Q&A – Transferring a UK Pension to Ireland
Have you spent time living and working in the UK? Chances are if the answer is yes, you’ve probably contributed to a pension fund there. So if you’ve returned to Ireland for good, you should consider your options when it comes to transferring your UK pension into a QROPS.
But where do you start?
We’ve drawn on the expertise of Elevate Financial’s Senior Financial Planner, Joe Murphy to answer some of the most common questions about transferring a UK pension back to Ireland.
Can all UK pensions be transferred back to Ireland?
Generally speaking, yes. Eligibility depends on the type of UK pension you have and what kind of scheme it is being transferred to. A QROPS (Qualifying Residential Overseas Pension Scheme) facilitates pension transfers from the UK to Ireland. If you transfer pension savings through a scheme that isn’t a QROPS, you could be liable to pay up to 55% tax on the transfer, or possibly be refused by your UK pension scheme. You can access a list of Recognised Overseas Pension Schemes (i.e. the type of scheme that you can transfer your UK pension into) here.
What is a QROPS?
QROPS stands for Qualifying Residential Overseas Pension Scheme. It is essentially a term for an overseas pension scheme that meets requirements set by HM Revenue and Customs. The key benefit of a QROPS is that tax-free transfers can be made for non-UK residents back to their home country.
What’s the minimum retirement age on a QROPS?
The minimum pension age on a QROPS is 55.
What’s involved in transferring a UK pension to Ireland?
The process of transferring your UK pension to Ireland via a broker typically involves these steps:
- You’ll need to get in touch with your UK pension provider to advise them that wish to transfer your pension to a QROPS in Ireland. You should request relevant forms to complete
- Your broker/financial advisor will assist you with all necessary documentation required to make the transfer (as well as your pension provider options)
- Your transfer application will be lodged with your pension provider in Ireland
- Your new fund will be set up in Ireland – your UK fund will be transferred into Euro (if requested) and be lodged into your new bond.
- Your financial advisor and you will review your fund annually
How long does the process of transferring a UK pension to Ireland take?
This again will depend on your own individual case, but a standard transfer timeline is 12-16 weeks.
What are the benefits of transferring my UK pension back to Ireland?
There are multiple benefits to transferring your UK pension to Ireland. Firstly, the convenience factor of having your pension in Ireland, as opposed to overseas. Many like to have their pension pot in one currency (e.g. Euro) but there is also an option to keep your UK fund in sterling post-transfer if you are interested in currency diversification.
Leaving your pension in the UK could be tricky in the event of your death if your dependents are residents of Ireland. It’s vital to know the inheritance implications of leaving your pension in the UK, as well as Irish inheritance tax requirements before making the switch.
Additionally – any excess in a pension fund over the Standard Fund Threshold is subject to 40% tax in Ireland. Transfers from a UK pensions scheme into a QROPS don’t count towards this threshold.
What happens if I leave my pension fund in the UK?
For some people, it does make sense to leave their pension fund in the UK – for example, if you plan on returning to live in the UK in the future, or if your UK pension is part of a Defined Benefit scheme. Otherwise, leaving your pension fund in the UK could simply mean it sits in a pot until you reach retirement age. It’s really important to know that once you transfer your UK pension to Ireland, UK tax rules still apply for up to 10 years. You also need to have not been resident in the UK for 10 years in order to access the benefits of your pension. So if you’re going to transfer your UK pension fund to Ireland, you should ideally be taking action before the age of 45 (since access to a UK pension begins at 55).
Transferring your UK pension to Ireland might seem like a daunting, arduous task – one that requires a lot of work. However, working with a qualified financial advisor, you’ll get unbiased information from a professional who will seek out the best options on the market for you and make the process as seamless as possible.