600 gross per year.

Contributions made to your spouse’s personal pension qualify for automatic tax relief at the basic rate of 20%, via the relief-at-source mechanism. For instance, making a gross contribution of £3,600 to a non‑earning spouse’s pension fund requires a net payment of £2,880, with the pension provider claiming the remaining £720 from the government.

While UK non-residents can contribute to UK-based schemes, your spouse must be a relevant UK individual to be eligible for tax relief.

A relevant UK individual is a person who meets one of the following criteria:

1. They are a UK resident.
2. They have relevant UK earnings for the tax year under consideration, which generally include income from employment and self-employment.
3. They have been a UK resident in any of the prior five years and joined a UK-registered pension scheme during that time.
4. They are a Crown Servant, or a spouse/civil partner of a Crown Servant, with income subject to UK tax.

Can You Transfer a UK State Pension to a Spouse?

While you can’t transfer your UK State Pension to a spouse during your lifetime, certain inheritance provisions can allow your partner to increase their State Pension entitlement after your death, subject to specific eligibility criteria.

If you reached State Pension age before 6 April 2016 and are covered under the old State Pension system, your spouse or civil partner may be able to inherit a portion of your basic or additional State Pension or use your NI contributions to enhance their pension benefits, particularly if they are not receiving a full pension themselves.

The pension inheritance rules are more limited for individuals covered by the new State Pension system (men born on or after 6 April 1951 and women born on or after 6 April 1953). While the new system typically does not allow for the transfer of NI records, a surviving spouse or civil partner may inherit part of a protected payment if the marriage or civil partnership began before 6 April 2016.

Your spouse’s ability to inherit your State Pension also depends on whether they are above the State Pension age at the time of your death and whether they remarry or form a new civil partnership before they reach State Pension age.

Does a Deferred State Pension Transfer to a Spouse Upon Death?

Upon reaching State Pension age, you are not automatically granted your State Pension; you must submit a formal claim to begin receiving payments. It is possible to defer claiming the State Pension, and if no claim is made, deferral will occur automatically.

If you delay claiming the State Pension for at least nine weeks, its amount will rise every week, increasing your pension by around 5.8% for each full year of deferral.

In the event of your death, your spouse or civil partner may be entitled to receive the additional benefits resulting from the deferral, provided all of the following conditions are met:

1. They are married to or in a civil partnership with you at the time of your death.
2. They have claimed their own State Pension.
3. They have not remarried or formed a civil partnership before reaching State Pension age, in case they were under the age of 66 at the time of your passing.

The length of the deferral period determines how your partner will receive the extra State Pension, as outlined in the table below:

Does a Private Pension Transfer to a Spouse on Death?

The rules governing the transfer of a private pension to your spouse after death depend on the type of pension you have. There are two general types of private pensions in the UK:

1. Defined benefit (DB): Also known as final salary, DB schemes provide retirement benefits based on your salary and length of service with the employer. These pensions offer a guaranteed income for life, but the transfer of benefits upon death is typically limited.
2. Defined contribution (DC): These pensions are funded by contributions from you, your employer, or both. The contributions are invested in a range of assets, and the pension’s total value depends on the contributed amount and the performance of those investments.

Funds accrued in DC schemes like SIPPs can be transferred to your beneficiaries, such as your spouse, upon your death. If you made no withdrawals before death, your spouse may receive the entire pension fund. If you began drawing benefits, the remaining balance will be transferred to your spouse and other named beneficiaries.

In contrast, DB schemes generally permit the transfer of between 50 and 66% of the pension benefits to beneficiaries, provided you name your spouse, civil partner, or a child under 23 as a beneficiary. If no qualifying beneficiary is designated, pension payments will typically cease upon your passing.

How Can You Maximise the Pension Benefits Your Spouse Inherits?

Some UK expats explore consolidating their pension assets, for example into an international SIPP, to simplify management and centralise retirement savings. This may be attractive if you hold several defined contribution pensions or have overseas arrangements such as a QROPS.

