How Can Expats Transfer a UK Pension to the Netherlands?

This guide explains how to transfer a UK pension to the Netherlands without incurring unnecessary tax penalties, explores whether your scheme qualifies for an overseas transfer, and introduces alternatives such as international SIPPs.

You will also learn how the Dutch tax system treats foreign pension income and what options are available for maximising cross-border retirement efficiency.

How Is the Dutch Pension System Structured?

The Dutch pension system is comprised of three pillars:

1. First pillar: Includes the state pension provided under the General Old-Age Pensions Act (AOW). Both employed and unemployed Dutch residents accrue entitlements at a rate of 2% per year over a period of 50 years, leading up to the statutory retirement age, which is currently 67.
2. Second pillar: Consists of occupational pensions, which are typically mandatory for employees in specific industries and sectors and funded with employer and employee contributions. Pension schemes may be administered by individual companies for the benefit of their employees or by sector-wide pension funds covering all employees within a particular industry.
3. Third pillar: Entails private pensions or insurance products funded by voluntary personal contributions. They aim to provide supplementary retirement income if the first two pillars aren’t sufficient, or if you want to increase your pension benefits to support a specific lifestyle during retirement. They’re also suitable for self-employed individuals.

UK expats who legally live in the Netherlands may participate in the AOW and private pensions. They may also accrue second-pillar pension benefits if employed by a Dutch company that offers such arrangements.

Which UK Pension Schemes Qualify for a Pension Transfer to the Netherlands?

To be eligible for a pension transfer, your retirement savings must be held in one of the following two types of UK pension schemes:

1. Defined benefit (DB) schemes: DB pensions are traditional workplace pensions that provide guaranteed retirement income. The benefits are calculated based on your salary and years of service with your employer.
2. Defined contribution (DC) schemes: DC pensions are private schemes funded by contributions from you and your employer. The contributed funds are invested across a range of assets, and the value of your retirement income depends on the total contributions made and the performance of the underlying investments.

Unfunded public sector DB pensions, including the Teachers’ Pension Scheme or the NHS Pension Scheme, cannot be transferred abroad. The same applies to UK State Pensions, but you may still receive pension benefits from both schemes while residing in the Netherlands.

Upon transferring a DB pension, your pension provider will calculate the cash equivalent transfer value (CETV)—the amount they will offer you for transferring out of a DB scheme.

Transferring DB pensions valued above £30,000 requires regulated financial advice from an FCA-authorised pension transfer specialist.This also applies to DC pensions, provided they contain special guarantees exceeding £30,000, such as a Guaranteed Annuity Rate (GAR).

If you are unsure whether transferring your DB or DC pension while living in the Netherlands is beneficial, consult our pension transfer specialists at Titan Wealth International.

We provide a professional assessment of your pension, evaluating its performance against your financial and retirement goals to provide transfer recommendations that maximise growth and minimise tax exposure.

Can You Transfer a UK Pension to a Dutch Scheme?

You are only allowed to transfer a UK pension to a Dutch scheme that His Majesty’s Revenue and Customs (HMRC) considers a qualifying recognised overseas pension scheme (QROPS).

QROPS are overseas pension plans that meet the rules and regulations imposed by HMRC, which means they can accept UK pension transfers without triggering tax charges and penalties.

To gain the QROPS status, an overseas pension scheme must report tax information to HMRC and meet specific criteria, such as:

• Being established in an overseas jurisdiction and open to its residents
• Being registered as a pension scheme with the tax authority in its jurisdiction
• Providing tax relief on pension contributions and withdrawals
• Not allowing payments to members under the age of 55

Multiple Dutch pension schemes are currently included on the official QROPS list. However, as the official QROPS list is updated twice a month, a scheme currently eligible to receive UK pension transfers may lose its QROPS status in the future or refuse to accept inbound transfers from the UK.

What Are the Rules and Requirements for Transferring a UK Pension to a QROPS in the Netherlands?

To ensure your overseas UK pension transfer is tax-free, you must choose a Dutch scheme that is on the QROPS list at the time of the transfer.

Otherwise, the transfer will be considered an unauthorised payment by HMRC, triggering an unauthorised payment charge of 40%, which may increase to 55% depending on the nature of the transfer and whether HMRC imposes a surcharge.

The unauthorised payment charge also applies if you withdraw funds from a QROPS before the standard private pension age of 55 (which will rise to 57 in 2028).

The amount you transfer to a QROPS shouldn’t exceed the overseas transfer allowance (OTA) of £1,073,100. Any funds exceeding the OTA will be subject to a 25% overseas transfer charge (OTC). The OTC will also apply in the following situations:

1. Transferring a UK pension to a QROPS located outside your country of residence
2. Moving to another country within five years of transferring a UK pension to a QROPS in the jurisdiction where you reside

If you transfer your pension to a Dutch QROPS before becoming a Dutch resident, you may be eligible for a tax refund. However, this refund is only available if you become and remain a Dutch resident within five years following the transfer.

Advantages and Disadvantages of QROPS

Transferring a UK pension to a Dutch QROPS provides the following benefits:

The primary disadvantages of QROPS are the strict requirements and the substantial tax charges and penalties you may incur if you fail to comply. Additionally, QROPS are foreign pensions and therefore not directly subject to UK regulations.

