Should You Leave Your Pension In The UK When You Move Abroad?
One of the biggest assets many UK professionals, freelancers, and business owners have is their UK pension.
Unfortunately, pensions are often overlooked during an international move. Yet the decision to leave your pension in the UK or move it overseas can have a major impact on your long-term financial security.
So, should you leave your pension in the UK when you move abroad?
The answer depends on your circumstances, your future plans, and where you intend to retire.
This guide explains the pros, cons, and traps to avoid, in clear, straightforward terms.
Why This Decision Matters
Your pension is likely to fund decades of your lifestyle. Getting this decision wrong could result in:
Paying more tax than necessary
Limited access to your retirement income
Currency risk if you spend in another currency
Falling into expensive or unsuitable offshore pension products
Understanding your options before acting is critical. You can see more about your UK schemes and how they work outside of the UK by vising our UK Pension Transfer Service below:
The Wealth Genesis | UK Pension Transfer Desk
The Pros of Leaving Your Pension in the UK
In many cases, leaving your pension where it is can be a sensible choice.
Strong Regulation and Protection
UK pensions are regulated by the Financial Conduct Authority (FCA). This offers a high level of consumer protection and oversight compared to some overseas arrangements.
No Immediate Costs or Complexity
Keeping your pension in the UK avoids:
Transfer fees
Exit penalties
Complicated paperwork
This can be helpful if your move abroad is recent or temporary.
Suitable If You May Return to the UK
If there’s a possibility you will return to the UK in the future, leaving your pension in place can keep things simple and familiar.
Things to be aware of: your pension remains invested in GBP, and UK pension rules may still apply even if you no longer live in the UK.
Recommended action: request an up-to-date pension statement and confirm what type of pension you hold (SIPP, workplace, or defined benefit).
The Cons of Leaving Your Pension in the UK
While convenient, keeping your pension in the UK isn’t always ideal for long-term expats.
Not Designed for Overseas Living
UK pensions are structured for UK residents. Living abroad can create:
Tax inefficiencies
Restrictions from pension providers
Currency risk
Confusion around withdrawal rules
Risk of Unnecessary Tax
Depending on where you live:
Pension income may be taxed locally
UK tax rules may still apply
Double taxation can occur if poorly planned
Currency Risk
If you retire abroad and spend in euros or another currency, a GBP-based pension exposes you to exchange-rate risk that can reduce your real income.
Recommended action: before accessing or drawing income from your pension abroad, get professional guidance that covers both UK pension rules and overseas tax systems.
Hidden Traps and Pension Transfer Risks
This is where many people make costly mistakes.
QROPS Are Not for Everyone
Overseas pension transfers are often promoted as the “best option” for expats, but this isn’t always true. In the wrong situation, they can increase costs and reduce flexibility and pension security.
Unregulated Advice
Expats are frequently targeted by advisers selling:
High-fee offshore pensions
Complex investments
Long lock-in periods
Unrealistic return promises
Once a transfer is complete, reversing it may be impossible.
Costly Errors
A poorly planned transfer can lead to:
Immediate tax penalties
Loss of UK pension protections
Higher ongoing costs
Reduced retirement income
Recommended action: never transfer a UK pension without a full, regulated comparison between keeping it in the UK and moving it overseas.
Our Verdict |There Is No Universal Answer
Leaving your pension in the UK works well for some people, but not for everyone.
The right decision depends on:
Where you live now
Where you plan to retire
How and when you’ll need income
Your tolerance for tax and currency risk
The biggest mistakes come from assumptions and rushed decisions,not from taking time to understand your options. To understand how our team of regulated, independent and commission-free advisers can help you, book a free Discovery call using the diary below.
