As a UK expat, you probably already know that you have the option to transfer your overseas pension into a specific scheme, as long as it is a qualified scheme. There are indeed plenty of benefits to this, but you need to know that there are certain risks associated with it as well. But the thing is, even if there are risks, as long as you know how to do it right and what to expect, you can take advantage of such an option without having to worry about your pension and significant tax fees or charges. If you are a UK expat and are thinking of transferring your pension to a flexible arrangement in the UK or a suitable pension scheme abroad, how can you do it in the proper way that fully benefits both you and your loved ones? Here’s your essential guide to transferring your pension as a UK expat- and the top facts you need to know.
The top facts on pension transfers you should remember
- A pension transfer can be particularly advantageous for numerous individuals, and it can certainly bring about specific tax benefits as well.
- The benefits of pension transfers on pensions for expats are well-known by financial experts, but you have to be wary of those who try to over-market these benefits. If you would like specific advice on pension transfers, it's best to go with experts who have your best interests in mind, and not those who merely work on getting the best commission.
- It is always good for you to know what your options are when it comes to pension transfers. Educate yourself about the prospective risks and rewards before you make any decision; needless to say, your decision shouldn't be taken lightly.
- If you don’t choose correctly, you may end up losing as much as 55 per cent of your pension fund due to taxes or an overseas charge for transfer of up to 25 per cent. Aside from this, be aware that you may incur additional financial expenses and penalties.
Who can do it?
Almost anyone who has a UK pension scheme has a right to transfer their pension to another scheme as long as it is qualified under UK law. As an expat, you have the option to transfer your UK pension abroad or overseas to a QROPS, or a qualifying recognised overseas pension scheme. But you have to make sure that you meet specific criteria as a QROPS transfer can give you a tax charge of as much as 25 per cent if you don't meet the requirements.
In order to be eligible as a QROPS, a scheme overseas or abroad would need to meet special requirements which are determined by the laws on taxes in the UK, and the QROPS would also need to qualify under HMRC. If the scheme does meet those special requirements, it follows that transfers with the QROPS will not be taxed.
The best thing you can do in order to help yourself and be sure is to seek advice from qualified financial and pension experts, especially those who have been dealing with UK expat pensions for some time. They can give you relevant advice according to your specific situation and provide you with the proper data to make sure you are making the best decision regarding your pension.
Image attributed to Pixabay.com
