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Expat financial advice from the experts

UK pension transfer to Ireland – What to consider

UK Pension transfer to Ireland

As we wait and see how Brexit will unfold, there is a lot of uncertainty and worry at the moment of what will happen next. Any expats who have left the UK and returned to Ireland wonder if they should look into a UK pension transfer to Ireland.

Your unique position as an expat

If you are like the majority of expats that we have encountered, you have probably worked in the UK for a number of years.  You have accumulated one or some defined benefit pensions. Now that you are working in Ireland, your new workplace has most likely offered you a defined contribution scheme. Managing your pension from Ireland might seems like a more convenient choice.

Transferring your pension

A lot of pension schemes will allow transfers from the UK to Ireland.  Each pension has to be dealt and looked into on an individual basis especially with defined benefit pension schemes and pros and cons have to be considered.

After speaking to a qualified adviser the next step would be to request a transfer value from the scheme. Following on from this, the financial adviser would analyze your situation. The majority of people who are under the age of 70 and now resident in Ireland would be allowed to transfer their UK pension to an Irish pension scheme.

Reasons to transfer your UK pension to Ireland

According to the Independent.ie, if there is no deal Brexit, pension payments will no longer be able to be made to Irish Bank Accounts. It seems there are 120,000 people who receive a British state pension in Ireland. The total number for personal pensions received in Ireland is not quite known but they will also be affected. Not being able to access your money is a frightening thought. If you are eligible it is better to transfer to explore your options and see if a transfer to an Irish pension scheme suits you. Certain factors have to be taken into consideration but already it is good to note that there are not that many pension differences between the UK and Ireland.

Advantages of UK pension transfers to Ireland

  • Increased Flexibility

You can take advantage of an increased level of flexibility by transferring your pensions to an Irish Scheme instead of leaving it in the UK by having all your pension pots in the same country. 

  • Tax-free lump sum

There is a maximum of €200,000 tax-free lump sum to be taken from all your pensions in Ireland. Transferring your UK pension to Ireland could mean that you could be allowed to take a higher tax-free lump sum than the one you would have taken in the UK. Nonetheless, if the sum is over €200,000 the part of the lump sum in excess will be taxed in Ireland.  This is something to also take into account before you decide.

  • Consolidation of pensions

In the UK, the average retirement age for Defined Benefit schemes is from age 60 or later. If you transfer to an Irish scheme, you could be eligible for a retirement age of 55. Using the transfer value of Defined Benefit schemes, you can transfer to a defined contribution scheme in Ireland and even access from age 50 through early retirement.

  • Inheritance tax

Once you transfer your UK pension to Ireland, the value of the pension upon your death is payable to your estate. You will not be accountable for paying British Inheritance tax. However, there are certain situations and criteria where you could be subject to British tax when you transfer the payment.

Other things to consider when transferring your UK pension to Ireland

With Defined Benefit Pensions, you get a guaranteed pension income which is based on your service and salary. You will be able to transfer to a defined contribution scheme in Ireland. There are other schemes you can transfer to as well such as QROPS (Qualified Recognised Overseas Pension Scheme) or a Non-Resident SIPP. Either way, compare the benefits and guarantees of any scheme in order to make the best decision.

Check if the value of your UK pension scheme is in a surplus of £30,000. If this is the case, you will also need to take advice from an adviser regulated by the Financial Conduct Authority.

What is the next step?

At Harrison Brook, we can assess your pension situation and provide a full holistic financial planning service as we believe we can not provide you with the best advice without considering the full spectrum of your financial situation. We also provide you with fully independent advice.

Get in touch today to discuss your unique situation and see how we can assist.

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