“I’ve read a lot about the various QROPS options for transferring a UK pensions overseas. I’m an Irish citizen aged 55, living and working in the UAE. I have a company pension scheme in Ireland that I’m no longer contributing to. How can I transfer my Irish pension to an overseas pension scheme, so I can receive payments here in the UAE? Is there any benefit in doing so?”
There are many financial benefits for expats in transferring your Irish pension to an overseas pension scheme and drawing on it in your country of residence.
Firstly, the money you’ve accumulated is rightfully yours, and it’s reasonable to want to maximize its value and minimize the taxes, fees and levies payable on it. For example, by transferring your Irish pension abroad, you will legally avoid all Irish taxes on it – income tax, fund management fees and the controversial government pension levy brought in during the recession. These taxes and fees run as much as 4.75% annually.
Secondly, maybe you want access to a lump sum now, to prepare you for retirement. Perhaps paying off a mortgage or paying down other debts, or purchasing other investment products. You could be eligible to ‘vest’ a 30% lump sum in cash if you transfer your Irish pension abroad, and receive the balance as regular income for the rest of your life.
However, transferring an Irish pension overseas is not as straight forward as a UK pension transfer to a QROPS. Even though legislation was passed in 2003, the process is still rather complex and each Irish pension transfer request is judged on a case-by-case basis by the Irish pension custodian.
The Irish Revenue’s position on Irish overseas pension transfers is if the transfer is to a country outside the EU, it may not be made to a country other than the one in which the member is currently employed / residing. Currently, the Revenue approves international pension plans in Malta, the Isle of Man, Gibraltar, Australia and New Zealand.
Furthermore, if you intend to retire back to Ireland, it’s unlikely that the Irish Revenue will allow a pension transfer. This is because only “bona fide” transfers are acceptable. That is to say, a pension transfer must be done for retirement reasons, and not tax evasion reasons. If the Revenue does allow it, you may face issues down the line when you return to Ireland.
The good news is that if you intend to retire somewhere other than Ireland, you can start the process of preparing for your retirement. It’s important to make financial plans ahead of time, including your pension transfer.
You may also have options to restructure your pensions in Ireland, such as transferring your benefits to an International Pension Trustee, a self-directed pension which will give you a choice of investment funds and your pension will grow tax-free. This is good financial sense, whether you plan to retire to Ireland or elsewhere.
If you’re an Irish expat, or have an Irish pension, contact our experts to discuss the options open to you.