Are you looking to transfer a UK pension fund to Taiwan but don’t know where to start? Here are the pros and cons of all your options to help you make an informed and tax-efficient decision.
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 Taiwan.
Checklist for transferring a UK pension to Taiwan
- Collate all existing UK pensions
- Request a CETV (Cash Equivalent Transfer Value)
- Conduct a cost and performance comparison
- Identify the ideal solution for Taiwan – I can help with this
- Submit transfer request documentation to the existing and new provider
Legally, pension transfers of £30,000 or more in safeguarded benefits can only be processed under appropriate advice. Yet, most UK-based advisers are unaware that they are only qualified to help a client who intends to remain a UK resident long-term. Very few have the necessary expertise to transfer your pension overseas safely, but they may mistakenly assume otherwise and offer you their services regardless.
Choosing a specialist financial adviser
Ensure your adviser specialises in expatriate financial affairs with extensive experience of the overseas transfer process. They must be familiar with the tax and financial jurisdictions of each country concerned and knowledgeable about offshore markets in general.
If you have at least £25,000 in pension assets, whether in a single pot or held across multiple schemes, I can guide you on the best transfer options for access from Taiwan. I have considerable expertise in this area and have been helping clients build and manage their wealth worldwide for many years.
What is a UK-registered pension scheme, and how do you know which you have?
Every British pension scheme attracts the same generous UK tax relief on your contributions, whether it is an occupational or private arrangement. Some may force you to purchase an annuity, reducing the size of your pot in return for a guaranteed income. In contrast, others grant you greater flexibility both in withdrawals and investment decisions.
However, they are all subject to the same UK rules governing taxes and contribution limits.
Simply put, your pension contributions and their growth at investment are always tax-free. You can even withdraw a pension commencement lump sum, free of any tax charge, if you are a UK resident at the time.
Still, the UK government will levy income tax on your pension benefits if your overall relevant income is high enough. You will pay tax on the excess amount if you breach your annual contribution allowance in any single tax year, as UK tax relief is capped at £60,000.
It is common to have British pension plans in one or more workplace schemes, as enrolment has been compulsory since 2012. All you need are the details of your current and any former employers, or you can use the UK government’s pension tracing service to round up any retirement savings you may have lost track of.
You may also have a personal pension, either in place of additional voluntary contributions or because you are self-employed. Generally, you can consolidate all these schemes into a single pot that is ideal for retirement in Taiwan.
This is the gold standard of pensions, sometimes also known as ‘final salary’, which is most often provided within the UK public sector, but they are occasionally offered within some private workplaces too.
Your benefits are guaranteed and do not depend upon the investment performance of your contributions. Instead, the taxpayer or your previous employer pays a proportion of your former salary for life, which you accrue through your years of pensionable service.
When you have a defined benefit plan with a transfer value of £30,000 or above, you are legally obliged to obtain suitable advice before transferring it either within the UK or to an overseas scheme. Unless you can demonstrate sufficient alternative means of supporting yourself throughout retirement, the UK pension scheme administrator should turn down your transfer request, as no other scheme can guarantee those lifelong benefits.
I can help you with a final salary pension transfer overseas if it is not your sole retirement asset, so do get in touch if you’d like personalised information about this.
If you are still unsure whether you have this type of pension, you can always ask the pension manager at work.
Every other UK-registered pension scheme, whether workplace or personal, will be some form of defined contribution arrangement.
Sometimes called ‘money purchase’, with this type of pension, your provider may invest your contributions on your behalf unless you have an alternative arrangement such as a group self-invested personal pension (SIPP). Either way, UK tax relief applies in the same way, at your marginal income tax rate.
Some older style schemes may come with annuity contracts, exchanging a chunk of your pot in return for a guaranteed income, which may not represent great value for money. You can escape any unwanted annuity contracts when you transfer to a more flexible, expat-friendly arrangement whilst retaining the option to purchase one if you want.
There is no requirement to consult a financial adviser before transferring from any defined contribution pension scheme, but it is always advisable to do so. Your pension savings are likely one of the most significant assets you possess, and while the correct advice can help you reduce risk, nobody can ever completely nullify it.
Overseas pension schemes vs. international SIPPs
You can choose between a qualifying recognised overseas pension scheme, QROPS, based in the European Economic Area (EEA) or an international SIPP. Both of these options perfectly meet the needs of British expats and foreign nationals alike.
Here are only a few of the many desirable features shared by overseas pension schemes and international SIPPs:
- Major reductions in currency risk
- Potential tax benefits
- No annuity contracts
- Flexible drawdown
- Consolidation of multiple schemes into one manageable pot
- Access to the broadest possible offshore investment opportunities
Yet, these two schemes are far from interchangeable, and it is essential to understand their differences before you can determine which is the right one to transfer your pension fund to.
Qualifying recognised overseas pension scheme, QROPS
Overseas schemes can only receive pension transfers from the UK when they satisfy the requirements of His Majesty’s Revenue and Customs for inclusion on a list of QROPS plans.
Because the pension system in Taiwan currently differs too markedly from UK regulations for this overseas transfer scheme, you may be advised to choose a QROPS based in an EEA state, such as Malta, instead. A tax charge of 25% of your pot will apply if you are not a resident of any EEA country, so why would anyone retiring in Taiwan choose this?
Prior to its abolition in the spring of 2023, a lifetime allowance of £1,073,100 restricted the total amount of pension savings any individual could hold. Transferring to an overseas pension scheme was more tax efficient than an international SIPP for people with around £1,000,000 in their pensions. If this is you, remember that the opposition has vowed to reinstate the lifetime allowance should they form a government following the general election in 2024.
If the money in your pension scheme is nowhere near the lifetime allowance limit, I can see no reason why you’d choose a QROPS over an international SIPP. The transfer process is quicker, simpler and less costly with an international SIPP.
There is no requirement to reside in the same country or jurisdiction; in fact, you may change countries at will and never incur the overseas transfer tax charge. An international SIPP remains in the UK under the close regulatory eye of the Financial Conduct Authority.
Structurally, the international version is virtually identical to any domestic SIPP, yet, like a QROPS, you may denominate a stable global currency in which to accrue and spend your pension benefits.
With an international SIPP, you can manage it all online, or if you need more experience or confidence, you can always work with an adviser or stockbroker for investment recommendations. Note that some SIPPs are only available via independent financial advisers, as quite a few providers do not engage directly with clients.
What if you can’t transfer your UK pension scheme?
Sometimes, it is impossible or inadvisable to transfer your pension savings overseas, but you can still receive payments in Taiwan.
You only need to give the scheme administrator the international bank account number (IBAN) and bank identification code (BIN) of your chosen account. They will credit your pension benefits directly so you can withdraw your money from ATMs in New Taiwan dollars, but you must pay the exchange rate commission each time. For this reason alone, if a transfer is possible, it is generally advisable, subject to certain conditions, as currency fluctuations can seriously affect your income.
UK state pension
Head over to the UK government pension forecasting website to see if you have made ten or more years of qualifying National Insurance contributions; these do not have to be consecutive tax years. There, you will also find a link to the International Pension Centre for further information about receiving your UK state pension benefits in Taiwan.
How to transfer UK pension to Taiwan FAQs
Can I transfer my UK pension overseas?
Qualifying recognised overseas pension schemes (QROPS)
How do I transfer my pension when I move abroad?
Then, you simply submit the transfer request documentation to both your existing and new scheme administrator.
Any incomplete or incorrect information can delay the transfer, and there are many potential pitfalls. Hence, it is always wise to get help from an expert before you transfer your British-registered pension scheme abroad.
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.