Have you worked in the UK and contributed to a pension there? If you are now a tax resident in Ireland you should consider bringing your pension home with you.
If you have worked in the UK, at some stage of your career you’ve possibly built up a fund in a UK pension. Now that you are back living in Ireland, you may wish to bring your pension home and have more control over your investment options both now and when you retire.
- Convenience – It is handy to have your pension managed by a local provider.
- Reduced Currency Risk– Reduces the risk of volatile currency rates on your pension.
- Death Benefits – the taxation process in Ireland is more favourable than the UK as death taxes there can be up to 73%.
In order to avoid paying unauthorised tax charge on your transfer to Ireland (which can be as high at 70%), you must transfer your pension into a Qualifying Recognised Overseas Pension Scheme (QROPS), approved by Her Majesty’s Revenue & Customs (HMRC).
These products are generally Personal Retirement Bonds and are usually accessible at age 55 years.
It is important to get financial advice before completing your transfer as there are many tax implications to consider in Ireland and in the UK.
Considerations on how to avoid an unauthorised tax charge
In order to avoid triggering a UK tax charge:
• you need to be a tax resident in Ireland for 10 years prior to accessing your pension benefits.
• you must not require access to your benefits for 5 years after the transfer has been completed as funds have to remain in the QROPS for 5 years before a retirement or a transfer payment can be made.
• you must intend on remaining a tax resident in Ireland for 5 years after you have accessed your benefits. For this reason, it is recommended to transfer your pension sooner rather than later!
Transferring your UK pension to Ireland:
This can be completed in 4 easy steps:
1. Once agreed with your financial advisor to carry out the transfer, you will be asked to complete an application.
2. A transfer options form from your UK provider must be requested which includes the option to transfer overseas. You will also need the Qualifying Recognised Overseas Pension Schemes Member information form which can be found on the HMRC website. Once completed, send them back to your financial advisor.
3. The application will be submitted to the chosen provider.
4. Once received, your policy will be converted into Euro and your new Irish policy will be set up.
What are my retirement options once I’ve transferred my UK pension to Ireland?
When retiring, you can take a cash lump sum and with that balance, subject to Revenue rules, you can:
a) Purchase a guaranteed pension income for life (Annuity).
b) Invest in an Approved (Minimum) Retirement Fund.
c) Draw down the entire fund as taxable cash.
d) Or finally, choose a combination of these options.
We can help you determine which option is best for you.
We invite you to use the contact button to ask us any questions or request a call back from one our qualified financial advisors.