Overseas
Pension Transfers

Because of the risks involved, you must always take the advice of a Financial Conduct Authority (FCA) regulated pension transfer specialist. Our retirement experts hold that accreditation.

Additionally, our retirement experts are Chartered Financial Planners, certified by the Chartered Insurance Institute (CII).

They are bound by the CII’s Code of Ethics, which requires them to:

• obey all relevant laws and regulations
• act with the highest ethical standards and integrity
• act in the best interests of each client

Understanding your choices

Our approach to your retirement planning options is transparent and comprehensive. Together, we: 

• review your current financial position, assessing pension performance and projected benefits, as well as international investment returns to date;
• consider where and when you want to retire, and your desired income in retirement; and
• identify each option you have, explaining the pros and cons of each approach, to guide your informed decision making.

The impact of a pension transfer on your UK tax liability depends on several factors, including the type of pension you are transferring and where you are transferring it to. Here are some key points to consider:

1. Transfer to a QROPS (Qualifying Recognised Overseas Pension Scheme)

Overseas transfer charge (OTC): If you transfer your UK pension to a QROPS outside the European Economic Area (EEA) and you are not a tax resident in the country of the receiving scheme, you may be subject to an Overseas Transfer Charge (OTC) of 25%. This is a one-off tax applied to the transfer amount.

No UK tax on transfer: in general, if the transfer is to a compliant QROPS, you won't incur any additional UK tax on the transfer itself, but be mindful of the potential OTC.

2. Tax on pension income post-transfer

Taxation in the UK: Once you move abroad, UK tax will not be applied to pension withdrawals unless you return to the UK and are considered a tax resident. However, the tax treatment depends on the country where you are a tax resident. Some countries may tax your pension income, and others like the UAE have a Double Taxation Agreement (DTA) with the UK to prevent double taxation.

Tax-free lump sum: You can still take a tax-free lump sum from your UK pension when you reach the age of 55, regardless of where you live. However, this is subject to UK tax laws at the time of withdrawal.

3. Impact on Lifetime Allowance (LTA)

The Lifetime Allowance (LTA) is the maximum amount you can accumulate in your pension pots without incurring additional tax charges. If you transfer your UK pension to another scheme (whether inside or outside the UK), it could impact your LTA.

4. Transfer of Defined Benefit Schemes

If you're transferring a defined benefit pension e.g. a final salary scheme, the transfer value is likely to be significant. Although the transfer itself isn't taxed, you may lose valuable retirement benefits, such as guaranteed income or inflation protection. It's important to assess the long-term impact, as the loss of these benefits could affect your overall tax planning.

5. Transfers to other UK pension schemes

If you transfer your pension to another UK pension scheme (like a SIPP or a defined contribution scheme), there are no immediate UK tax consequences. However, you'll still be subject to UK tax laws when you access the funds in the future.

In summary, the main impact on your UK tax liability when transferring a pension is the potential 25% Overseas Transfer Charge (OTC) if you transfer to a non-EEA QROPS. There is no tax on the transfer itself, but pension withdrawals may be taxed depending on your country of residence. If you’re approaching the Lifetime Allowance or transferring a defined benefit pension, it's important to consider the long-term tax implications.

Transferring a pension overseas can be beneficial, but it comes with several costs. Financial advice is often required (1–3% of the transfer value), plus setup fees for a SIPP or QROPS (£250–£1,000+) and annual admin fees (£300–£1,500). Your current provider might charge transfer-out fees, and ongoing platform or fund fees typically range from 0.5% to 2% annually. Hidden costs can include currency conversion fees (2–5%), early withdrawal penalties, and commissions baked into offshore products. A 25% tax charge may apply if transferring to a non-compliant QROPS. Always get a full fee breakdown and use a regulated, fee-only adviser.

Read more

1. QROPS vs SIPP pension transfer guide

2. Should Dubai-based executives transfer UK pensions to QROPS or SIPP?

3. QROPS vs QNUPS vs SIPP – key pension differences