How to transfer UK pension to India

Planning to move or retire to India? If you receive a UK pension, you’ll need to find out whether you can transfer it abroad. This is especially important if that pension will be your main form of income while living in India.

In this guide, we’ll run through all of the essential info you need to know about transferring a UK pension to India. This includes whether it’s possible, which pensions are eligible and a step-by-step look at the process. We’ll also touch on the potential costs 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.

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Can I transfer my UK pension to India?

Yes, in theory, you should be able to transfer a UK private or workplace pension overseas to India.

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 India.

This means that it’s on HMRC’s list of approved QROPS schemes, and it could make it easier to transfer your pension. Crucially, it could help you avoid a high tax bill. We’ll cover QROPS in more detail in just a moment.

It’s important to remember that 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 India?

You should be able to transfer most UK-based private and workplace pensions to India. But you’ll need to check the specific conditions of yours, especially if you’re on a defined benefit scheme - as these can have restrictions on transfers.¹

You can’t transfer a UK state pension over to India, but you can receive your pension payments from it once you move. To be eligible, you’ll need to be up to date on National Insurance (NI) contributions. People who’ve lived or worked abroad may also be eligible.

You’ll just need to apply to the International Pension Centre within 4 months of your state pension age.²

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

The basic process for transferring your UK pension to India involves checking that your pension is eligible, finding a QROPS scheme and then completing the paperwork. We’ll cover this in more detail below. But first, some useful info on 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 a 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.³

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

Steps to transfer your pension

Here’s a quick look at the process for transferring your pension from the UK to India:

1 - Find a QROPS scheme

The first thing to do is check whether there are suitable QROPS available in the country you’re retiring 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 India is on this list, and there are quite a few different QROPS to choose from.

2 - Check that your UK pension allows transfers

Next, you need to contact your pension provider to find out if it allows transfers overseas. 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 - Apply for the transfer

Once you’ve done the research 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, you’ll need to make sure you don’t miss out any information on the form. Regardless of any of the other details of your pension transfer, it’ll be taxed at 25% if you don’t provide all the requested information within 60 days of submitting your form.³

Timeframes and costs involved

The time it takes to transfer a UK pension overseas varies depending on the pension providers involved, and how quickly you respond to requests for information.

Once you submit your application form, you’ll need to provide all required information within 60 days.³ You’ll need to speak to your pension provider (and perhaps the QROPS provider in India) to find out more about specific timeframes for the transfer to be completed.

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, you shouldn’t have to pay this charge.⁴

However, it may apply if your transfer exceeds your overseas transfer allowance (OTA). This is £1,073,100, although it can differ in some circumstances. If you exceed your OTA, the 25% charge may be payable on the excess.³

Tax considerations of transferring your UK pension to India

As we’ve mentioned, the tax implications of moving your pension abroad can be complex. So if possible, it’s a good idea to get some professional advice before going ahead.

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

If you’re living in the same country as the QROPS (i.e. you’ve retired to India and live there permanently, and have transferred your pension to a QROPS in India) you shouldn’t have to pay tax on the transfer.³

However, you will pay 25% tax on any transfer amount that exceeds your overseas transfer allowance (OTA) of £1,073,100.³

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.³ So, it’s safe to say that this is best avoided.

Save money on pension transfers to India with Wise

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

But it’s also important to think about how you’ll actually receive your pension sum in India, especially considering that it’ll need to be converted from British pounds (GBP) to Indian rupees (INR).

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 INR.

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 India.

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Sources used:

Sources last checked on date: 23-Sep-2024