How to transfer UK pension to Germany

Planning to retire in Germany? You’ll have a long to-do list to get through before your move abroad, but it’s important not to forget about your pension.

You might want to look into transferring it from the UK to Germany, especially if you’ll be relying on it for income.

In this helpful guide, we’ll be taking a look at how to transfer a UK pension to Germany. We’ll run through which UK pensions are eligible for transfer and how to get started, as well as the potential costs and tax implications involved.

And remember, if you’re looking to move pension savings or other income across international borders, the Wise account is an ideal solution. It offers low transfer fees*, the mid-market exchange rate and a choice of 40+ currencies, as well as being safe and secure for transferring large sums.

Can I transfer my UK pension to Germany?

In theory, you should be able to transfer your UK private or workplace pension overseas to Germany.

However, it all depends on the conditions and restrictions of your particular pension scheme. You’ll also need to move your pension to what is known as a Qualifying Recognised Overseas Pension Scheme (QROPS) in Germany.

This means that it’s on HMRC’s list of approved QROPS schemes. It makes it easier to transfer your pension abroad, and in some cases it’s the only way to do it - as many UK pension providers won’t permit transfers to non-QROPS schemes. It’s also essential for avoiding a large tax bill, although you may still have some taxes to pay on pension transfers.

Transferring UK-based pensions abroad may have significant tax implications. These can sometimes be complex and costly, depending on the country you’re moving to. So, it could be a good idea to speak to a pensions or tax specialist to get some expert advice.

Which UK pensions are eligible for transfer to Germany?

Not every type of UK pension is eligible for transferring overseas.

You should be able to transfer occupational pensions, Small Self-Administered Schemes (SSAS), defined benefit schemes and defined contribution schemes to a QROPS in Germany.

However, you’ll need to check the specific conditions of your pension - as some have restrictions on transfers.

You won’t be able to transfer your UK state pension to Germany though. You can still receive your pension payments while living there, as long as you’re up-to-date with your National Insurance (NI) contributions or meet other eligibility criteria such as having lived or worked abroad. You’ll just need to apply to the International Pension Centre within 4 months of your state pension age.¹

If you have a civil service pension (i.e. as a teacher, NHS worker or police officer), you may face difficulties in transferring it abroad. You’ll need to contact your pension provider to find out about your options.

How to transfer your UK pension to Germany - a step by step guide

To transfer a UK pension to Germany, there are a few key steps involved. Most of your time will be spent doing some research, finding out if your pension is eligible for overseas transfer, and then finding a suitable QROPS scheme in Germany. But you’ll also have some paperwork to complete, in order to apply for and initiate the transfer.

We’ll run through these steps in more detail in just a moment. Firstly, let’s take a closer look at QROPS.

Qualifying Recognised Overseas Pension Schemes (QROPS)

The most crucial part of transferring a UK pension overseas is finding a QROPS. These are pension schemes that have been vetted and approved by HMRC, and which allow UK nationals to transfer their pensions overseas.

Most UK pensions can only be moved to an HMRC-approved QROPS. It may be possible to move your pension to a non-QROPS scheme, but you’ll face a whopping 40% tax bill on the transfer.²

It’s important to note though that transferring your pension to a QROPS in Germany may not mean you avoid tax charges altogether.

Steps to transfer your pension

Now, let’s take a look at the steps involved in transferring your pension from the UK to Germany:

1 - Find a QROPS scheme

The first step is to find out if there are suitable QROPS available in the country you’re moving to. The easiest way to do this is on the recognised overseas pension schemes notification list here. Sorted alphabetically by country, these are all the schemes that meet HMRC’s requirements to be a QROPS.

The good news is that Germany is on this list, although there are only a handful of different QROPS to choose from.

2 - Check that your UK pension allows overseas transfers

The next thing to do is get in touch with your pension provider to find out if it permits transfers overseas - and specifically, to Germany. It should if it’s a QROPS you’re transferring to, but it’s always worth double-checking.

