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UK Pension Transfer to Switzerland – Things to consider

UK Pension Transfer to Switzerland

There is good news for the UK and Switzerland relationship. The insurance sector post-Brexit will continue to trade freely. The two nations struck a deal at the World Economic Forum in Davos on the 25th of January. This is one of the first positive moves we see from the UK towards a productive relationship with key financial centres. If you are moving to Switzerland after having worked and accumulated pensions in the UK, a UK pension transfer to Switzerland might the right choice for you.

The UK-Swiss Direct Insurance Agreement

At a time when the UK prepares to leave the EU, this new agreement brings confidence and certainty for the general insurance market. It will guarantee insurers freely access markers in both UK and Switzerland. According to the UK Government page, the agreement reproduces the agreement already in place between the EU and Switzerland and “allows non-life insurance firms to branch into one jurisdiction from the other with greater ease through mutual recognition of solvency requirements’’.

The pension system in Switzerland

The Swiss pension system is based on a three-pillar system. State pensions fall within the first pillar. This is known as AHV – Alters- und Hinterlassenenversicherung which cover the basic needs of retirees. The second pillar is the company or occupational pensions which are mandatory for employees. Lastly, private pensions schemes fall within the third pillar and they are voluntary contributions. Together, the three pillar system ensure retirees have enough living allowances in order to have a comfortable retirement.

Your unique position as an expat

A lot of expats see Switzerland as the ideal destination for retirement. This country has many things to offer including high living standards, attractive tax rates, great healthcare and beautiful attractions and scenery. Due to all these positive attributes and advantages, it is important to note that this country is also one of the most expensive places to retire. Make sure to consider all aspects. There are certain criteria which are taken into account before you are issued a residency permit and cases are dealt on a case by case basis.

Tax treatment in Switzerland

If you decide to transfer your UK pension to Switzerland, the low tax rates will mean that you get to enjoy that little bit extra of your pension income. However, once you retire here, all your assets might be subject to Swiss tax. We suggest you speak to a local tax adviser and read more on this subject in order to fully grasp the implications. The UK and Switzerland have a Double Tax Agreement (DTA) so income tax will only be taxed in your new country of residence.

Advantages and implications of a pension transfer

  • The Swiss pension system is one of the most well-organised and feasible systems above countries such as the UK and Germany
  • Work and live in Switzerland for the required number of years and claim payments from pension authorities

You may also have heard of Non-Resident SIPP or Swiss QROPS (Qualifying Recognised Overseas Pension Scheme) both of which are aimed at expats with UK Pension rights. Each investment option will present different advantages based on your personal circumstances.

What are the next steps?

Harrison Brook is Europe’s leading independent financial advisers. Have your pension benefits assessed and see what your options are. You can then you can make an informed decision regarding your retirement planning.

Get in touch today to discuss your unique situation and what your options are.

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