If you’ve spent a few years working in the UK, it’s likely you’ve built up a decent pension pot. Now you’ve moved back, should you bring your pension with you?
We’ve prepared answers to all the big questions to help you decide.
Why should I move my UK pension?
There are several reasons bringing your pension back to Ireland along with your other belongings makes sense.
To start with, it’s simpler and easier to manage. By moving it back to Ireland, you can control it directly. And when you draw down your pension, it’ll be paid to you as Irish taxable income.
You can also get financial advice more easily. These days, most UK firms can’t advise you on your pension if you’re overseas.
And there are possible tax advantages to moving your pension out of the UK. If you have a large pension pot, for example, you’ll no longer be at risk of breaching the UK’s Lifetime Allowance. (The Lifetime Allowance charges 25% on all income above £1.055 million drawn from a UK pension pot).
What about currency risk?
Sterling has been volatile recently, for reasons we all know. That creates a problem for your pension savings.
It makes sense to build up your pension savings in the currency that you’ll be spending. As you move your pension back to Ireland, you can also change it from Sterling into Euro.
And with the right advice, there are some smart ways to change your funds into Euro over time, and manage your exposure to exchange rate risk.
But are there reasons to leave my pension in the UK?
Yes. For some people, leaving their pension alone is the right thing to do.
For example, if you expect to move back to the UK, you might choose to keep your pension pot there. Many public sector pensions won’t allow a transfer out of the UK.
And if you have a valuable defined benefit (or final salary) pension in the UK, you may not be willing to give this up. (You can read more about moving a UK defined benefit scheme to Ireland here).When is the right time to move my pension?
In general, it’s worth looking to move your pension back to Ireland early. After you move it, UK tax rules still apply for up to 10 years. Although you can generally access your UK pension from age 55, you also have to be non-resident in the UK for 10 years before you take the benefits.
In plain English: if you can, it’s often worth moving your pension back before you hit the age of 45.
Where can I move my money?
Several pension providers in Ireland run ‘qualified recognised overseas pension schemes’ or QROPS, which means they can receive UK pensions.
You’ll be able to drawdown your pension – from age 55 – in the normal way in Ireland, taking advantage of a 25% lump sum in cash, and using the rest either to invest in an Approved Retirement Fund, or to purchase an annuity.
What’s the process?
There are three key steps in moving your UK pension back to Ireland:
- Decide on your new Irish pension provider and fund choice. You’ll need a fund which is authorised by HMRC to receive your pension pot without an excess tax charge (Moneycube has relationships with all the relevant providers and can advise on fund choice).
- Inform your UK pension provider you intend to move your funds. They’ll typically supply a ‘transfer out’ form for you to sign and return.
- We’ll manage the transfer process to get your funds moved across and reinvested in a timely manner.
Done right, moving your pension back to Ireland from the UK can make a lot of sense. Speak to Moneycube about how you can bring your money home today.