What Is the Alternative to Transferring a UK Pension to the Netherlands?

To mitigate the risk of tax penalties associated with a QROPS transfer, you may consider transferring your UK pension to a UK-based scheme specifically designed for British expats and non-residents.

An international self-invested personal pension (SIPP) is a UK pension scheme regulated by the Financial Conduct Authority (FCA).

It is particularly suitable for individuals with multiple pension pots, as it enables the consolidation of all your private UK pensions into a single plan, allowing for streamlined management and convenient access while residing overseas. It accepts transfers from qualifying DB and DC pensions and, unlike QROPS, is not subject to transfer limits.

Following the transfer, you can typically continue contributing to an international SIPP tax-free, up to the annual pension allowance of £60,000, which includes personal and employer contributions as well as any applicable tax relief.

While contributions exceeding this limit are permitted, the excess funds will be subject to UK income tax and may incur additional tax penalties.

You may also be eligible for UK tax relief on your international SIPP contributions, up to 100% of your relevant UK earnings.

If you don’t currently have qualifying earnings, you may still claim tax relief on contributions up to the gross amount of £3,600, provided you were a UK resident in one of the previous five tax years and at the time you joined the scheme.

Benefits of International SIPPs

International SIPPs provide the following advantages:

• Global investment options: International SIPPs provide access to a wider selection of investment options than other UK-based DC plans and QROPS.
• Pension allowances: Like QROPS, these schemes allow tax-free lump sum withdrawals and death benefit allowances.
• Withdrawals in multiple currencies: International SIPPs allow you to access your pension benefits in multiple currencies, including euros, protecting your funds from exposure to currency exchange risks.
• Flexible pension access: Once you retire, you can choose from several withdrawal methods, including lump sum withdrawals and a flexi-access drawdown.
• Portability: You can transfer your pension to an international SIPP and maintain your contributions to the scheme, whether you reside in the UK, the Netherlands, or another jurisdiction.

Before opting to consolidate your pension into an international SIPP, it is essential to consider one of its primary drawbacks: the associated costs. International SIPPs often involve a range of fees, including setup charges, ongoing administrative fees, and advisory costs. As a result, they tend to be more expensive than other UK-based pension schemes.

How Can You Supplement Retirement Income While Residing in the Netherlands?

As a UK expat in the Netherlands, you may participate in a qualifying non-UK pension scheme (QNUPS) to accrue supplemental retirement savings and potentially optimise your tax liability.

QNUPS are offshore schemes recognised by HMRC, but are generally not eligible for pension transfers because they don’t adhere to the same tax rules as UK-based schemes and QROPS.

Consequently, any attempt to transfer a UK pension to a QNUPS will be treated as an unauthorised payment and subject to the unauthorised payment charge.

QNUPS are particularly suitable for high-net-worth UK expats as they provide the following benefits:

• No contribution limits
• Typically established in low-tax jurisdictions like Malta, the Isle of Man, and Guernsey
• No capital gains tax on investment growth
• Access to global investment opportunities
• Exemption from inheritance tax (IHT) at present
• Tax-free lump sum withdrawals of up to 30% of the pension value
• Early pension access, depending on the QNUPS jurisdiction.
• Integration with regular or indexed universal life (IUL) insurance for additional wealth management and tax benefits

However, QNUPS also entail the following drawbacks:

How Are Pensions Taxed in the Netherlands?

To prevent their tax residents from being taxed twice on the same income, the UK and the Netherlands have entered into a double taxation agreement (DTA), which allocates the primary taxing rights between the two jurisdictions.

According to the DTA, if you are a Dutch tax resident, most of your pension income, including that derived from international SIPPs and QROPS, will generally be taxable in the Netherlands.

If you’re eligible to receive payments from unfunded public sector schemes, that income is generally taxable only in the UK, regardless of your country of residence.

The Netherlands applies a three-box system for categorising income and determining applicable tax rates:

• Box 1: The first box includes income from employment, home ownership, and business activities. Pensions are typically considered employment income and are taxed at progressive rates of up to 49.50% in 2025.
• Box 2: The second box is reserved for income from business ownership. If you own 5% shares or more in a company, you’re taxed at a 24.50% rate on income up to €67,804, or 31% on any amount over that limit.
• Box 3: The third box includes income from assets, savings, and investments. Any income over the tax-free allowance of €57,684 is taxed at a rate of 36%.

Foreign pensions are generally taxed under Box 1 (income from work and pensions) if they were built using contributions that benefited from tax deferral or relief—which applies to most UK pensions. Only certain fully taxed, non-relievable foreign pensions might be classified under Box 3.

Additionally, pensions held by Dutch tax residents are subject to inheritance tax in the Netherlands. The applicable rates range from 10% to 20% if the beneficiary is your partner or child, and from 18% to 36% if the beneficiary is a grandchild or great-grandchild.

It is crucial to note that lump sum pension withdrawals are taxed at standard income tax rates under Box 1, with no preferential treatment provided for one-time payments.