If you’re retiring in Oman and need to access your UK pension savings, here’s how you decide whether and how a pension transfer is right for your retirement lifestyle.
As soon as you have your existing scheme information, I can help with the following checklist, ensuring compliance at every step.
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 Oman.
Checklist for transferring a UK pension to Oman
- Collate all existing UK pensions
- Request a CETV (Cash Equivalent Transfer Value)
- Conduct a cost and performance comparison
- Identify the best solution for Oman – I can help with this
- Submit transfer request documentation to the existing and new provider
Advice requirement for safeguarded pension savings
Anyone attempting to transfer more than £30,000 in safeguarded retirement funds must, by law, seek appropriate advice. However, all pension transfers are enormous decisions you should only ever undertake with the help of a suitable financial adviser.
Your future financial security is at considerable risk unless you work with an international pension transfer specialist knowledgeable about offshore pension schemes and investment options. Almost every UK-based financial adviser lacks sufficient experience and expertise to transfer your pension overseas safely and cannot give you the correct advice. However, they are best for helping a UK resident with pension transfers to other UK schemes.
Contact me if you’d like to access your UK pension abroad; you can do so before or after moving overseas. I am a fully regulated financial adviser specialising in UK pension transfers worldwide. I have many years of experience helping British expats and others make tax-efficient savings when they retire abroad.
What is a UK pension?
Before transferring your pension, knowing more about its type is necessary. Most people who have lived in the UK are likely to have at least one of these:
- UK state pension
- Occupational plan
- Personal pension
UK State Pension
You can receive your UK state pension in Oman if you have made ten or more years of qualifying National Insurance contributions; these do not have to be consecutive years.
Log in to the UK government’s Pension Forecasting site to determine your state retirement age and whether you can increase the amount of state pension. There, you will also find a link to the International Pension Centre; click this for further information about accessing your state pension overseas.
Your UK-registered pension scheme
Contributions to your occupational and personal plans are always eligible for tax relief up to your maximum allowance, which is £60,000 per tax year for those earning £200,000 or less. The annual limit tapers incrementally for higher earners, while for non-tax-payers, the most that can be paid into a pension scheme each year is just under £3,000.
When invested, the growth of your pension fund is also always free of capital gains tax and tax on dividends. In fact, all taxation is deferred until you begin to withdraw pension benefits, and you only pay tax when your overall income exceeds the UK income tax limit. Yet most UK pensions also allow you to take a tax-free pension commencement lump sum of up to a quarter of your fund once you are ten years below your state retirement age.
When you live abroad, a transfer to an overseas scheme could free you from paying UK taxes on your UK pension at all. Contact me if you’d like to learn more about the tax implications of UK pension transfers as they pertain to your personal situation.
Not every UK pension scheme is suitable for overseas transfer, though, so here’s how to determine whether yours is.
Unless you opted out, any UK employer you have had since 2012 should have enrolled you into an occupational plan. In this way, gathering a few workplace UK pension schemes whenever you change jobs is extremely common. To round up any you’ve lost track of, try the UK government’s pension tracing service. It is usually a good idea to consolidate these through transfer into a single expat-friendly arrangement when you are ready to live abroad.
Defined Benefit Scheme
Defined benefit, also known as ‘final salary’ schemes, are the gold standard because they provide you with a guaranteed income for life as a proportion of your former salary. Many offer additional benefits, such as spousal or dependent pensions, which can take years to reproduce in a different pension scheme. Your pot accrues through pensionable service rather than investment growth and may be unfunded, meaning it provides an annuity rather than a transfer value.
If you have ever worked in the UK public sector, you will most likely have a defined benefit scheme (DB), but some private sector employers still offer them, too. Ask to speak with the pensions manager at work if you are unsure whether you have this type of UK pension.
The Pensions Protection Fund (PPF) safeguards your private sector DB pension should your employer become insolvent. However, you can only claim up to 90% of it, and the PPF will only compensate you once you reach your state retirement age.
You must demonstrate that you have more than sufficient alternative pension funds before your scheme administrator will agree to a pension transfer. If this is you, do get in touch. Depending on your individual circumstances, I can help you with a DB pension transfer to a scheme with minimal management fees and wider investment options that are ideally suited for access from the Sultanate of Oman.
Defined Contribution Schemes
Every other workplace plan is some form of defined contribution scheme, and these are also known as ‘money purchase’ schemes. The pension provider invests your contributions for you, and the performance of those investments determines how much pension income you can expect when you retire.
You may exercise more control over your occupational pension fund investments in a couple of exceptions: Group self-invested personal pensions (group SIPPs) and small self-administered schemes.
Your defined contribution scheme pension, whichever type, is likely suitable for transfer to an arrangement which facilitates offshore access. Some factors to consider are exit penalties and fund management fees; with older-style pensions, you may have already borne the brunt of high charges earlier on, and undergoing a UK pension transfer may not be cost-effective.
