If you have had several jobs throughout your working life, you might have contributed to multiple pension pots. Before you retire, it’s important to track down all your pensions so you don’t miss out on your savings.
Once you find your various pots, you might consider consolidating them into a single pension scheme. This could make it easier to manage your savings, as you only have to deal with one pension. You could potentially reduce the fees you pay, too.
However, if you have moved outside the UK or plan to soon, pension consolidation could be more complex.
Read on to learn about pension consolidation for expats.
You have several options for consolidating your pensions as an expat
If you’re moving overseas and want to consolidate your existing pensions, there are three options you might consider.
Consolidating into a UK pension scheme
If you have multiple workplace pensions in the UK, each with different providers, you could combine them into a single UK scheme. You may move the rest of your pensions into one of the existing schemes or start a new pension and transfer all your savings into it.
However, while this may simplify your pensions, holding all your savings in a UK scheme likely means you’ll face hurdles when managing and withdrawing your retirement savings overseas.
Many providers won’t pay into an overseas bank account, so you will need to withdraw your savings into a UK account and then move them to your new country of residence. This typically results in additional fees and charges, and poor exchange rates could mean you spend more of your savings to maintain your standard of living in certain months.
Transferring into a QROPS
Instead of keeping your pension savings with a UK provider, you might decide to transfer them into a Qualified Recognised Overseas Pension Scheme (QROPS).
This is an HMRC-approved non-UK pension scheme, which allows you to manage your savings and make withdrawals in a different currency so you can access your retirement fund in your new country of residence.
However, there are downsides to consolidating your pensions into a QROPS:
- You could pay an Overseas Transfer Charge (OTC) of 25%
- The fees are often very high
- QROPS are regulated overseas and may not offer the same protection as a scheme regulated by the Financial Conduct Authority (FCA)
- You may not have much flexibility when managing the investments in your pension.
As such, you may want to explore alternative options instead of transferring all your pension savings into a QROPS.
Placing your pension savings in a SIPP
A self-invested personal pension (SIPP) may be a more suitable option if you want to consolidate your UK pensions before moving overseas.
When choosing a SIPP with us, you could enjoy benefits including:
- Lower management fees and no OTC
- Greater control over your investments
- Stronger regulatory protection from the FCA
- The ability to withdraw funds in multiple currencies.
Consequently, a SIPP could give you increased control and potentially reduce the cost of managing your pension, meaning you retain more of your hard-earned savings.
There could be more administrative delays when trying to consolidate UK pensions from overseas
If you live overseas, you may experience delays when trying to consolidate your pensions back in the UK for several reasons.
For example, when initiating a pension transfer, providers must carry out the necessary security and money laundering checks. If you’re living overseas, consolidating UK pensions might attract more scrutiny, slowing the process down.
You might face practical roadblocks, too. For instance, if you move to a country with a significant time difference from the UK, contacting your pension provider and dealing with the transfer could be challenging.
It’s important to consider these hurdles when deciding how to manage your pensions.
Forward planning can help you manage pension consolidation more effectively
If you plan to emigrate soon, you may benefit from consolidating your pensions sooner rather than later.
By moving your various savings into one of our SIPPs, which are specifically designed for expats and international clients, you could prevent administrative delays after moving overseas.
Once your retirement savings are in the SIPP, you will be able to manage your investments easily, and when you come to withdraw from your savings, you can take funds in multiple currencies.
This could reduce delays in receiving your income as you don’t need to move funds from a UK bank account to one in your country of residence. You may be able to reduce charges for currency exchange and international transfers, too.
If you have already moved but have some remaining UK pensions, you can still benefit from transferring your savings into a SIPP.
Get in touch
Please contact us to learn more about our SIPPs and how they could be useful when consolidating your UK pensions.
You can email us at [email protected] or call 03303 202091 for more information.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
