Updated: January 14, 2020

Personal Pensions for People Moving Abroad

What happens to your personal pension if you move abroad? Read on to find out exactly what you should do.

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Richard Angliss

Author: Richard Angliss - Finance Expert

Updated: January 14, 2020

personal pension can be a smart choice for anyone who prefers to take the DIY approach to investment, but what becomes of your UK scheme if you’re moving abroad, and is it possible to set up a UK personal pension as an expat?

Our guide to personal pensions for people living abroad covers the following topics…

What happens to my UK personal pension if I’m leaving the country?

If you have a personal pension and are moving overseas, several options will likely be available to you. They would typically include…

  • Leave your pension in the UK and draw an income from overseas
  • Take your pension abroad with you
  • Leave a pot in the UK and take another abroad (if you have multiple pots)

If you’re unsure which of these options to take, make an enquiry with us. We will introduce you to an independent pensions advisor who can go over all of the options with you in detail and suggest the best course of action.

Leaving your pension in the UK

Nothing will really change if you leave your UK-based personal pension at home when you move overseas. Your pension options won’t be any different when it comes to drawing an income, though there are variables to consider.

Keep in mind that most pension providers won’t pay pension income directly into an overseas bank account, and those that do might hit you with extra fees.

There are workaround solutions, such as asking your provider to pay your income into a UK bank account and either withdrawing the funds in your new home country or transferring them into your foreign bank account. Just make sure you’re fully aware of the charges this will come with and how exchange rates can affect things.

Taking your pension with you

You will have the option to transfer your pension to a scheme overseas but most experts only recommend doing this if the plan you’re transferring into is a qualifying recognised overseas pensions scheme (QROPS). Moving to a non-QROPS scheme will likely come with heavy tax charges.

QROPS schemes meet the same standards as those in Britain, but keep in mind that you could have fewer options than you would if you left your pot in the UK.

You can also claim your state pension abroad if you meet the criteria.

Given that transferring a pension overseas can come with hefty taxes and potentially mean you have fewer options available, it’s important to seek expert advice before making a final decision. Make an enquiry and we’ll introduce you to an independent pensions advisor who can help you make the right decision.

Combining both options

Many people who start up a personal pension also pay into a workplace scheme or other pension pot. If you have more than one pension, it may be possible to combine the above options and leave one pot behind when you move abroad.

Whether it makes financial sense to do so will depend on the charges and tax implications involved, so be sure to seek expert advice first.

Tax implications

Where taxation is concerned, the first thing you should be aware of is that you must let HMRC know if you’re moving abroad. You may have to pay UK tax on your pension and will need to make sure they’re charging the correct amount.

Some countries have a ‘double tax’ agreement with the UK, which means you won’t have to pay tax in both territories. However, if you’re moving somewhere that isn’t covered by one of these agreements, your pension income could be taxed twice.

Moreover, those who move abroad before they have started drawing a pension income run the risk of missing out on their tax-free lump sum.

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Are there personal pensions for expats living in the UK?

Yes. If you’re a foreign national living and working in the UK, then you’re entitled to set up a personal pension.

You can claim a state pension as well if…

  • You’re of state pension age (due to rise to 66 in October 2020)
  • You have a National Insurance number
  • Having been paying National Insurance for at least 10 years (does not need to be ten consecutive years)
  • To receive the full state pension, 35 years of contributions are required, anything less will mean you receive a pro-rata amount

As long as you can legally live and work in the UK, you’ll have access to all of the same personal pension products and benefits as someone who was born in Britain, but seeking professional advice before you take out a pension is recommended.

The expert pensions advisors we work with have access to the entire market, can provide bespoke advice and help you choose the best pension product for you. Make an enquiry and we’ll introduce you to them for a free, no-obligation chat.

Can I set up a personal pension if I’m a non-UK resident?

Technically speaking, it’s not possible to take out a UK personal pension if you don’t have the right to live and work in the country.

However, if you’ve been a UK resident within the last five years it may be possible to make limited pension contributions. It could also be possible to open a SIPP and transfer funds from a different personal pension while you’re a non-UK resident.

If you’ve been a UK non-resident for five years or more, moving your pension funds to a QROPS scheme might be an option to discuss with an advisor.

Speak to an expert

Whether you’re moving abroad with a personal pension or want to set one up before you head overseas, speaking to an expert could potentially save you time and money. The pension specialists we work with are best positioned to offer you bespoke advice and help you make the most financially viable decision.

Call 0808 189 0463 or make an enquiry and we’ll introduce you to an advisor for a free, no-obligation chat about your personal pension options.

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We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in pensions. Ask us a question and we'll get the best expert to help.

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Richard Angliss

Richard Angliss

Finance Expert

About the author

Richard Angliss has made a career in financial services which stretches over 40 years.

His early career was spent learning about the various financial products and applying them to prudent advice, working for one of the largest life assurance and investment firms. After that he joined the financial services arm of a very well-known firm providing independent advice to their 8 million customers.

For the last 20 years he has been involved in building software solutions that help Advisers and clients work together to achieve good financial outcomes and helping to set up three independent advisory firms. He also has written many articles for financial services publications and provided commentary for newspaper journalists.

At an early stage in his career he realised the great satisfaction that comes with being able to help people achieve their goals and protect their families. “Regulation of financial services has hugely impacted on ensuring people get appropriate advice. The issue these days is access to that advice and just as importantly regular reviews to make sure that everything stays on track”.

With the growing development of online resources such as Online Money Advisor he sees a great future for people to access advice to make their pension and investment work harder for them.  Plus, of course, to ensure they have insurance products in place that will be required when unforeseen events happen.

He knows getting that balance right is crucial to prudent financial planning and the wellbeing of individuals and their families.

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