How to transfer an overseas pension to the UK

It is often possible to transfer an overseas pension to the UK, but the rules vary by the origin country and type of pension being transferred. In some cases, it may be better to draw down money from the overseas pension into a local bank account, and transfer or withdraw that money in the UK.

Transferring an overseas pension to the UK might depend on:

  • whether it’s an eligible ROPS pension scheme
  • whether a UK pension provider is willing to accept the transfer
  • the specific transfer rules of the origin country

PensionBee and pension transfers from abroad

As of April 2023, PensionBee doesn’t accept overseas pension transfers.

Moving money from an overseas pension into a PensionBee pension can be done indirectly, however there are likely to be tax efficiency implications which should be discussed with a suitable financial adviser.

An overseas pension can be drawn down into a local bank account, before that money’s transferred to a UK bank account and then paid into a PensionBee pension plan. PensionBee is unable to accept international bank payments.

If moving money using this method, bear in mind:

  • To transfer money to a UK bank account, a currency exchange fee may apply
  • Money transferred to the UK may gain or lose value as exchange rates fluctuate
  • Tax considerations around withdrawing the pension
  • Contribution limits

For further information, please see our FAQ.

Recognised Overseas Pension Schemes (ROPS)

ROPS are a type of overseas pension that meet a set of rules set by HMRC - for example, not being accessible until the age of 55. Overseas pensions that meet these rules are easier to transfer to the UK than ones that don’t.

Here is a list of overseas ROPS.

If your overseas pension is ROPS:

  • some UK pension providers may be happy to accept the transfer, though they may also conduct additional fraud checks first
  • it should take the same amount of time to transfer compared to a UK-based pension

If your overseas pension isn’t ROPS:

  • your UK pension provider may refuse to take the transfer

Overseas transfer charges

Some overseas transfers from ROPS may incur a 25% tax charge. This is deducted by the ROPS provider on behalf of HMRC, before the transfer is made.

Transfers from non-ROPS may incur an unauthorised payments charge of at least 40%.

The particular details around overseas transfer charges can be a little complicated. For further details, see the website.

What are the tax implications of transferring a pension from overseas?

Impact on tax relief

Most UK taxpayers will benefit from tax relief when making contributions into their UK pension. A standard rate taxpayer would receive a £20 top up on a £100 contribution, for example.

But overseas pension transfers into UK pension plans aren’t considered contributions. Therefore, they’re ineligible for tax relief. So a basic rate taxpayer wouldn’t receive any top up if they were to transfer their overseas pension to the UK.

Impact on the annual allowance

The annual allowance is the maximum amount of money that can be paid into a UK pension before a tax penalty is charged. The allowance as of the 2023/24 tax year is £60,000.

Because overseas transfers aren’t considered contributions, they won’t contribute to the annual allowance. Therefore, an overseas pension worth more than £60,000 could be transferred to a UK pension without incurring a tax penalty.

Impact on the lifetime allowance

The lifetime allowance is currently £1,073,100 for the 2023/24 tax year. This doesn’t mean you’re unable to save above this amount, there’s no upper or lower cap for how much money you can have in your pensions. However in the 2023/24 tax year, any amount over the lifetime allowance will be taxed as income at your marginal tax rate. It has been announced by the Government that the lifetime allowance will be removed entirely in the 2024/25 tax year and replaced by an upper limit on how much tax-free cash you can withdraw, which is expected to be £268,275.

Because transfers from overseas aren’t considered ‘benefit crystallisation events’ (BCEs), they won’t trigger a test against the lifetime allowance. But when a BCE does occur (when money is first taken out of a pension, for example), the overseas money previously transferred into that pension will count towards the lifetime allowance.

If the overseas transfer is made from a ROPS pension, the lifetime allowance can be increased by the transferred amount and no tax penalties will be charged. For example, transferring £100,000 from a QROPS would increase the lifetime allowance to £1,173,100. To do this, a claim must be made to HMRC within five years of the transfer being made.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

Last edited: 19-07-2023

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