What Happens To A Pension When You Become An Expat?

By Retirement

Pension savings left in the UK are always safe when someone moves abroad and starts a new life in another country.

Although you do not have to worry about losing your money, managing a pension from a different time zone and thousands of miles away can present a problem.

Many providers have online dashboards and investment platforms to make this easier, but thousands have still to wake up to the benefits of technology.

If you are planning to stay abroad for some time or even permanently, HM Revenue and Customs (HMRC) will let you transfer your pension savings out of the UK to a Qualifying Recognised Overseas Pension Scheme (QROPS).

Don’t break QROPS rules

You can find a list of the 1,200 or so pensions considered QROPS on the HMRC web site. This list is updated every two weeks.

It’s important to follow the QROPS rules because failing to do so can cost some significant tax penalties.

If you are moving overseas for a short time – say a year or two – you can still pay contributions into your UK pension, but you might find that you are not allowed to top-up the fund with tax relief on the payments.

If you are retiring overseas, your UK provider will likely refuse to send the money abroad. Instead you should set up a UK bank account and transfer the cash to where you are.

Take professional advice

It’s worth noting that this is not a problem with a QROPS, which pay out in most major currencies to a local bank in the country where you are living.

For expats with several pension pots, combining them into a single pension, such as a SIPP or QROPS is a good idea to simplify managing your money and cutting costs.

To find out which pension options most suit your plans as an expat, talk to an independent financial advisor who is regulated and has experience in dealing with expat money matters before you go.

For instance, expats cannot transfer a public sector or civil service pension to a QROPS.

Expats can deal with pensions from overseas, but simple tasks such as proving ID with recent utility bills and a passport become a lot harder across international borders.

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