Many people with benefits in a UK pension scheme can transfer to another UK scheme. Most expats have similar options to transfer pensions overseas into a qualifying recognised overseas pension scheme, or QROPS.
QROPS are sometimes referred to as ROPS, which simply stands for recognised overseas pension schemes.
Such transfers, if done correctly, are not taxed at the point of transfer.
It’s important to note that not all qualifying overseas pension schemes accept transfers in, and not all expats are eligible to transfer their pension to a qualifying recognised overseas pension scheme.
Whether you’re able to transfer your pension needs to be determined with professional advice.
In order to qualify for international pension transfers, an overseas scheme has to meet specific criteria determined by UK tax law.
The scheme also has to tell HM Revenue and Customs (HMRC) that it qualifies.
However, HMRC does not "approve" any schemes, even though it provides a list of QROPS on its website, and HMRC does not carry out any checks that a recognised overseas pension scheme qualifies.
If an overseas scheme meets all UK tax law requirements, and you are either:
...then a transfer to it should not incur UK taxation on the transfer itself.
However, as these rules have newly come into effect, accompanied by other changes to QROPS, including the application of a 25% Overseas Transfer Charge for other transfers, we strongly recommend you refer to our technical note on this point, and contact us to discuss how these changes may affect your choices.
If at any point in time HMRC discovers a recognised overseas pension scheme does not actually meet the qualification requirements, transfers that have been made to that scheme may incur up to a 55% unauthorised transfer tax charge.
Any jurisdiction that fulfils the above UK tax law criteria relating to QROPS and pensions could conceivably be considered for a pension transfer to a scheme in that jurisdiction. However, there are other considerations you need to think about too.
The jurisdiction most appropriate for your transfer, if you decide to transfer, will depend on many things including your jurisdiction of tax residence, where you plan to retire and any relevant double tax agreements (DTA).
Popular jurisdictions for pension transfer business currently include Malta and Gibraltar, but there are many other jurisdictions to choose from as well.
Malta, and to a lesser extent Gibraltar are popular largely because of their highly regulated, low tax environments, and in the case of Malta their many DTAs.
However, neither may be appropriate for you, and there are many other choices.