How do you transfer your UK pension to Jordan? If you’re wondering how best to access your pension overseas, read on for all the options as I weigh their potential risks and benefits.
Once you have your existing UK pension scheme details to hand, this is the step-by-step transfer process I can help you with.
Also consider: Read more about how to transfer your UK pension
Looking to transfer your UK pension?
Speak to me, Dan Ward, about transferring your UK pension funds to Jordan.
Checklist for transferring a UK pension to Jordan
- Collate all existing UK pensions
- Request a CETV (Cash Equivalent Transfer Value)
- Conduct a cost and performance comparison
- Identify the ideal solution for Jordan
- Submit transfer request documentation to the existing and new provider
Seeking advice for a pension transfer is always the wisest move, but it is also a legal requirement for those of you with £30,000 or more in safeguarded benefits.
However, be aware that most UK-based financial advisers can only assist by transferring your pension to another UK scheme unless they are suitable specialists with additional offshore experience and licenses in expatriate financial affairs. Do not risk your future financial security to unscrupulous advisers ‘helping’ you with an offshore product that amounts to little more than a pension scam.
As an independent financial adviser and authority on international transfers for pension schemes, I have many years of experience in this area. I am always happy to hear from anyone changing countries with at least £25,000 in UK pension savings. I can guide you safely through the transfer process, handling the paperwork for you and complying with all the regulations while ensuring you make the most tax-efficient and cost-effective investments, often dramatically reducing fund management fees along the way.
Your UK Pension Scheme
The first step is to verify which form your UK pension savings currently take. Holding pension funds across various workplace schemes and personal plans is extremely common, and you may also qualify for the UK state pension.
The state pension can be a worthwhile addition to your retirement income. You may receive payments in Jordan provided you have made ten or more years of qualifying National Insurance contributions. Check the Pension Forecasting section on the UK government website, where you will also find a link to the International Pension Centre for more information about receiving your state pension overseas.
All other UK pension schemes provide generous tax benefits on your contributions and their growth when invested. Generally, you should also be entitled to a tax-free lump sum at pension commencement of up to a quarter of your pot.
So, when do I pay tax on my UK pension?
Under UK rules, taxes only become payable when you begin to withdraw payments from your pension schemes if your overall income exceeds the income tax code and if you are a UK resident at the time.
You will also pay tax if you breach the annual contribution allowance in any single tax year; this is £60,000 for anyone with relevant earnings of £12,750 to £200,000. A much smaller yearly limit applies for non-taxpayers, while the £60,000 allowance is tapered incrementally for higher earners.
A timely transfer to a pension scheme designed explicitly for internationally mobile people can bring considerable tax benefits, depending on your residential status in Jordan or elsewhere. Get in touch to discover how this applies to your circumstances.
Your Workplace UK Pension Scheme
It is easy to lose track of workplace retirement savings whenever you change employer; if this is, you try the UK government’s Pension Tracing Service. You can usually consolidate all your workplace UK plans into one single international scheme, which is ideal for retirement life in Jordan.
However, there are some occupational plans you can, or should, only transfer in exceptional circumstances.
Defined Benefit Scheme
Also known as ‘final salary’ plans, the defined benefit scheme (DB) has long been revered as the gold standard of UK pensions. DB plans guarantee a proportion of your former salary for life and frequently come with additional spousal and dependent allowances. Such benefits can take many years to reproduce in alternative pension schemes without any safeguards.
A handful of private sector employers still provide DB arrangements, but you are most likely to have one if you have worked in the UK public sector. Before the provider can agree to a transfer to a scheme designed for offshore access, you must demonstrate that you have made more than adequate alternative provision for your retirement.
If your DB scheme is your only or main pot, then you should discuss your retirement plans with the administrator first and then consult a reputable UK financial adviser. In such cases, you can transfer your pension to a similarly safeguarded scheme within the UK or accept that it is best to leave it where it is. Either way, if you have more than £30,000 in a DB pension, you are statutorily obliged to obtain suitable advice before transferring.
However, suppose you have sufficient savings in an additional scheme. In that case, I can help with transferring your pension to an excellent solution for Jordan, whether it is a DB plan or not.
Defined Contribution Scheme
Every other workplace and all personal pension arrangements are some form of defined contribution scheme (DC). You may have heard of DC plans being called ‘money purchase’ schemes.
DC plans come in various types, but the pension scheme administrator usually invests your money for you. How much money you receive when you retire depends entirely upon the performance of these investments.
There are some exceptions where you may exercise greater or even total control over your occupational plan: group self-invested personal pensions (group SIPP) and small self-administered schemes (SSAS). Group SIPPs and SSASs also permit commercial property investment from which to grow your business.
If you have a personal plan, for example, if you are self-employed, it will be a DC plan. Again, the pension provider makes all the investing decisions, often across a constricted range of funds, unless you have opted for a SIPP. But what exactly is a SIPP?
Self-Invested Personal Pension, SIPP
A SIPP is a type of ‘wrapper’, attracting the same tax relief as all standard UK pension plans while allowing for a virtually limitless range of investing opportunities.
SIPPs are excellent products for globetrotters, as converting one into an international SIPP is comparatively more straightforward than transferring to an overseas pension scheme.
Pension Transfer Options for Jordan
When you are ready to return to Jordan, you can choose between transferring your UK pension to an international SIPP or a qualifying recognised overseas pension scheme (QROPS or ROPS).
- Consolidate existing pensions into one pot
- Reduce currency risk
- Flexible drawdown
- Better estate planning for your beneficiaries
- No obligation to purchase an annuity
So, what distinguishes an overseas scheme from an international SIPP, and how do you know which is right for you?
Qualifying recognised overseas pension scheme, QROPS
A QROPS is an overseas pension scheme which adheres to the exacting requirements of His Majesty’s Revenue and Customs (HMRC) to receive UK pension transfers.
Unfortunately, there are currently no QROPS providers anywhere within the Hashemite Kingdom of Jordan. Still, you could opt for a QROPS based within the European Economic Area (EEA), such as Malta, but you must pay tax in the form of the overseas transfer charge of 25% of your pot if you are not ordinarily resident in any EEA country.
Before the abolition of the lifetime allowance, a QROPS based in Malta was often a good choice for anyone with retirement savings approaching or exceeding £1,000,000 million as it freed you from paying tax on the excess amount. It remains to be seen whether Labour will reinstate the lifetime allowance should they win the general election in 2024, so if this is likely to concern you, do get in touch.
With an international SIPP, permanent residency in the European Economic Area or any other financial jurisdiction is unnecessary. Further, transferring pensions into an international SIPP can be far less complex and costly than transferring to an overseas scheme.
Additionally, you can rest assured that the Financial Conduct Authority, which regulates all SIPP providers, keeps your money safe. As ever, be wary of excessive charges as offshore investment bonds often require more specialist fund management, which always comes at a cost.
Feel free to contact me if you’d like to learn more about which of these products are and are not likely to be in your best interests.
How to transfer UK pension to Jordan FAQs
Can I move my UK pension to another country?
Can a UK pension be paid into a foreign bank account?
However, you must pay currency conversion costs from GBP to, for example, Jordanian dinar (JD), which could become quite corrosive over time.
What happens to my pension if I change country?
It is essential to seek suitable advice tailored closely to your individual circumstances. Remember, you can always ask me to assess your risk tolerance and check for any exit penalties to identify a solution in your best interests.
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.