What happens to my private pension if I move abroad?

Planning a move abroad? These are exciting times, but there’s also a long list of things to organise. If you’re at or reaching retirement age, one of the most important things to get sorted are your pension arrangements.

In this guide, we’ll focus on what happens to personal pensions if you move overseas. We’ll look at the options for transferring pensions to your new country of residence, including any potential tax implications to look out for.

Plus, a handy tip to help you save money when receiving any kind of UK income in another country - open a multi-currency Wise account. You can use your Wise account to get lower fees and the real, mid-market exchange rate, all of which helps your retirement savings to go further.

Learn more

But more on how this works later. Let’s focus on answering that burning question - what happens to my private pension if I move abroad?

Option 1 - transferring a personal pension to a QROPS scheme

The good news for British expats is that it is possible to move private pensions abroad. But there could be tax implications, depending how you set up the transfer and what kind of overseas scheme you move your retirement savings to.

The key word to remember is QROPS. This stands for Qualifying Recognised Overseas Pension Scheme, and it means that a particular scheme is approved by HMRC for pension transfers. You can check the full (and regularly updated) QROPS list here. Not every country is on it, and some countries only have a very limited number of QROPS.

Unless you choose a pension scheme in your new country of residence that is on the QROPS list, you could face an eye-watering tax bill of at least 40%¹. Your UK pensions scheme could also refuse to make the transfer.

Just because your chosen scheme is a QROPS, this doesn’t necessarily mean your pension transfer will be tax-free. There may also be extra charges and conditions.

To avoid a nasty surprise, it’s a really smart idea to seek expert pensions advice before you do anything. You can also take a look at the Government’s Pension Wise website for more help.

Option 2 - leave your pension in the UK

You don’t have to take your UK private pensions with you when you move abroad. If you prefer, you can leave your pot in the UK and arrange for the money to be transferred to your overseas bank account.

There’s also the chance to mix option 1 and option 2, leaving some pensions in the UK and transferring others abroad. Again, a pensions adviser could be a really helpful source of information for anyone considering retiring abroad.

Use Wise to save money on UK pension payments overseas

If you’re receiving payments from the UK in another country, you’ll need to watch out for high bank fees, currency conversion charges and exchange rate mark-ups. These can all eat into your pension savings.

Luckily, there is an alternative. Open a multi-currency account with Wise and you’ll have a low-cost, secure and convenient way to manage your money across borders.

With Wise, you can receive UK pension payments in GBP, then convert to your new local currency when you’re ready for zero transaction fees. There’s only a tiny conversion fee to pay, but you’ll get the real, mid-market exchange rate. This could save you a small fortune, particularly if you have a large pension pot.

Join Wise and start saving today

Managing pension savings across borders can sometimes be tricky, and you’ll need to watch out for tax and other pitfalls. But plan ahead and seek professional advice to find the best solution for your circumstances, and you could soon be enjoying your hard-earned retirement savings overseas. Good luck!

Sources used for this article:

Sources checked on 11th May-2021.