Transferring your pension overseas or to a private pension scheme in the UK can offer tax benefits, a greater variety of investment options, and more withdrawal flexibility.
Still, before you opt for this step, you must consider the costs, taxation implications, and administrative requirements associated with a pension transfer. The process can be complex and time-consuming, raising a critical question: “How long does a pension transfer take?”
In this guide, we’ll explain how long the transfer process can be depending on the type of pension scheme you’re transferring your funds to or from.
We’ll also provide answers on when you can move your UK pension, how to do so, and what the key factors to consider before initiating the transfer are.
What You Will Learn
- How long do pension transfers take based on your pension scheme?
- When can you make a UK pension transfer?
- Which tax charges and other factors should you consider before transferring a pension?
How Long Does It Take To Transfer a Pension?
A UK pension transfer typically takes two weeks to seven months, depending on the type of your pension scheme and the assets you’re moving.
Cash transfers generally proceed faster than those involving shares or other investments. While delays can extend the transfer process, it should not take longer than 12 months.
There are two main types of pensions in the UK you can transfer:
- Defined benefit: Also known as final salary, this is the traditional workplace pension in the UK. The defined benefit pension income depends on your salary and the length of your employment. It is protected from inflation, making it a stable and predictable source of retirement income.
- Defined contribution: This pension scheme is based on contributions from you and your employer. The contributions are then invested in assets like stocks and exchange-traded funds, meaning your pension income can increase or decrease based on the performance of your investments.
When transferring funds from a defined benefit scheme, you must first determine your cash equivalent transfer value (CETV)—the monetary value of your pension benefits.
This cash value is then transferred to another pension plan, typically a defined contribution personal scheme, which can provide greater financial flexibility and investment return opportunities.
Moving a defined contribution pension usually means transferring it to another defined contribution pension provider, like a UK self-invested personal pension (SIPP).
This is a common scenario for UK expats with a qualifying recognised overseas pension scheme (QROPS) who decide to return to the UK permanently and wish to move their pension back to the country.
Average Time To Transfer a Pension From a Defined Benefit Scheme
When transferring funds from a defined benefit scheme, the first step is determining your CETV. To be eligible to request the transfer value, you must be at least 55 years old. The pension provider has to provide the CETV within three months of your request.
After your pension provider calculates your CETV, they will provide you with a statement of entitlement within 10 days of the calculation date.
The transfer value from the statement will be valid for three months, during which you must complete the necessary pension transfer paperwork. If your CETV exceeds £30,000, you must also provide proof of receiving financial advice within three months of obtaining the statement to proceed with the transfer.
If everything is in order and there are no delays, your pension transfer from a defined benefit scheme should be complete within six months.
To ensure this transfer process goes smoothly, consider consulting a pension transfer expert. Our professionals at Titan Wealth International can analyse your CETV and provide a tailored report outlining the advantages and drawbacks of your pension transfer, with a focus on tax implications and long-term benefits.
Pension Transfer Timescales for Transfers to a Defined Contribution Scheme
The period for moving your retirement funds to a defined contribution pension depends on the scheme you’re transferring your pension to. The two most popular defined contribution schemes are:
- SIPP: This is a UK-based personal pension plan that allows you to save money for retirement while giving you more flexibility regarding the investment options you can choose.
- QROPS: This is an overseas pension scheme recognised by His Majesty’s Revenue and Customs (HMRC) that accepts transfers from UK pension schemes.
When transferring a pension to a SIPP, the average transfer time depends on the assets you’re moving. In-specie transfers—direct asset transfers from one scheme to another—typically take longer as they include additional administrative steps, especially if you hold multiple types of assets.
The approximate transfer periods you can expect are:
- Cash transfers: 2–4 weeks
- Share transfers: 4–6 weeks
- Fund transfers: 6–8 weeks
- International share transfers: 10–12 weeks
Timeframe for Transferring a UK Pension Overseas
If you’re transferring a pension to a QROPS, the process can take up to seven months. This is because a QROPS transfer includes the following steps:
| Step | Timeframe | Explanation |
|---|---|---|
| Completing Form APSS263 | Up to 90 days | When you make an overseas pension transfer request, the scheme administrator has up to 30 days to ask you to provide the necessary details. You must do so using Form APSS263 within 60 days of the transfer request. |
| HMRC Reporting | Up to 60 days | Your pension administrator must report the transfer by sending Form APSS262 to HMRC within 60 days. During this timeframe, they must also deduct a potential overseas transfer charge (OTC) of 25% from your pension benefits through the quarterly Accounting For Tax (AFT) process (if applicable). |
| Receiving a Notification About the Transfer Details | Up to 90 days | The administrator must send you the pension transfer details, including the possible OTC, within 90 days of the transfer. They must also notify the overseas scheme manager within 31 days of the transfer. |
If you’re not liable for an OTC and your administrator is efficient in reporting the transfer, the process can take as little as two to three months.
