Key reasons people transfer their UK pensions
100% of your pension fund value can be passed to your beneficiaries.
Increased tax-free lump sum availability by up to 30%.
Early access to your pension at 55 years of age if needed, with no penalty on benefits.
If you are transferring into a QROPS, a crystallisation event occurs at the transfer point, meaning that the lifetime allowance rules will not apply afterwards.
The flexibility of Income. Once transferred to a private pension, you can take as much or as little as you need as an income.
Eliminate Exchange Rate Risk. If you live abroad, receiving your pension in GBP may mean the value fluctuates month to month in relation to the currency you are spending in.
Control of investment and growth potential.
Disadvantages of International Pension Transfer
Loss of Existing Benefits and Guarantees
Moving your pension abroad may result in losing valuable benefits and guarantees associated with your UK pension (DB schemes), which could impact your overall retirement security.
Charges and Fees
You may encounter initial charges and fees when transferring your pension, and ongoing costs in your new scheme could potentially be high, reducing the overall value of your retirement savings.
Flexibility Concerns
Ensure that your new pension scheme provides the same level of flexibility in accessing your benefits when needed. Inadequate flexibility could limit your financial options in retirement.
Tax Penalties
Transferring your pension overseas can trigger tax penalties such as the Lifetime Allowance or overseas transfer charges, potentially diminishing your retirement funds.
High Advisory and Setup Costs
Seek professional advice and set up accounts that may come with substantial initial expenses, reducing the immediate value of your pension transfer.
Inappropriate Investments
Choosing investments that carry too much risk can jeopardise the safety and growth of your pension fund, potentially impacting your retirement income.
Longevity Considerations
Underestimating how long you may need your pension fund to last requires discipline and commitment to prudent investment strategies, ensuring your financial well-being throughout your retirement years for both you and your loved ones.
What's right for you?
Whether the solution for you is, a QROPS or an International SIPP will be determined by your circumstances and country of residence. Knowing what your options are and what the potential benefits could be for you is absolutely crucial.
You will need to understand your tax position now that you live abroad.
- Are you worried about how much your retirement funds will be passed to your beneficiaries?
- Do you simply need to understand the current position regarding your pension assets?
These will all be some possible questions we can provide and help you understand the answers. When looking for the answers to these complex questions, we always recommend speaking with a UK qualified financial adviser.
