I’ve moved back to Ireland in retirement. Can I transfer my pension?
Ask the Experts: Rules on transferring depend on client’s age and where they lived
Most people under the age of 70 and resident in Ireland would be eligible to transfer their pension from the UK back to an Irish pension scheme. Photograph: iStock
I have returned to Ireland after 34 years abroad in the UK, where I contributed to a SIPP (self-invested personal pension). I arrived back in May 2017 at the age of 75. My UK SIPP manager tells me that compliance forbids him advising me any longer, unless I visit the UK for face to face meetings. I now would like to know if I can transfer my SIPP to Ireland. How can I do this? How will it be paid?
Answer: Stephen Jones, director, Acumen & Trust
In most cases when dealing with non-resident clients, it is necessary to conduct face to face meetings in the country to which the advice is related. For example, a UK resident looking for advice in relation to an Irish investment or pension would need to meet the advisor in Ireland, and vice versa.
Given this man’s age on returning to Ireland (75), unfortunately it would not be possible to transfer his UK pension benefits to an Irish arrangement at this stage.
The cut-off age for personal pensions and personal retirement saving accounts (PRSAs) is 75, and for company pensions it’s 70.
The process depends upon the type of pension being transferred back from the UK, and is governed by Qualifying Recognised Overseas Pension Scheme (QROPS) rules.
Most people under the age of 70 and resident in Ireland would be eligible to transfer their pension from the UK back to an Irish pension scheme. Under QROPS rules they will still be liable to certain restrictions, i.e. transfers are only permitted from the UK pension into an Irish QROPS approved scheme.
Earliest access to the pension funds is limited to those who are 55 years of age and over, and funds must be drawn down within five years of the person being tax resident in the UK. It’s also important to note that it may not be advisable for the person to transfer funds from the UK to Ireland if they intend returning to the UK before they have drawn the pension funds down.
For more information on transferring your pension to Ireland from abroad, see welfare.ie/en/Pages/Transfer-of-Private-Pensions-to-Ireland-for-returning-Irish-Emigrants.aspx. The British government’s website has more detailed information about transferring funds from the UK, see gov.uk/transferring-your-pension/transferring-to-an-overseas-pension-scheme
This man should seek advice from both an Irish and UK advisor in relation to his flexible pension and investment options. He should also seek tax advice in relation to his overall estate planning, and the implications of his UK pension benefits.
Pensions assets in different jurisdictions are covered by different rules when it comes to distribution of the underlying assets on death. For a UK resident they would need to seek specialist advice from a UK regulated tax advisor on how their pension assets would be treated in the event of their death in the UK ( if the pension assets remain in the UK ), and in Ireland if they are resident in Ireland at the time of death. The UK taxes donors on death, whereas Ireland taxes the beneficiaries.
Finally, assuming this man is in receipt of a full UK state pension, he should also request his Irish PRSI history to assess if he would be entitled to a reduced Irish Contributory State pension.
The rules governing the eligibility to an Irish state pension and a UK one are different. By gathering the client’s PRSI history and his national insurance history in the UK he can then assess:
1. If the combined histories could be amalgamated to qualify for a higher state pension in one of the jurisdictions, or receive reduced pensions from both.
2. If he meets the eligibility criteria in each jurisdiction.
3. If he has the option or potential to buy additional years to maximise the annual state pensions and the benefit/cost of doing so.
Any pension benefits drawn from the UK arrangement should only be taxable in Ireland based on the UK/Ireland double tax treaty. The tax is paid by annual tax return, but the collection can be achieved by reducing tax credits allocated to other income, including pensions.
The important thing to remember is that each case is different, and personalised professional advice is important in assessing what can be very significant benefits in retirement.