How to Transfer Your UK Pension to Ireland

Now that we have covered how the process of transferring your UK pension to Ireland, it is time to look at some of the benefits.

Many people work abroad but plan to eventually return home to Ireland. A lot of those who worked in the UK is no different.

Transferring your pension benefits from the UK to Ireland will allow you to have everything closer to home. It will also allow you the benefit of working with a local financial advisor who is familiar with the Irish market.

A Qualifying Recognised Overseas Pension Scheme (QROPS) potentially can accept a transfer from the UK without a tax charge. This will be scheme and rules dependent.

Inheritance planning is an important aspect of any financial planning. Pensions are no different. Leaving your pension behind in the UK could cause some difficulties for your estate. Transferring your pension benefits to Ireland could help ease the process.

Brexit has been a trending topic since the UK voted in June 2016. It has caused much uncertainty and will continue to do so. It may also make transferring your pension more difficult further down the road.

Any pension benefits transferred to a QROPS in Ireland do not count towards the €2 million Standard Fund Threshold. Your Standard Fund Threshold is the maximum pension benefits you can have in Ireland while avoiding additional tax implications.

With Brexit among other factors, the economic climate is quite uncertain. Add a global pandemic into the mix and we face more uncertainty.

Transferring your UK pension to Ireland will allow you to have your fund in Euro. This will end any potential future currency concerns.

As per above, there are several benefits to transferring your UK pension back to Ireland. But, it is worth mentioning the caveat that it may not be the best option for everyone.

There is often a lot of moving parts when it comes to pensions. Take time to assess all your options and speak with a financial advisor before deciding on a course of action.

As we touched on before, to transfer your UK pension to Ireland you will need a QROPS.. If you transfer to a scheme that is not a QROPS, you could be liable to a significant tax bill.

Be sure to discuss this with your financial adviser. If it is not a QROPS, your UK pension provider has the right to refuse the transfer. Or, you could liable to a minimum of a 40% tax bill.

There are certain criteria when it comes to taxes while considering your pension transfer. You must be a tax resident in Ireland and have ceased to be a UK tax resident within the last 5 years.

The minimum retirement age you can access a QROPS is 55. Also, all transfers received into a QROPS after 6th April 2017 are accessible if:-

• The policy owner is over age 55
• The policy owner has ceased being a UK tax resident for at least 10 UK tax years.

For all transfers before 6th April 2017, benefits are payable once the policy owner:-

• Is aged 55 or older
• Has ceased being a UK tax resident for at least 5 UK tax years.

It is worth noting that the UK tax year is from the 6th of April to the 5th of April.

Benefits transferred from the UK to Ireland will follow relevant legislation. There may be potential  Captial Acquisitions Tax (CAT) bills. 

These tax liabilities will vary depending on your relationship with the person you are inheriting the benefits from

There is a 25% overseas transfer charge on a QROPS transfer unless:

• The transfer is to your employer’s occupational pension scheme, OR
• It is to your country of residence, OR
• It is within the European Economic Area (EEA)

There are also additional stipulations. Should you decide to move out of the EEA within the 5 years this may affect.

As with anything pensions related, it is important to read the fine print and consult an advisor experienced in the relevant area.

As we touched on earlier, there are limits on the total capital value of pension benefits that an individual can draw from tax-relieved pension arrangements. It is referred to as the Standard Fund Threshold (STF).

Schemes are Different

Defined Contribution pension schemes in the UK and Ireland have some key differences. Be sure you understand all potential differences and what options are available.

There may also be some differences surrounding inheritability so discuss this with your financial advisor.

Transferring to a QROPS in Ireland will have several benefits such as:-

• A pension scheme administered by a local financial advisor. This will allow you the convenience of local advice along with someone familiar with the market.
• You eliminate any currency risk by transferring to Euro.
• The UK ‘overseas’ charge we discussed earlier does not apply to QROPS.

Finding an advisor who is familiar with the process of transferring a UK pension will be vital. It can be quite a labor-intensive process.

It is also worth noting that transferring your pension to Ireland might not be the best course of action. Some schemes in the UK may also not permit a transfer.

This will depend on various factors. The UK pension scheme administrator will likely play an important role.

With these things there is a lot of paperwork involved. It is advisable to allow between 12-16 weeks to complete the process.

However, this is a guidelines and some may be completed in a shorter timeframe.

There is no exact figure on how much a UK pension transfer will cost. Although our advisors will be upfront and transparent with regard to any potential fees.

As a ballpark figure, you can expect to pay approximately €3,000 for the QROPS process to be completed.