Due to the excellent public healthcare system and attractive tax incentives, many UK expats decide to retire in Ireland. However, doing so requires some financial adjustments. Moving your UK pension to Ireland can help you avoid foreign exchange fees and simplify financial planning while unlocking tax and pension savings benefits.
In this guide, we’ll explain if UK expats can transfer their pensions to a QROPS in Ireland and under what conditions.
What You Will Learn
- Can UK expats transfer to a QROPS in Ireland?
- What are the available QROPS options in Ireland and what are their benefits?
- What should UK expats know when transferring their pension?
- Which steps should UK expats follow to transfer their pension to a QROPS in Ireland?
Can UK Expats Transfer Their Pension to a QROPS in Ireland?
To transfer their pension overseas, UK expats must find a QROPS scheme that meets all His Majesty’s Revenue and Customs (HMRC) criteria. To simplify finding such schemes, HMRC has published a list of approved providers by country.
Ireland is one of the countries on the QROPS list. Many Irish pension providers offer pension schemes that meet stringent requirements and can receive UK pensions.
Available QROPS Options in Ireland
The HMRC list of recognised overseas pensions schemes (ROPS) includes over 40 schemes UK expats can use to transfer their pensions to Ireland. Some popular schemes included in the list are:
- Maples & Calder Defined Contribution Pension Scheme
- Quest Self-Invested Personal Retirement Bond
- Synergy Personal Retirement Savings Account
- Standard Life Synergy Buyout Bond
Expats typically transfer their UK pensions to one of the following QROPS pension types available in Ireland:
- Buyout bond (BOB)
- Occupational pension scheme
- Personal retirement savings account (PRSA)
Buyout Bond
Also known as a personal retirement bond (PRB), a BOB is a pension policy that allows you to make one contribution from an occupational pension scheme you’re leaving or an existing PRB. So, instead of losing your benefits when switching jobs, you can take them with you by investing the value of your scheme in a bond.
Once you complete the transfer, you can’t make additional contributions to the bond unless they’re from the same pension scheme as the original transfer.
You can transfer to a BOB if you have a defined benefit or a defined contribution pension from the UK, but the BOB you choose must qualify as a QROPS for the transfer to be viable.
Transferring a UK pension to a BOB offers the following benefits to expats:
| Benefits | Explanation |
|---|---|
| Investment Freedom | You can choose how and where to invest your pension funds. |
| Tax-Free Growth | Investment growth is free of capital gains tax (CGT), deposit interest retention tax (DIRT), and exit tax. |
Occupational Pension Scheme
Also known as a company pension plan, this scheme is set by an employer. Two popular types of this scheme are defined benefit and defined contribution pensions—similar to the UK pensions of the same name.
Individuals can transfer their UK pension schemes to occupational pension schemes only if they work for a company that offers them. Due to this specific eligibility criterion, this scheme isn’t widely available to UK expats.
An occupational pension scheme offers the following benefits:
- Financial security in retirement: Occupational pension schemes provide regular income in retirement, while some may also offer a tax-free lump sum payment.
- Tax relief: Both you and your employer can get tax relief on contributions toward the pension. For example, you could be eligible for income tax relief, while your employer could get a 12.5% tax relief for contributing to your scheme.
PRBs and occupational pension schemes in Ireland are generally transferable again in future if you leave Ireland, subject to the receiving scheme’s rules and applicable jurisdictional regulations.
Personal Retirement Savings Account
A PRSA is an investment account you can transfer your UK pension into to save for your retirement and invest. There are two ways to contribute to a PRSA:
- You can contribute to a PRSA set up by your employer. In situations where your employer doesn’t provide access to an occupational pension scheme, they’re obligated by law to offer a PRSA as an alternative.
- You can set up a PRSA yourself and contribute to it independently.
The table below summarises the main benefits of a PRSA:
| Benefits of PRSA | Explanation |
|---|---|
| Flexibility | You can make regular monthly payments toward your pension fund or contribute with lump sums. There are no fees or penalties if you stop payments for a specific time. You may also change the amount or frequency of contributions. |
| Portability | You can switch PRSA providers at any time within Ireland and carry your pension from one employment to another without penalties. However, PRSAs are not portable internationally if you move outside. |
| No Connection to Employment Status | You don’t have to be employed to have a PRSA, which means that it’s available to all UK expats. |
Important Considerations When Transferring a UK Pension to a QROPS in Ireland
Transferring a pension overseas is a complex process. Understanding the tax implications, unique benefits, and ways to maximise your pension savings is crucial for efficiently completing the transfer process and securing financial stability.
