How do I Transfer my UK Pension to Kuwait?

Understanding your UK pension fund

It is perfectly usual to have more than one UK pension scheme. You may have pension funds in workplace and personal plans and still qualify for the UK state pension.

All workplace and personal pensions attract tax relief at your marginal rate of UK income tax, and their investment growth is also always free of capital gains tax. You can usually withdraw a pension commencement lump sum, tax-free, of up to a quarter of your pension fund up to ten years below your state retirement age.

Workplace Plans

If you are, or have ever been, employed in the UK, you are likely to have one or more workplace pension schemes. For help tracking down any lost occupational pension savings, use the UK government’s Pensions Tracing Service. It may be possible to consolidate these with a transfer into one expat-friendly pot.

Your work pension scheme will be either a defined benefit, frequently called a ‘final salary’ arrangement, or a defined contribution scheme, often known as a ‘money purchase’ pension.

Defined Benefit

Defined benefit (DB) schemes are also known as ‘final salary’ plans, as they guarantee a proportion of your former salary for the duration of your retirement. If you’ve worked in the UK public sector, for example, for the NHS, local government or the armed services, you are most likely to have a DB pension scheme. However, private sector employers are offering this type of pension, too, so do ask the pensions manager at work if you are unsure.

DB schemes may be ‘unfunded’, technically meaning no transfer value exists. Instead, they provide an annuity, a guaranteed income for life and, in many cases, additional valuable benefits such as spousal and dependent pensions. The taxpayer or your former employer will pay these benefits.

Your DB pension accrues through your years of pensionable service instead of by investment growth. Due to market volatility, its benefits can take time to reproduce in alternative pension plans, and you may incur significant losses.

A transfer from a DB scheme places your pension benefits and financial security at considerable risk. You should demonstrate that you have made more than adequate additional provisions for your retirement before your provider will agree to make the transfer.

Speak to your pension scheme administrator in the first instance. Provided you have sufficient funds in additional pension plans, you can always ask me about a final salary (DB) pension transfer to an overseas scheme.

Defined Contribution

Every other type of workplace pension, and all personal plans, will be some form of defined contribution (DC) or ‘money purchase’ arrangement. Older style schemes may oblige you to purchase an annuity, reducing the size of your pot in return for a guaranteed retirement income.

With a DC pension, the scheme administrator usually invests your contributions on your behalf, and their investment growth determines how much money you will have when you retire.

Two exceptions are workplace or group self-invested personal pensions (workplace or group SIPPs) and small self-administered schemes, which may grant greater investment flexibility and control.

All DC schemes are likely eligible for pension transfers to an overseas pension scheme or one designed with offshore access in mind. Still, discussing your individual circumstances with a suitable specialist when you retire abroad is essential.

Personal Pension

You likely have a personal pension if you were self-employed or chose to make extra retirement savings. If so, your provider may be an insurance company, a bank, a building society, or a specialist pension scheme administrator.

Look for the annual statement summarising your savings and their investment performance for more information about your plan. It is common to have a stakeholder, a low-cost and low-risk plan guaranteed free of exit penalties. You may also have a self-invested personal pension, known as a SIPP.

UK State Pension

You can quickly check your entitlement to the state pension by logging in to the UK government’s pension forecasting website. In some cases, increasing the amount payable may be possible by plugging any gaps in your qualifying National Insurance contributions. Here, you can also find your state retirement age, which depends on your date of birth and is subject to frequent review.

You may receive your UK state pension overseas. Still, your benefits will stay the same yearly as no Social Security Agreement is currently in force between the State of Kuwait and the United Kingdom. However, do consult the official International Pension Centre too.

Which overseas pension schemes are suitable for Kuwait?

There are two options for pension transfers when you want to access your UK pension overseas: a qualifying recognised overseas pension scheme (QROPS or ROPS) or an international self-invested personal pension (international SIPP).

Both choices will reduce currency risk by allowing you to denominate a robust global currency, granting access to worldwide investments and funds. Each will enable you to consolidate your pension funds into one manageable pot, easily accessible when living abroad. However, essential differences distinguish an international SIPP from a recognised overseas pension scheme.

Qualifying Recognised Overseas Pension Schemes, QROPS/ROPS

A qualifying recognised overseas pension scheme, QROPS or ROPS, must meet the strict requirements of His Majesty’s Revenue and Customs (HM Revenue) to be broadly similar to a UK scheme regarding contributions, withdrawals and taxes.

There are currently no QROPS or ROPS providers in the State of Kuwait, but you could consider basing one in Malta. There will be an overseas transfer charge of 25%, but if you hold pension funds of £1,000,000 or more and are concerned about the potential reinstatement of the lifetime allowance, it is certainly worth considering.

I’m happy to explain all the advantages, tax implications and potential pitfalls of a Malta-based QROPS for your unique situation, so do get in touch.

International SIPP

An international SIPP is the simplest and most cost-efficient way for UK pension fund holders to access their retirement income when moving to a new country. It is often quicker to consolidate all your retirement funds into this ‘tax wrapper’ than to transfer to a recognised overseas scheme.

I explain international SIPPs and their array of investment options in greater depth in a separate article. Still, you can always contact me to discuss how an international SIPP might suit your unique plans and circumstances.

When searching for a SIPP provider, it is worth noting that some do not work directly with members of the public, and you can only access their products via advisers or stockbrokers. I always negotiate the lowest possible fees and fund management charges for my clients. Generally speaking, the larger the pot, the more negotiable such costs are.

Transfer UK Pension to Kuwait 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.