There may also be conditions, costs or other tax implications you need to know about before setting up the transfer.

3 - Complete the application form for the transfer

Once you’ve found a suitable QROPS, checked your pension conditions and perhaps also spoken to a financial advisor or pensions specialist, it’s time to apply for the transfer.

You’ll need to download and complete Form APSS 263 from the UK Government website. This asks for information such as:

• Your personal details and National Insurance number
• Address and contact information for you in the UK (or your previous UK address if you’ve already moved)
• Details of the QROPS - including the name, address, country in which the scheme is established and regulated and its HMRC reference number
• Your employment details (if relevant)

Once you’ve completed the form, you’ll need to submit it to your UK pension scheme administrator to start the transfer process.

Crucially, make sure you check your form carefully before submitting it, and don’t miss out any information.

If you are asked for more info, provide it as quickly as possible. If you fail to provide all the requested details within 60 days of submitting your form, your transfer will be taxed at 25% - whether or not you’re exempt from other taxes or charges.²

Timeframes and costs involved

The time it takes to transfer a UK pension overseas varies. It depends on the processes (and efficiency) of the pension providers involved in both countries, as well as how quickly you respond to requests for information.

You’ll need to speak to your pension provider (and perhaps the QROPS provider in Germany too) to find out more about specific timeframes for the transfer to be completed. It’s not likely to be super quick, so you may need to wait patiently for a few months.

In terms of costs, there is one main charge you need to know about. This is the overseas transfer charge of 25%. If you’re living in the same country as the QROPS you’re transferring to - and stay there for at least 5 years - you shouldn’t have to pay this charge.²

However, it may apply if your transfer exceeds your overseas transfer allowance (OTA). This is currently set at £1,073,100, although it can differ in some circumstances. If you exceed your OTA, the 25% charge may be payable on the excess.²

Tax considerations of transferring your UK pension to Germany

The world of tax and pensions is rarely straightforward. It can be extremely complex, especially when trying to navigate tax rules in more than one country. This is why it’s always a good idea to get some professional advice before transferring a pension to another country.

But generally speaking, here’s what you need to know about tax when you move a UK pension to Germany.

If you’re living in the same country as the QROPS, you shouldn’t be liable for tax on the transfer. So if you’ve already moved to Germany and live there permanently, and transfer your UK pension to a Germany-based QROPS, you won’t have to pay tax.²

Crucially, you’ll need to stay living in Germany, the UK or within the EEA for 5 years or you may have to pay 25% tax.²

However, there may be other tax implications that affect you, depending on your circumstances. For example:

• If you make a transfer that exceeds your overseas transfer allowance (OTA) of £1,073,100, you’ll pay tax of 25% on the excess.²
• If you transfer your pension to a non-QROPS (which is usually not permitted, but still technically possible), you’ll pay up to 40% tax on the whole of the transfer amount.²

Learn more about the Wise account

Save money on pension transfers to Germany with Wise

After reading this, you should have a better idea of how to transfer your UK pension to Germany, including the steps, costs and taxes involved.

But it’s also important to think about how you’ll actually receive your pension sum in Germany. A key consideration is that your pension pot will need to be converted from British pounds (GBP) to euros (EUR).

If you use a local bank account, you could be stung by high currency conversion fees and poor exchange rates. As it’s likely to be a large amount you’re transferring, this could make a serious dent in your retirement funds.

Luckily, there’s a better solution available. Open a Wise account and you can manage your money in 40+ currencies, including GBP and EUR.

You can use it to send and receive money internationally, for low fees* and mid-market exchange rates.

This could be hugely useful for transferring your pension between countries, or even for receiving your UK state pension or other UK-based income while living in Germany.

Sign up with Wise today

---

Sources used:

1. GOV.UK - State Pension if you retire abroad
2. GOV.UK - Transferring your pension

Sources last checked on date: 23-Sep-2024