Get in touch so I can help you calculate whether or not you will be better off transferring your pension.
You may have a personal pension if you are or were self-employed or chose to make additional savings for retirement. Every year, you should receive a statement from your provider summarising the growth of your pension fund and how much income you can expect in retirement.
Two of the most commonly held forms of personal UK pensions are stakeholder and self-invested personal pensions (SIPPs).
Self-Invested Personal Pension, SIPP
A SIPP is a pension ‘wrapper’, eligible for the same tax relief as any UK pension scheme while allowing for far greater investment flexibility. If you lack experience managing investments, work with a stockbroker or similar and pay them for their expert investment recommendations. Invariably, this comes at a price.
SIPPs are an excellent product for anyone considering living abroad in future, as they are convertible into an international arrangement. Please contact me if you have a SIPP and would like to access it from Oman when you retire. I can assess your risk tolerance and significantly reduce those fund management fees threatening your retirement income.
UK Pension Transfer Options for Oman
Generally, you can transfer your UK pension to an international SIPP for Oman or a qualifying recognised overseas pension scheme (QROPS). Both of these options offer similar advantages to ex-pats, including, among many others not listed here:
Benefits of transferring to QROPS or International SIPP
- Flexible drawdown with no obligation to purchase an annuity, although I can arrange for that if you wish
- Consolidation of various pension funds into one manageable pot
- Tax-efficient access to retirement income from your UK pension overseas
- Reduction in currency risk from fluctuating exchange rates by denominating a different currency to accrue and spend your pension benefits
- Several potential tax benefits, including freedom from UK income tax charges and any future changes in British tax rules
- Access to a broad range of international investments and asset classes
However, the differences between an overseas pension scheme and an international SIPP, which, despite its name, is based in the UK, can have significant tax implications.
Qualifying Recognised Overseas Pension Scheme, QROPS
A qualifying recognised overseas pension scheme, QROPS or ROPS, is so called because it adheres to His Majesty’s Revenue and Customs (HMRC) requirements to receive a UK pension overseas. All qualifying overseas pension schemes must be similar to UK rules concerning tax, withdrawals, and contributions.
Although HMRC does not explicitly approve any overseas pension schemes, they maintain a list on their website of all plans that meet the stipulations. Always check this list for yourself to verify that any scheme you are considering is there; HMRC updates it every first and fifteenth of the month. Failure to check places your pension assets in grave jeopardy, as you could theoretically lose 55% of your pension funds to tax charges as an unauthorised withdrawal penalty or, at worst, become the victim of a scam with little to no recourse when something goes wrong.
At the time of writing, there are no QROPS or ROPS in the Sultanate of Oman, so you could base yours in the European Economic Area and pay the overseas transfer charge of 25% of your pot. Malta is the EEA country of choice for those transferring tax-advantaged pension funds exceeding the former lifetime allowance of £1,073,100 to a QROPS.
Lifetime Allowance Considerations
You probably know the current UK government recently abolished the lifetime allowance. Still, if this concerns you, note that a Labour administration has promised to reinstate it should they win the general election next year.
Remember, you can always speak with me about the risks and benefits of transferring to a Maltese or other QROPS if you want advice closely tailored to your retirement plans and circumstances.
International Self-Invested Personal Pension, international SIPP
If the lifetime allowance is not an issue for you, then an international SIPP is infinitely preferable to a QROPS on multiple fronts. For example, there is no overseas transfer charge because international SIPPs remain in the UK, where the Financial Conduct Authority regulates all SIPP providers closely.
Further, transferring to an international SIPP can be much quicker, easier and cheaper than transferring to a QROPS or ROPS. Also, there is no requirement to remain a resident of any fixed financial jurisdiction, making international SIPPs the ultimate choice for anyone wishing to be internationally mobile throughout their retirement.
When researching SIPP providers, please note that some do not engage directly with members of the public, and you can only access their products through the services of a specialist. Feel free to contact me about a pension transfer to an international SIPP offering more bespoke investments and to avoid an excess amount of charges for products you don’t really need.
How to transfer UK pension to Oman FAQs
What happens to my UK work pension if I move abroad?
However, it may not be possible or in your best interests to do so in some circumstances, so your scheme administrator might agree to pay your pension benefits directly to a bank account. You must provide your bank identification code (BIC) and international bank account number (IBAN) to receive your pension income overseas.
How do you transfer pensions internationally?
Working closely with an adviser, you must request the Cash Equivalent Transfer Value (CETV) from all your existing schemes before conducting thorough cost and performance comparisons.
Once you and your adviser agree upon the ideal international solution, you submit transfer request documentation to your current and new providers.
I can handle all this paperwork and red tape for you so that transferring your pension goes smoothly and safely.
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.