Living outside the UK does not necessarily prevent you from transferring a UK pension.

Depending on the pension involved and your individual circumstances, a transfer could potentially be made to another UK pension arrangement or, in some cases, to an eligible overseas pension scheme.

However, being able to transfer a pension and deciding whether a transfer is appropriate are two very different questions.

International pension transfers can involve UK pension rules, overseas taxation, scheme eligibility and potentially significant transfer charges. Existing pension benefits and guarantees also need to be understood before they are surrendered.

Here are some of the key considerations.

Can a UK pension remain in the UK if you live overseas?

Yes. Moving overseas does not automatically require your pension to move with you.

Many UK pensions can remain in place after their owner becomes non-UK resident.

The practical position can vary between providers, however.

Some providers may restrict certain transactions, investments or services depending on the country in which a customer becomes resident.

That means somebody moving abroad may wish to establish how their existing provider deals with overseas residents rather than assuming their pension needs to be transferred.

Can you transfer to another UK pension?

Potentially.

Living abroad does not necessarily mean that another UK pension arrangement is unavailable.

Depending on the circumstances, transferring or consolidating defined contribution pensions into another UK pension arrangement may remain possible.

An international SIPP, for example, is still fundamentally a UK pension structure but may be designed with internationally resident members in mind.

Provider eligibility and restrictions can vary, so availability can depend on where an individual lives.

Can you transfer your pension out of the UK?

Certain UK pension benefits can potentially be transferred to an eligible overseas pension scheme.

This is where Qualifying Recognised Overseas Pension Schemes (QROPS) enter the discussion.

A QROPS is an overseas pension arrangement meeting certain UK requirements that may receive eligible transfers from UK registered pension schemes.

It is important to understand that HM Revenue & Customs does not approve or recommend individual QROPS simply because a scheme appears on its published list.

The regulatory status, jurisdiction, costs and underlying investments of an overseas arrangement remain important considerations.

Our What Is a QROPS and Why Is It Important When Moving Overseas? guide provides a broader explanation of how these arrangements work.

Does moving abroad mean a QROPS is necessary?

No.

This is one of the most important misconceptions surrounding international pension planning.

A person can live overseas while retaining UK pension arrangements.

A QROPS is one potential structure rather than an automatic consequence of expatriation.

Depending on the circumstances, the alternatives could include:

• retaining the existing UK pension;
• consolidating pensions into another UK arrangement;
• using an internationally accessible UK pension structure; or
• transferring eligible benefits to a suitable overseas arrangement.

Comparing the alternatives is generally more informative than beginning with the assumption that a particular structure is required.

What is the Overseas Transfer Charge?

Tax can become particularly important when a pension is transferred outside the UK.

Depending on the circumstances, an overseas pension transfer can potentially face a 25% Overseas Transfer Charge (OTC).

The rules changed on 30 October 2024, including the removal of the previous general exemption for transfers by EEA residents to QROPS established elsewhere within the EEA.

The location of the individual and the location of the receiving pension can consequently have major implications.

For example, living in one European country does not automatically mean that a transfer to a QROPS located in another European country is exempt from the charge.

A 25% charge can be substantial.

On a £300,000 pension, it would represent £75,000.

Our separate guide to The 25% Overseas Transfer Charge: What UK Expats Need to Know explores this subject in greater detail.

Can a final salary pension be transferred abroad?

Defined benefit or final salary pensions require particular care.

These schemes can provide guaranteed retirement benefits rather than simply an accumulated investment pot.

Transferring can therefore mean surrendering benefits such as guaranteed lifetime income, inflation protection and dependant benefits in exchange for a transfer value.

UK rules contain significant safeguards concerning defined benefit transfers, including regulated advice requirements in relevant circumstances.

The fact that a transfer may technically be possible does not establish whether surrendering the existing guarantees is appropriate.

Does your country of residence matter?

Very much so.

Where you live can influence:

• how pension withdrawals are taxed;
• whether an Overseas Transfer Charge applies;
• which pension providers will accept you;
• how pension death benefits are treated;
• which currencies are relevant;
• local reporting obligations; and
• the interaction between UK and local pension rules.

Double taxation agreements can also affect taxing rights over pension income.

This is one reason an arrangement that appears suitable for somebody living in one country cannot automatically be assumed to produce the same outcome for somebody living elsewhere.

What if you move to another country later?

International life does not always follow a fixed plan.

Someone might retire to Spain, move to France several years later and eventually return to Britain.

That possibility can matter when considering an overseas pension transfer.

The Overseas Transfer Charge rules include a five-year period during which subsequent changes in circumstances can affect the charge.

Future mobility can therefore be relevant when considering the longer-term consequences of an international pension structure.

Think beyond the transfer itself

A pension transfer is ultimately a change in the structure holding retirement savings.

The more important issue is what that structure means for the person who owns it.

Questions include:

• What benefits are being surrendered?
• What will the new arrangement cost?
• How are the investments regulated?
• How will withdrawals be taxed?
• What currency will retirement spending occur in?
• Where will beneficiaries live?
• Could another international move take place?
• And how does the pension fit with the rest of the person’s financial position?

Living overseas can make these questions more complicated, but it also makes understanding them increasingly important.

A UK pension accumulated over several decades can represent one of a person’s largest financial assets. An international move provides a natural opportunity to understand the available options before making any permanent changes.