Personal Pensions for People Moving Abroad
A 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.
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.
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 experts 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.