Providing information and clarity

for British Expats looking to Transfer their UK Pension Offshore



Do you know that if your Pension is left in the UK you are risking:-




Losing 50% of your pension for your Spouse.



The majority of UK pension schemes have an optional benefit of a “50% spouse income”. This is a benefit that you pay for throughout the duration of your pension plan by reducing your annual pension income. In simple terms you might pay thousands of pounds each year to lose 50% of your fund you have worked all of your life to build for you and your spouse.


In addition, a significant number of schemes that offer the 50% spouse income benefit will not pay out the full 50% if the spouse is self sufficient.



Losing 100% of your pension for your family in the event of the death of your spouse.

In the event of your spouse’s death the fund dies with
them. Do you really want to lose your children’s inheritance
that you have worked all of your life to build?


Pension Deficits. - Currently many Pension Schemes in he UK are in deficit. They do not have sufficient income into the scheme in order to be able to pay out to Retirees over the long term. As of 2016 Companies including The British Airways Pension Scheme (B.A.) (-£2.8bn), British Telecom Pension Scheme (BT) (-£6.4bn), BAE Systems Pension Scheme (BAE) (-£4.5bn), *Carillion (-£394m),Tesco (-£3.2bn), GKN Pension Scheme (B.A.) (-£1.6bn),*TUI AG (-£827m), *Thomas Cook (-£272m), *A (-£296m) and *Greene King (-£92m) to name but a few.


Many clients choose to move their Pension while there is still a value and not risk leaving the fund to deteriorate.


*Source:Investorschronicle website,Sept 2016


Exposure to buying an Annuity.

If you were to purchase an Annuity, the annuity dies with you. For example if an Annuity is purchased and you pass away in year 2 so dies the annuity payment. This is no longer compulsary under UK Pension legislation in place from 6th April 2011.


Non Domicile Spouse - Gifts made between spouses or civil partners are exempt from inheritance tax.


This exemption is limited to £325,000 if the deceased (or donor) was domiciled in the UK and their spouse or civil partner was not domiciled in the UK at the time of the transfer. i.e if you are married to a non UK Passport Holder. This was increased from £55,000 in 2013.


Restricted Investment & Currency Choice - Many UK Pension Schemes are restricted to investing in British Pounds and UK Investments. For Expats that prefer investing in alternative investment locations and currencies Overseas Pensions may be a better option.


Taxation: DB & DC Schemes – For Defined Benefit schemes that will allow payment in the event of death to anyone other than a husband, wife, civil partner or child under 23 will be taxed at up to 55% as an unauthorised payment. However as of 6th April 2015 there is no longer taxation on defined contribution or defined benefit schemes in the event of Death before age 75. At age 75 and over there is currently a 45% tax deducted at source by the Pension Provider before payment to the Beneficiaries. Your beneficiaries can also opt to take an income. This will be taxed at source by the provider at up to 45%.


Taxation: Annuity or money from a drawdown fund & SIPPS – If you were to die before age 75 then no tax is payable by your beneficiaries. However after age 75 then the payment will be classed as income and fall under your Personal Allowance with taxation of up to 45% for your beneficiaries.

A full explanation of the changes can be found Here


Limited Annual Pension Contributions - As of April 2015, the maximum pension contribution limit was reduced to £40,000. also correct as of 2017. Reduced from £50,000 pre 2014 £255,000 before 2011).


Restricted Life Time Pension Contributions - For the 2016-17 tax year The lifetime allowance is £1m. This was previously reduced in April 2014 from £1.5m to £1.25m. The allowance was also previously £1.8m before April 2012.  Any amount over your lifetime allowance taken as a lump sum is taxable at 55 per cent. Any amount over your lifetime allowance taken as a pension is taxable at 25 per cent.


Pension Access - As of 6th April 2015, from age 55 it is now possible to accesse 100% of your UK Pension from a defined contribution pension scheme (also known as ‘money purchase schemes’). However this access is at the discretion of the Pension Provider, with the withdrawal being classed as income and result in a Taxation of up to 45%. QROPS, now known as a ROPS Scheme as of April 2015) may be able to achieve pension access in a more tax efficient way.

The majority of company schemes and Defined Benefit Schemes will stil remain to be restriced by the scheme rules. Is is however possible to transfer a Defined Benefit Scheme to a Recognised overseas Scheme (ROPS), legally and fully approved by HMRC.

A full explanation of the changes can be found Here


25% Overseas Transfer Charge (OTC) - As of 9th March 2017, the UK Government has announced a 25% Overseas Transfer Charge, that will be deducted by the UK Scheme Administrator before making the transfer to a Regognised Overseas Pension Scheme (ROPS), if the member is not a resident of one of 31 countries in the European Economic Area (EEA). If the memeber is a resident in an EEA country then the 25% OTC will not apply.

The 9th March legislation includes a nuber of additional criteria where by the 25% OTC will not apply. One of which relates to when the "original transfer from a registered pension scheme was more than 5 years ago". Therefore anyone wishing to retire overseas outside of a European Economic Areas (EEA), should speak with a Recognised Overseas Pension Transfer expert 5 years or more, before the legal Pension Commencement age of 55, in order to explore all possible planning options.

A full explanation of the 9th March 2017 25% Overseas Transfer Charge can be found Here


Can we Help? - If you are a British expat or you have lived in the UK and contributed to a UK Pension for over 7 years and would like information on how to transfer your pension offshore, we can help you. You may wish to transfer your UK pension overseas into a (Q)ROPS, establish a QNUPS or even consildate all schemes into one and leave them to remain in the UK via a UK SIPP.




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