Some of the issues to consider are:
- the currency in which your benefits have accumulated and how the value of that currency may move against the currency in which you ultimately draw benefits
- the monetary cost of transferring payments between countries and how this can also eat into your retirement income
- any withholding taxes that are charged on the pension scheme in its domestic market – these can be a shock when you retire if you are not prepared
- not all pension schemes are easy to transfer
- UK pension schemes are not always taxed advantageously when drawn abroad – for example, the tax-free pension commencement lump sum (PCLS) we have in the UK for UK residents can be taxable in other countries
Qualifying Recognised Overseas Pension Schemes (QROPs)
The transfer of a UK pension to an overseas scheme can be beneficial to those retiring abroad. There are an increasing number of international pension schemes that are suitable for the transfer of UK benefits under the QROPS rules – many in traditional offshore jurisdictions but with a growing number located elsewhere. Careful consideration is needed prior to transfer to determine the most appropriate location and, indeed, if benefits should be transferred at all.