UK Pension Advice
A UK pension transfer is not an uncommon option, yet it is frequently overlooked and misunderstood by expats. However, with the desire for more significant investing freedom, many expats with a UK pension are now considering this option.
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Together, we can fully understand your pension, whether they are 'Fit For Purpose', and then we can look at all of your suitable options based on the style of retirement you are working towards.
It is quite a thing to be financially literate yet not know what your pension is doing.
Andrew Baily
Governor of the Bank of England
Chair of the Monetary Policy Committee
What type of pension do I have?
Defined
Benefit​
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Also known as a Final Salary pension, is a type of workplace pension scheme that guarantees a specific retirement income based on your salary and the number of years you've worked for your employer.
Defined Contribution​
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This is a type of retirement scheme where both you and your employer make regular contributions into an individual account, and the amount you receive at retirement depends on the total contributions made and the performance of the investments over time.
Private
Pensions​
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This is a retirement savings plan that you set up independently of your employer. It allows you to contribute regularly to a fund that is invested on your behalf, with the aim of building up a pot of money to provide income in retirement.
State
Pension​
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This is a regular payment from the government that you receive when you reach state pension age, calculated based on the number of qualifying years of National Insurance contributions you've made, providing a basic level of income in retirement.
What Are My Options with My UK Pension as an Expat?
Leave Your Pension in the UK
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Defined Contribution (DC) Pensions​
You can leave your DC pension in the UK and continue to manage it. This includes monitoring its performance, adjusting investments, and considering your withdrawal options once you reach the eligible age (55 years and older).
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Defined Benefit (DB) Pensions:
If you have a DB pension, it will remain in the UK, providing a guaranteed income for life based on your salary and years of service. You should review the scheme's rules regarding payments to overseas residents.
Consolidate Your Pensions in the UK
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Defined Contribution (DC) Pensions:
You can consolidate your DC pensions into a single pot in the UK. This simplifies management, reduces fees, and streamlines your withdrawal options once you reach the eligible age (55+).​
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Defined Benefit (DB) Pensions
Consolidating DB pensions is complex and sometimes not possible, but reviewing each scheme's rules for overseas payments is crucial. Understanding the benefits from each can help you plan effectively for retirement.
Consider a Transfer to an International SIPP:​
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An International Self-Invested Personal Pension (SIPP) offers expats enhanced investment flexibility and control. In the UK, there are approximately 60 SIPP providers, and they help pensioners access a broad range of global investments and multiple currencies, helping to diversify their portfolios and mitigate currency risk.
With an International SIPP, you can actively manage your pension, consolidate multiple pensions under one roof, and benefit from potential tax advantages, depending on your country of residence. Flexible withdrawal options allow for tailored retirement planning, and favourable inheritance options support effective estate planning.
Consider a Transfer to a QROPS or QNUPS:​
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Depending on where you may be residing, or plan to retire, it may be the right choice to transfer your pension benefits into either:
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QROPS (Qualifying Recognised Overseas Pension Scheme)
is for transferring UK pensions to an overseas scheme, which can offer tax-efficient management for expats. It follows UK pension rules and may incur tax charges.
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QNUPS (Qualifying Non-UK Pension Scheme)
is designed for inheritance tax planning, allowing contributions from personal wealth, not just pensions, and can provide protection from UK inheritance tax depending on your residency.
In short: QROPS is for UK pension transfers abroad, while QNUPS is for broader inheritance tax and wealth protection of international assets.