The UK Rules
'Follow the Regulations'
Transfer Options

Rules for Transferring Pensions

There are several beneficial reasons for transferring your pension. This section explains the benefits, risks, and pension transfer options in the UK or overseas.

PENSION TRANSFER RULES: A pension fund is often called a 'pension pot'. Some of the reasons for moving some (or all) of the pot include situations where:

Free Help to Transfer a Pension

The Money Advice Service offer free and impartial information on transferring your pension. You can also contact the Pensions Advisory Service.

An independent financial adviser will also give impartial advice about moving workplace pensions. But, as a rule you will have to pay a fee for their advice.

Transferring a Pension to another UK Scheme

Pension transfer rules allow several different types of transfers. One of the most common is transferring a UK pension pot to another registered UK pension scheme. People also use the money to buy a 'deferred annuity contract'. This is a pension transfer agreement that provides a guaranteed income for the future.

Note: There are strict rules on transferring pension pots or taking an unauthorised lump sum. The result from any 'unauthorised payments' means tax will be liable on the pension transfer.

Before You Transfer a Pension

There are several important things to check before transferring your pension. You will need to contact the pension provider of your current scheme as well as the provider of the scheme you want to transfer to. Check with them both to confirm that:

In some cases, the transference of a pension pot can result in:

Transferring a Pension to an Overseas Scheme

In some cases, the regulations allow you to transfer your pension savings in the United Kingdom to an overseas pension scheme.

Overseas Pension Schemes

QROPS stands for a 'qualifying recognised overseas pension scheme'. As a rule, you can only transfer your pension savings overseas into a QROPS scheme. Thus, check this with your UK pension provider or the overseas pension adviser.

What if the overseas plan is not a qualifying recognised overseas pension scheme? In this case, the pension scheme based in the United Kingdom may refuse to sanction the transfer. In other cases, you could be liable to pay 40% tax on the pension transfer (or more).

QROPS Tax Implications

The location and base of the QROPS determines whether tax is liable or not. You will have the added responsibility of finding this out.

As a rule, no tax is due if it got transferred to a QROPS scheme which your employer provided. You should check this with your particular scheme to find out.

Note: Requesting a transfer to a QROPS pension scheme before the 9th of March 2017 means you do not pay tax on it.

Pension Transfer to a QROPS Scheme based in the EEA

You will pay 25% tax if you live outside the EEA or you move to live outside the EEA within 5 years. Otherwise you do not pay tax.

Anyone moving to an EEA country within 5 years of the transfer can get the tax refunded. You will need to use form APSS 241 to claim back the tax. This document informs the administrator of the scheme that you have moved. The administrator will then add the refunded money back into your pension pot.

Pension Transfer to a QROPS Scheme based outside the EEA

No tax is due if you live in the same country as your QROPS (outside the EEA). But, you will have to pay 25% tax if not.

Use form APSS 241 if you move countries within 5 years of the transfer. Fill in the document and give it to the administrator of your scheme. Following that, you will:

Transferring to an Overseas Pension

You can get the information needed to make an overseas pension transfer in form APSS 263. Give this form to your UK pension scheme administrator after filling in the document.

Note: You must provide all the information in the form and within 60 days of the transfer request. Otherwise, the overseas pension transfer will get taxed at 25%.

Contact the UK pension scheme administrator if you are under 75 years old. They will calculate what percentage of your lifetime allowance the transfer uses. That will confirm if the amount you are transferring exceeds your allowance. Thus, they will inform you if you will get taxed on it.

Receiving Payments from an Overseas Pension

Some pension transfer rules relate to paying tax on foreign income for expats. That means you may need to pay UK tax on some payments from an overseas scheme. It depends most on when you were a resident in the United Kingdom.

Pension Transfer Options: Benefits, Risks and Rules for Transferring a Pension