How to Transfer UK Pension to Germany

What type of UK pension do you have?

Most UK pension savings take the form of workplace or personal pensions. Some schemes are not eligible for overseas transfer.

You may also have a self-invested personal pension (SIPP) or a small self-administered scheme.

Workplace pension

In the UK, it has been compulsory since 2012 for an employer to enrol employees on a workplace pension scheme automatically.

Collecting more than one pension like this is typical whenever you change jobs. You can use the Pension Tracing Service to locate any UK workplace pension lost along the way.

Workplace pensions tend to be either ‘final salary’, defined benefit (DB) or defined contribution (DC) schemes.

If you are employed but need help figuring out what type of pension you have, simply ask to speak with the pension manager at work.

Your contributions are eligible for tax relief at your marginal rate of Income Tax and will be deducted from your pay while the scheme provider invests the money both you and your employer put in.

The fund’s overall performance decides how much money you will receive in retirement.

UK Public Sector Pensions

These tend to be ‘final salary’, a defined benefit scheme and not usually transferable to an overseas pension plan.

Suppose you have had a long career in the NHS, police force or armed services. In that case, your pensionable service determines how much money you receive upon retirement, not your contributions’ performance.

Generally, transferring out of this kind of UK pension scheme is neither possible nor advisable, but you can still retire abroad.

Speak to the UK Pensions Advisory Service first if you have a defined benefits scheme with this type of pension provider.

Your benefits may be at risk when transferring from this kind of UK pension scheme.

Small Self-Administered Plan, SSAP

An alternative type of company pension scheme, small self-administered plans, SSAPs, are available to up to 11 senior executives, company directors and relatives at a time.

SSAPs are much more flexible than other UK workplace pensions as trustees take investment decisions with a broader range of opportunities to choose between.

Personal Pension

A personal pension is one you open yourself, independently of any workplace.

Insurance companies were among the first to offer this kind of defined contribution, DC, plan, in the UK, but you could also have one with a bank, building society or unit trust.

They work similarly to workplace pensions, with the same tax relief on contributions while the pension provider decides how to invest your money.

When considering retiring to Germany, it often makes sense to round up your various work and personal pensions and consolidate them through transfer into a self-invested personal pension first.

Self-Invested Personal Pension, SIPP

If you don’t already have one, you may be considering a self-invested personal pension, also known as a SIPP.

A far more flexible range of investments is available with a SIPP than with the older style schemes described above, and this can lead to much greater returns.

With a SIPP instead of a traditional pension provider, you can invest in commercial real estate, UK and international shares or investment trusts, among many other options.

You remain completely in charge of these investments even when you work with an adviser to help you choose the best SIPP provider for your circumstances.

It is up to you whether you make regular payments to a SIPP or simply pay in a lump sum as and when.

You can convert your SIPP into an international form. International SIPPs are ideal for when you want to retire in another country, are a foreign national employed in the UK or are considering a phased approach to retirement.

Why transfer your UK pension to an overseas scheme?

There is no obligation to transfer your UK pension whatsoever. You can leave it exactly where it is when you move to another country.

You may have no choice in some instances, such as with a specific UK public sector pension.

One of the dangers, however, is that despite the double taxation agreement between UK and Germany, you may pay tax under the UK PAYE system (pay as you earn) while your pension payments are also taxable in Germany.

You can claim this tax back or change your tax code, but transferring your pension will be less hassle in the long run.

• An overseas pension scheme also allows you to denominate the international currency you want to spend in, for example, Euros, thereby avoiding exchange commission costs.

• It grants the most favourable tax treatment on your contributions and your withdrawals.

• Your pension fund can be held all in one manageable place.

If you’re unsure about making such a transfer with your UK pension, you can always speak to me. I am qualified to advise on the safest and most suitable course of action, always considering tax efficiency and your unique financial circumstances.

I can make sure you pay no unnecessary tax when transferring your pension.

How do you choose the best overseas pension scheme?

There are two ways to transfer your pension from the UK to another country, an international SIPP or a qualifying recognised overseas pension scheme (QROPS).

Both options offer similar tax benefits to retirees moving abroad.

Before making an informed decision about any overseas scheme, you and your adviser will consider many factors carefully. The first of which tends to be the size of your pension pot.

Until recently, the advice was that transfer to an international SIPP was usually best if you had under £150,000 in pension savings. Transferring to a QROPS was better when the transfer value exceeded this amount.

However, since the UK government scrapped the Lifetime Allowance (LTA) in April 2023, QROPS are losing this advantage. Yet a change in administration following the general election in 2024 may well see the LTA reinstated, so this is still something to bear in mind.

International SIPP

One of the key benefits of transferring to international SIPPs is that the Financial Conduct Authority regulates them in the same way as domestic SIPPs, and your pension assets remain in the UK.

This way, you can enjoy the same safety and security as a UK pension scheme in whichever country you choose to retire.

International SIPPs are also an excellent transfer choice if you want to return to live in the UK at some point.

Lump sum payments can be withdrawn free of tax after age 55 while you are still a UK resident. You may have to pay tax on such withdrawals if you do so after you become a resident of another country.

Qualifying Recognised Overseas Pension Scheme, QROPS

Qualifying recognised overseas pension schemes, or QROPS, are so-called because they can accept a transfer from UK pension providers and must comply with the strict requirements of His Majesty’s Revenue and Customs, HMRC.

The list of scheme providers in every participating country is updated twice a month on the HMRC website.

Always seek advice first and verify that a QROPS you are considering a transfer to is on the list. If not, you could be taxed with high transfer charges or fall prey to a scam.

The transfer process to this type of recognised overseas pension scheme is costly and can become highly complex and convoluted compared with transfer to an international SIPP. Therefore it is essential to only do so under advice.

I can work with you to identify the ideal QROPS based in Germany or offshore if this is your best way forward.

German Pension

The official German retirement age is currently 65 years and ten months.

You may be entitled to a German pension if you have worked for an employer in the country for five or more years or have paid pension insurance.

How to transfer UK pension to Germany FAQs

Please note

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

Overseas pension transfers can be complex. Make sure you take financial advice before you transfer your funds.