When migrating from the UK to another European country, a UK pension member would need to take expert advice when making the decision to either leave their pension in the UK or transfer their UK benefits to an overseas scheme.
Transferring UK Pensions Overseas
There are many factors in the decision process. The first is, should you transfer your UK pensions to the same country that you have migrated to? This can depend on where you have migrated to. There may not be pension schemes capable of receiving UK benefits in the country that you are migrating to. Therefore you may not have that option. Alternatively, even if it is possible, the benefits payable in retirement may not be better than those available from your existing UK pension. If transferring your UK pensions to your new country of residence is not an option, then it may be possible to transfer to a scheme in another country or jurisdiction. This could have the following attractions:
- Income payments could be paid gross at source.
- It may be possible that income levels from the new scheme could be greater than a UK scheme.
- Higher pension lump sum payments may be available.
- An overseas pension can pay benefits in EUROs (or potentially any currency).
- A member does not have to purchase an annuity.
Upon death, as a member of an overseas scheme, the funds available to beneficiaries may be better than what is available from UK pensions. The benefits of transferring UK pensions overseas are not limited to the above points. However, an individual should be aware that there may also be restrictions or risks to transferring from the UK.
For example, if a UK pension member decides to transfer their UK pensions abroad, the receiving scheme has to be a Qualifying Recognized Overseas Pension Scheme (bdhSterling) under UK pension regulations, in order to receive the UK pension funds. This limits the amount of overseas schemes available that can receive UK pensions. Also, an individual should be advised of the benefits that they are giving up from their UK pension (particularly if they are a member of a defined benefit pension).
There is also the potential for changes in legislation in the UK, in your new country of residence or in the bdhSterling jurisdiction, which could determine whether your pension funds should remain there in retirement or be moved. Expert advice on transferring UK pensions overseas should be taken to assist in the decision process.
For more information, ask our experts.