Are you no longer a resident of the UK? Did you know that, subject to conditions, it is often possible to transfer your pension fund out of the UK to Guernsey (or other location) with significant potential benefits?

These potential benefits include the ability to control investments, access income or capital without punitive UK tax consequences. Importantly, it is often possible to allow the transfer of the fund to future generations upon death.

How does it work?

HM Revenue and Customs (HMRC) allow non UK residents to transfer UK pension rights to an approved offshore scheme know as a Qualified Recognised Overseas Pensions Scheme or ‘QROPS’ for short.

HMRC maintain a list of approved schemes that is updated twice a month. An important safeguard is that if the proposed pension transfer is to an unapproved scheme the transfer can not take place.

The transfer to an approved scheme can take place as soon as the person becomes non-resident from the UK but it is important that they intend to remain non-resident for the foreseeable future.

For someone who has been a non UK resident for less that five complete tax years the benefits provided under the new scheme will be similar to those provided under UK law. After that point in time everything changes.

Advantages of transferring a UK pension scheme

Regardless of when the transfer is made, as soon as the person has been non UK resident for a period of five complete tax years the onerous and rigid HMRC regulations relating to pensions fall away.

As it is not necessary for the member to be a resident in the country to which the transfer takes place transfers can be made to tax friendly jurisdictions such as Guernsey or New Zealand.

Some of the significant benefits to such jurisdictions such include:

* Freedom to control investments – the possibilities become more or less unlimited and can include antiques, jewellery, fine wines and in certain circumstances, residential property.

* No requirement to purchase an annuity – under a UK scheme a possible tax charge of 82 % is payable if an annuity is not taken by the age of 75.

* The possibility to access income and capital without deduction of tax at source.

* Flexibility to access funds at any time between the ages of 50 and 75 with the potential to access the funds outside these ages.

* Upon death of the member – the ability to transfer the full value of the fund to nominated beneficiaries.

* No deduction of tax at source. Taxation will apply in accordance with the legislation governing the QROPS scheme member’s country of residence.

Who is a QROPS for?

QROPS transfers tend to be arranged for non UK residents with a UK pension pot in excess of £50,000. Typically, this can include anyone with (a.) Deferred benefits in a Company Pension Scheme, (b.) members of a Public Sector Scheme including for example, teachers, doctors, nurses, members of the Armed Forces, (c.) Personal Pensions.

QROPS are not available to anyone who has started to take their pension as an annuity but are available to those who are ‘drawing down’ income from their pension fund but have not secured an annuity.

What happens if I return back to the UK?

Once your fund has been transferred into a QROPS if you subsequently move back to the UK then there is the possibility to transfer your QROPS to an alternative scheme. The fund does not have to become once again subject to UK rules if this method is adopted.


QROPS transfers are not to be taken lightly and taxation will apply in accordance with the legislation governing the member’s country of residence. It is therefore important to obtain specialist advice from a suitably qualified pension adviser with the relevant permissions from the UK authorities.

Further information

All of the above advantages become possible after your UK pension fund has been transferred to a QROPS and you have been a non UK resident for five complete tax years.

For further information regarding the transfer of a UK pension scheme contact Robert Burns: Telephone 902 88 90 20 or