The key points UK expats should consider when moving their pension to a QROPS in Ireland are:
- Tax implications
- Additional voluntary contributions
Tax Implications
The main tax implications related to moving your pension to Ireland are:
| Transfer Options | Implications |
|---|---|
| Transferring to a Non-QROPS Scheme | If you move your pension to a scheme in Ireland that doesn’t qualify as a QROPS, you’ll be subject to at least a 40% tax on the transfer. |
| Overseas Transfer Charge (OTC) | If you transfer your pension to a QROPS in Ireland while residing outside the country or relocating within five years of the transfer, you’ll have to pay a 25% OTC. The OTC does not apply if you are resident in Ireland at the time of transfer and remain resident for five complete UK tax years. |
| Overseas Transfer Allowance | For most expats, the overseas transfer allowance is £1,073,100. If your pension’s value is higher than the allowance, you’ll be subject to a 25% tax charge on the exceeding amount. |
| Age Limit | If you access the funds in your QROPS before reaching the UK’s Normal Minimum Pension Age (currently 55, rising to 57 from 2028), you may have to pay a 40% tax charge plus a potential 15% surcharge. |
| Pension Access | You could be subject to UK tax rules if you access your QROPS pension without being a non-UK tax resident for 10 full and consecutive years. Additionally, you could face charges if you try to withdraw funds from your QROPS within five years of the transfer. |
| Standard Fund Threshold | Ireland imposes a limit of €2 million on the amount you can contribute toward your pension without incurring a 40% tax charge, referred to as the Standard Fund Threshold (SFT). Transferring to a QROPS in Ireland doesn’t count toward the SFT, so expats can grow their pension funds without heavy tax penalties. |
| Tax-Free Lifetime Limit on Retirement Lump Sums | Ireland has a €200,000 tax-free lifetime limit on retirement lump sums from all sources. If you exceed this amount, you’ll have to pay a 20% tax if lump sum payments are below €500,000. If they’re above this amount, you’ll be subject to tax at the marginal tax rate. |
| Double Taxation Agreement with Ireland | The UK has signed a Double Taxation Agreement with Ireland, so income from your pension won’t be subject to tax under both countries’ laws. Your pension income will be taxed in Ireland as that’s your country of tax residence. This only applies while you are a tax resident in Ireland. If you later leave Ireland, the treaty protections may no longer apply and UK tax rules could become relevant again. |
| Death Benefits | Lump sum death benefit allowance does not apply to QROPS. UK income tax charges on death benefits after age 75 also generally won’t apply if the beneficiary is not a UK tax resident. |
Many tax charges are avoidable if you understand relevant laws and regulations. To ensure a tax-efficient transfer, seek professional tax advice from a specialist firm like Titan Wealth International.
Additional Voluntary Contributions
Additional voluntary contributions (AVCs) are unique pension arrangements available to UK expats in Ireland. They allow them to increase their pension fund contributions in a tax-efficient manner. At retirement, expats can use the accumulated money to purchase more benefits.
You choose the amount and frequency of AVC contributions for which you can claim tax relief. The percentage of tax relief depends on your income tax band rate. For example, if you’re in the 20% band rate and you invest €50 in your AVC, your actual cost will be €40, as you’ll get €10 back through tax relief.
Key Steps for Transferring a UK Pension to a QROPS in Ireland
Below are the steps a UK expat should complete to move their UK pension to a QROPS in Ireland:
- Check HMRC’s list: Open HMRC’s list of QROPS to see which pension schemes in Ireland meet the required conditions. Research the options you’re interested in to understand tax implications, investment potential, and other relevant details.
- See if your current scheme is eligible for the transfer: Contact your pension provider to determine whether transferring your scheme to a specific QROPS plan is an option.
- Speak to the QROPS provider in Ireland: Contact your preferred provider to gather more information on the scheme you want to transfer to and to confirm that it aligns with your goals and financial plans.
Transferring a UK pension to a QROPS in Ireland is a complex process that requires attention to detail and understanding all relevant laws, regulations, and tax implications.
Seeking help from a professional pension transfer specialist is highly recommended. Specialists at Titan Wealth International can simplify the transfer process and guide you through every step to ensure full compliance and no unexpected penalties or money loss.
Key Takeaway
In this guide, we’ve explained how UK expats can move their pension to a QROPS in Ireland. We’ve highlighted the importance of choosing a scheme recognised by HMRC and discussed available QROPS options and pension types UK expats often select.
To prepare you for the transfer, we’ve summarised important transfer-related considerations to be aware of, from relevant tax implications to the additional contribution options.
We’ve also offered an outline of the steps UK expats should complete to transfer their pensions to Ireland. The importance of an accredited and experienced pension transfer adviser for a successful transfer process is immense—thanks to their expert guidance, expats will be able to select a suitable scheme, make the right investment choices, and align strategies with their goals.
Advisers at Titan Wealth International offer an in-depth QROPS review to determine the best way to move forward, eliminate tax issues, optimise costs, and maximise wealth.
