Transfer of rights in a UK pension scheme overseas

Produced by in association with John Hayward

Employment Tax

Guidance

Introduction

A pension transfer is the movement of an individual’s accrued pension rights from one pension scheme to another. UK pensions tax legislation specifies which transfers may be made without adverse tax consequences.

Such transfers are known as ‘recognised transfers’ and are a type of authorised member payment. The term ‘authorised member payment’ means that this is a type of transaction that can be made without any tax implications on the member. Such transfers are reported to HMRC but there are no taxation consequences.

To constitute authorised member payments, transfers must be made to either a UK registered pension scheme or to an overseas pension scheme which is recognised by HMRC as a Qualifying Recognised Overseas Pension Scheme (QROPS). A QROPS is a Recognised Overseas Pension Scheme (ROPS) which has given certain undertakings to HMRC relating to the reporting of payments. So the relevant legislation which sets out the necessary conditions (see SI 2006/206) refers to

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