What happens to my pension if I work abroad?

What happens to my pension if I work abroad?

For some, the chance to work abroad marks the start of an invigorating new adventure, one that opens up a wealth of various personal opportunities.

Others may find the concept of working abroad terribly confusing and difficult to navigate, especially when the prospect of pensions and taxes are brought into question.

If you’re about to embark on an exciting new career under foreign horizons, or you’re thinking about it, you may be wondering how the move might effect your pension. Here’s a quick guide to help you understand the implications for your pension when working abroad.

Pension Options When Living and Working Abroad

Your UK pension won’t be affected if you move abroad and stop putting money into it, just like if you were to suddenly leave your job. The money in the pot is yours, and it will keep increasing and decreasing over time depending on how it performs while invested.

When it comes to working and paying into a pension in another country, the rules and regulations can vary wildly based on where you are in the world, so it’s worth reaching out to the local pension service to check whether or not you’re eligible for a pension first.

You can still choose to pay into a UK pension scheme while you’re working abroad; however, the tax relief benefits probably won’t be the same (more on this later).

If you want to transfer your pension from a UK provider to a new provider in another country, the new provider will have to be a what’s known as a Qualifying Recognised Overseas Pensions Scheme (QROPS), and it’s up to you to make sure this is the case.

Failing to do so may result in tax penalties, or the transfer might be refused by your current provider altogether.

Tax Implications

You won’t be able to benefit from tax relief when saving into a pension if you aren’t defined as a ‘relevant UK individual.’ This is a term generally used to refer to someone who has made taxable income in the UK of that tax year or has been a resident in the UK at some point during the tax year.

You may be taxed twice on your pension if the country you’re a resident in doesn’t have a ‘double taxation agreement’ with the UK. You can check to see whether or not this applies to you here, on the government’s website.


pensions when working abroad


Managing Your Pension While Abroad

Your tax responsibilities may differ when it comes to paying into and receiving a pension while working abroad, but the management side of affairs should remain unchanged. Consolidating your pensions into an iSIPP means you will be able to manage your pension investments from anywhere in the world via our dedicated online portal.

State Pension – Rules By Economic Area

If you live in Switzerland or a country in the European Economic Area (EEA), and you are of state pension age, then you’ll still be able to get your UK state pension increases each year.

If you live in a country outside of Switzerland or the EEA, you’ll still get your state pension, but you won’t benefit from the means-tested increases.

How iSIPP Can Help

At iSIPP, we can help you consolidate your pensions into one easily manageable and accessible pot, and we’ll take care of it all for you.

We can also accept transfers from a QROPS, making it easy for you to combine your pension pots and manage them from anywhere in the world, complete with 24/7 service.

It’s worth noting that a big advantage of transferring to a UK-based pension scheme while working abroad is that your contributions won’t be subject to the annual allowance, meaning that you won’t incur tax penalties if you transfer over £40,000.

If you have moved within five years of the transfer, you will also still be eligible for tax relief.

Consolidating your pensions into one Self-Invested Personal Pension with iSIPP may make your life easier when working and living abroad. If you are thinking about pension consolidation, you can contact us here; we’d love to help you out.


The content of this article is for general information purposes only and should not be construed as legal, financial or taxation advice. You should not rely on the information contained in this article as legal, financial or taxation advice. The content of this article is based on information currently available to us, and the current laws in force in the UK. The content does not take account of individual circumstances and may not reflect recent changes in the law since the date it was created. It is essential that detailed financial and tax advice should be sought in both jurisdictions and any legal advice, if required.

This notice cannot disclose all the risks associated with the products we make available to you. When making your own investment decisions it is important you understand that all investments can fall as well as rise in value and it is possible you may get back less than what you have paid in. You should also be satisfied that any investments you choose are suitable for you in the light of your circumstances and financial position. You should seek financial advice if you are not sure of what’s best for your situation.

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