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Transferring your pension overseas

This guide was last updated in August 2011.

If you are moving abroad, you may wish to transfer your pension across with you. You can do this without excessive tax penalties if you transfer to a Qualifying Registered Overseas Pension Scheme (QROPS). HM Revenue and Customs (HMRC) have produced a list of all these schemes.

Requirements for the transfer

The trustees or managers of your UK registered pension scheme will need to check that the scheme you choose to transfer to is indeed a QROPS. They will also need to report the transfer to HMRC if you are living in the UK at the time, or if you have lived there in any of the previous five tax years. The QROPS provider must agree to comply with a number of HMRC requirements.

QROPS requirements

No UK tax charges will usually arise as long as you are no longer living in the UK when any payments from your QROPS are made, or were not living there in any of the previous five tax years. Otherwise the QROPS will need to report the payments to HMRC. HMRC will impose a tax charge if a charge would have arisen if the payments had been made from a UK registered pension scheme.

What do you need to think about before transferring?

The rules governing the transfer of pensions overseas give some individuals moving abroad certain tax advantages. This will depend on the country in which the QROPS is based. Some tax regimes are more onerous than the UK's, others less so.

Tax is just one thing you should think about before transferring your pension abroad. Your financial adviser will also need to check that the QROPS you have chosen is reputable, and that it will be well managed at a reasonable cost. Will the choice of investments and the form of benefits payable be suitable for you? Your financial adviser should check that you are getting good value for money, particularly if you are transferring from a defined benefit scheme.