How to Transfer Overseas Pensions into a UK Pension
Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.
A transfer from an overseas pension into a UK pension arrangement is possible, though there are some considerations to bear in mind. True Potential Investor is here to help you better understand this type of arrangement…
When funds can be transferred
During the procedure of funds from an overseas pension being transferred into a UK pension scheme, clarification will usually be sought that the incoming transfer is either being made from a UK registered pension scheme or from a ‘Qualifying Recognised Overseas Pension Scheme’ (QROPS).
Be aware that the majority of UK pension scheme providers will only accept transfers to take place from overseas schemes if they are found to be a QROPS.
HM Revenue & Customs’ definition of a QROPS is that it has to meet the organisation’s conditions to be both an ‘overseas pension scheme’ and a ‘recognised overseas pension scheme’. HMRC has detailed the relevant Regulations of each scheme in its Pension Tax Manual.
If a person’s retirement benefits are already in payment though, there will be a good chance that a provider of a UK registered pension scheme won’t accept a transfer to take place from an overseas pension scheme. This is the case even when the scheme has been identified as a QROPS.
How the annual allowance will be affected
Make a transfer from an overseas pension scheme into a UK registered scheme and there will be no impact on a person’s annual allowance.
In the case that the registered scheme which is receiving the funds from the transfer is either a defined benefit or cash balance scheme, the benefit increase which arises from the pension transfer will not effectively count towards an individual’s annual allowance. This is because it should be the case that the transfer payment’s value is deducted from the closing value of the member’s rights in the tax year concerned for annual allowance purposes.
If the registered scheme receiving the funds from the transfer is a money purchase scheme, as this is not a contribution the transfer value is not considered for annual allowance purposes.
If you’d like to find out if your overseas pension is a QROPS or if you’d like to transfer it to a Personal Pension, contact us on 0800 046 8007 and we’ll be happy to help.