Expats often ask us whether they should transfer their pensions from their current UK schemes to an international scheme with a potentially more advantageous structure, like a Qualified Recognised Overseas Pension Scheme (QROPS) or Self Invested Personal Pension Scheme (SIPPS).
When we talk to them we also hear a fair amount of confusion about what types of pensions you can and can’t transfer; a common question, for instance, is whether state pensions can be transferred.
When we talk about ‘pensions transfers‘, we mean transferring personal pensions and certain employer occupational pensions from an existing scheme to something like a QROPS or SIPPS.
Pensions you cannot transfer
Pensions that cannot be transferred are:
- State Pensions
- Certain former employer schemes already in drawdown
- Civil Service & Armed Forces pensions, e.g. NHS, Police, Teachers, Fire Services…
- Council schemes
- An employer scheme you still pay into
- Any annuities already purchased
- Any employer scheme held within the ‘Pension Protection Fund.’
It is also worthwhile noting that it is not advisable to transfer:
- Schemes that offer high Guaranteed Annuity Rates
- Employer schemes held under the ‘Pension Protection Fund.’
How to work out if a transfer is best for you
For pensions where a transfer may be feasible, it may nevertheless not be right for every individual.
There are many personal and circumstantial variables in play such as how long you intend to stay abroad and how important inheritance provision is to you. Additionally, there is the ever-changing legislative landscape and the potential impact of Brexit on pension transfers.
To ensure the best outcome in each instance is a complex endeavour and, as there is no ‘one size fits all’ solution, it is vital to seek professional advice.
When we undertake this work for our clients, we provide unbiased, fact-based, recommendations. If you are better off keeping your pension where it is, we will tell you so. We will only ever recommend a transfer if it is viable and feasible and, most importantly, if it represents an advantage for you.
The subject of planning for your retirement embodies a far broader set of issues than merely considering whether to transfer your UK pensions, and the best way of preparing for the lifestyle you want once you stop working is to plan your lifestyle holistically.
