Pensions and retirement

Why you can’t transfer your UK State Pension abroad

9th November 2020

The Author: Craig Gardner

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Craig works in the Madrid office as a Financial Planner and is responsible for helping clients make better financial decisions.

As an expat, you cannot transfer your State Pension overseas.

However, it is possible within many of the countries that have a dual pension treaty with the UK to transfer your eligible years to allow for a combined total.

This can be really useful when trying to achieve a certain amount of years in order to qualify for a state pension from the country in which you live.

For more information about the state pension relevant to where you live, it’s best to visit your country of residence’s official government website.

What are some pension alternatives if you have a private/work pension in the UK?

We know many expats are frustrated to learn they can’t transfer their State Pension but there are alternatives.

Your options depend on your tax residency. However, one of the most popular options is to use a Self-Invested Personal Pension (SIPP) that is tailored to non-UK residents.

What are the benefits of a SIPP?

SIPPs are a form of personal pension that give you the freedom and flexibility to choose and manage your investments with your financial adviser. They differ from most personal pension schemes where your investments are managed for you within a pooled fund.

In addition to the freedom and flexibility of a SIPP, there’s also a greater variety in the types of investments available, such as:

  • Cash
  • Commercial property
  • Corporate bonds
  • Investment trusts
  • Open Ended Investment Companies
  • Shares
  • Unit trusts.

In the long-term, the fact that you can have a greater variety of investments in a SIPP can make a significant difference to the size of your pension pot when you retire.

Is a SIPP always the right choice?

The freedom and flexibility of SIPPs mean they are designed for people who feel comfortable investing and are happy to dedicate time to managing their pension fund.

However, while anyone can open a SIPP, they come with more responsibility than other pension schemes. Every investment carries risk and you’ll need to regularly review your investment performance and make your own decisions.

Also, given a SIPP can be more work for you and your SIPP provider, it can lead to higher charges and fees. If your pension pot is large enough, you may be able to soak up the additional costs. If not, you may need to reconsider your options.

As with any important financial decision, there are risks and things can go wrong. And as a busy expat, do you have the time to dedicate to managing a SIPP?

We always suggest you seek the help of a financial adviser to manage your SIPP.

What will happen to expat State Pensions when Britain leaves the EU?

State Pension rules stay the same for expats living in the European Economic Area or Switzerland until 31 December 2020, when the transition period under the Withdrawal Agreement ends. During this time, the rules on residency, travel and benefits including pensions continue to apply.

Every EU country will decide new rules for British expats living in those respective countries. The UK Government will publish any changes online before the transition period ends.

How can I find lost pensions?

Billions of pounds in lost pensions are waiting for their owners to claim them, so don’t forget to find your lost UK pensions while you are living overseas.

The quickest way to do so is to use the UK Government Pension Tracing Service.  

Need more information?

Here at United Advisers Group, we speak with a lot of expats who have UK pensions to understand their situation before investigating various options for pension transfers.

Please get in touch if you think we can help.