What are Your Pension Options When Moving Abroad?
If you are considering a move abroad, there are several options with your pensions to consider. From leaving your pensions in your UK pension plan to transferring your UK pensions to a QROPS. Before making any changes to your pensions it is advisable to seek independent expat pension advice to ensure you have the most effective strategies in place.
At Prism Xpat, as an international financial advisory and expat pension advice specialist, our experienced team of advisers can support and guide you through all the options available to you for your pensions when you are moving abroad.
Leaving your Pension in a UK Pension Plan
If you decide to leave your pension in a UK pension plan your pension will continue to be held by your pension provider until you reach pension age and begin to claim it.
Early payment can be requested once you are 55 years old, depending on the rules of your pension scheme you may also at this point be able to take a tax-free lump sum of 25% of your pension. The remaining 75% will remain in the scheme to provide a pension income for your retirement. Note that each of these payments may be taxed if you reside out of the UK.
Leaving your pension in the UK may incur additional costs such as currency conversion, as your UK pension would be paid in Sterling regardless of your country of residence. It is also important to mention that fluctuating exchange rates could result in a decrease in the value of your payments.
To understand the pros and cons of leaving your pension in the UK after you have moved abroad, it is advisable to seek expat pension advice to ensure you are aware of costs, implications, restrictions and benefits of leaving your pension in the UK.
Transfer your UK Pension to a QROPS
If you have private pensions or workplace pensions you may be able to transfer these to a Qualifying Recognised Overseas Pension Scheme (QROPS) providing you meet the conditions. Those with UK pension rights who are living away from the UK permanently or those looking to retire abroad could benefit from transferring their UK pension to a QROPS.
These benefits include:
- Increased flexibility of pension income
- Greater tax efficiency
- No currency conversion costs post transfer
- Not affected by exchange rates
it is always recommended to seek independent expat pension advice before transferring your pension to a QROPS from a UK pension to ensure you understand the solutions available to you, the benefits of each and any exit fees you may occur when entering or exiting your QROPS.
Claiming your UK State Pension Abroad
providing you have paid at least 10 years of National Insurance Contributions and you will need to have contributed for 30 years to receive a full pension.
However, you will only receive pension increases each year if you live in:
- the UK for 6 months or longer each year
- the European Economic Area (EEA)
- a country that has a social security agreement with the UK that allows for increases
If you are planning to relocate overseas or are already living there and are looking for independent expat pension advice, our specialist team can advise you on your options and provide a formal recommendation on your optimal course of action. Get in touch to discuss your requirements and pension options when moving abroad.