There is generally no upper limit imposed by the SIPP provider on the amount that may be transferred into an international SIPP.

However, if you transfer from overseas pension schemes, such as QROPS, HMRC applies an Overseas Transfer Allowance (OTA) capped at £1,073,100 – transfers above this level will incur a 25% tax charge.

While consolidating into a single international SIPP can simplify administration, especially for expats, it is not necessarily more efficient.

To facilitate a smooth and efficient pension consolidation process, it’s highly advisable to consult pension transfer specialists. Our experts at Titan Wealth International can help you ensure that the consolidation aligns with your overall estate and retirement planning goals while complying with cross-border tax regulations.

What Are the Tax Implications of a Pension Transfer to a Spouse on Death?

If you die before age 75 and your pension provider designates the funds to beneficiaries within two years, withdrawals are usually tax-free. After age 75, or outside the two-year window, beneficiaries pay income tax at their marginal rate. Conversely, if you die after the age of 75, they will be subject to income tax at their individual marginal rate.

Still, the taxation specifics depend on several factors, such as your age at the time of death, the type of pension scheme you’re enrolled in, and the form of payment received by your spouse. Regardless of whether the pension is a DB or a DC scheme, the tax treatment for your spouse will be as follows:

Distinct rules apply to DC pensions you have already accessed by purchasing an annuity or moving them into a flexi-access drawdown arrangement (withdrawing a portion and leaving the rest invested).

If you pass away before age 75 but accessed or converted the pension funds on or after 6 April 2015, your spouse won’t be liable for income tax on the inherited benefits, regardless of the method of access. Meanwhile, if you accessed or converted the funds before 6 April 2015 and you die before turning 75, the funds will be subject to income tax. In the event of death occurring after age 75, any inherited funds will be liable for income tax regardless of when the pension was accessed or converted.

Are You Liable for Inheritance Tax on Private Pension Benefits?

Currently, most pension funds aren’t considered a part of your estate and are therefore exempt from inheritance tax (IHT).

However, from 6 April 2027, unused pension funds and death benefits from both DC and DB schemes will normally be included in your estate for IHT purposes will be treated as part of your estate, which is subject to IHT at a rate of 40% on the value exceeding the tax-free allowance of £325,000.

The new tax regulations will apply to a wide range of pension death benefits, including:

• Annuity protection lump sums
• Flexi-access drawdown fund lump sums
• Dependents’ and successors’ annuities
• DB lump sum death benefits
• Pension protection lump sums

However, certain death-in-service benefits from registered schemes will continue to be excluded. From 2027, it will be the responsibility of your personal representatives to declare and settle any IHT liability on these pension benefits.

Is Your Spouse Entitled to Your Pension After Divorce?

A pension is considered a joint asset in the UK, so your spouse is typically entitled to a part of it in case of a divorce. Both parties are required to disclose their assets, including pension schemes. Your pension provider will then calculate a cash equivalent transfer value (CETV)—the estimated value of your pension benefits at the time of transfer.

Your pension can be divided between you and your former spouse in several ways:

• Pension sharing: Your spouse can obtain a court order requesting a share of one or more of your pension funds amid a divorce. The pension provider starts executing the pension sharing order within four months of receiving the necessary documentation. If your former spouse hasn’t reached pension age yet, the sharing order can be deferred.
• Pension offsetting: Instead of transferring your pension to your former partner, you can offset the pension value against other assets. For instance, if you own property of similar value to your pension, you may transfer that property or a share of it to your former spouse instead, provided they agree.
• Pension attachment: Also known as earmarking, this is a court order that states a portion or all of your pension benefits will be payable to your former partner when you reach pension age. Unlike pension sharing, which allows immediate and direct pension transfers to your spouse, earmarking leaves the pension in the original owner’s name and does not allow transfers until the pension holder retires.

Note that pension sharing orders primarily apply to private pensions. The basic State Pension itself cannot be shared on divorce. However, rights under the Additional State Pension (SERPS or State Second Pension) built up before April 2016 may be shared by court order. For those covered only by the new State Pension system, sharing is not possible.”