When Can I Transfer a Pension?
You can transfer your UK pension whenever you want, as long as there is no more than one year before you’re due to start withdrawing your pension benefits. In some cases, you can transfer a pension even after you’ve started taking benefits from it.
For example, the age requirement for pension withdrawals from a QROPS is 55 (57 from April 2028). However, you can transfer your pension between the ages of 18 and 75, the latter being the age you must begin withdrawing benefits under HMRC rules.
Factors To Consider Before Transferring a Pension
Before you decide to transfer your pension overseas or to another UK scheme, make sure you consider:
- Pension transfer charges
- Tax implications
- Potential loss of pension benefits
- Changes in the available investment options
Pension Transfer Charges
Make sure you understand all the potential costs of moving your pension to another scheme before the transfer. On top of set-up fees, common charges you should pay attention to include:
- Exit fees: Some schemes impose fees for transferring or withdrawing funds. While defined benefit schemes have no exit fees, defined contribution schemes set up before 2001 may charge an exit fee (typically 1%) if you transfer your pension before a specified age.
- Annual management fees: These are the fees you pay to your pension provider to run your scheme and investment portfolio. They’re usually a set monthly amount (£50, for example) or a percentage of your pension pot (for example, 0.25% of your fund).
- Platform fees: If you manage your pension online, you may have to pay a certain fee to keep your platform running. It can be a set amount or a percentage of your fund.
Depending on the scheme you transfer your pension to, you may also have to pay trading fees for buying/selling investments. This is usually the case if you hold your pension in a QROPS or SIPP.
Tax Implications
If you’re transferring your UK pension to another country, you may be subject to the following taxes:
| Charge Type | Explanation |
|---|---|
| Overseas Transfer Charge (OTC) | You may have to pay an OTC of 25% on the transferred amount that exceeds the overseas transfer allowance (OTA) of £1,073,100. The OTC also applies if you don’t live in a jurisdiction where your QROPS is based (even if the transferred amount is below the OTA) or fail to submit the transfer forms within 60 days of your transfer request. |
| Unauthorised Payment Fee | If you transfer funds to an overseas pension scheme that isn’t on the official QROPS list, the transfer will be treated as an unauthorised payment, and you could incur a fee of 40–55%. |
To ensure tax compliance when making an overseas pension transfer, consider consulting with a pension transfer adviser, like those available at Titan Wealth International.
Potential Loss of Pension Benefits
Your current pension plan may offer certain benefits you can lose if you transfer funds to another scheme.
For example, if you took out a pension policy in the 1980s or 1990s, your pension scheme likely offers a higher guaranteed annuity rate compared to today’s rates. The guaranteed annuity rate refers to the guaranteed income your pension provider pays you for life once you retire. If you move your pension to another scheme, you will forfeit this benefit.
Changes in the Available Investment Options
Depending on the scheme you transfer your pension to, you’ll be exposed to diverse investment options.
For example, SIPPs and QROPS offer more investment opportunities than defined benefit schemes. However, having access to a broader range of investments may require hiring an investment portfolio manager, resulting in higher pension management costs.
Before choosing the scheme you wish to transfer to, assess your investment risk tolerance level and the costs associated with managing investments. The safest way to do so is to speak to a pension transfer specialist.
Key Takeaway
Moving your UK pension to another scheme can take up to seven months. However, with proper preparation and guidance from a pension transfer expert, you can complete the process in a few months.
In this guide, we’ve explained how the pension transfer timeline varies depending on whether you’re transferring a UK pension to a defined benefit scheme or a defined contribution scheme, such as a SIPP or QROPS. We’ve offered information on when you can make a pension transfer and the steps you should take.
We’ve also outlined the main factors to consider before transferring your pension to another scheme. We focused on transfer costs, taxation, investment option changes, and the possible loss of pension benefits your original scheme offered.
At Titan Wealth International, our pension transfer experts offer comprehensive guidance on moving your pension to another scheme. They can recommend the best pension transfer strategy based on your CETV and assist you with efficient retirement planning.
