How to Transfer UK Pension to Singapore?

Why do you need Regulated Financial Advice?

For some schemes, it is mandatory to seek professional financial advice for UK pension transfers overseas. Your retirement income is at risk if you do not obtain appropriately regulated financial advice before you transfer your pension to an overseas scheme.

However, your current UK independent financial adviser (IFA) will only be legally authorised to provide this if they have the additional licenses required for a pension transfer overseas to Singapore, which is unlikely. They will also lack sufficient knowledge of, and experience with, the comprehensive range of international products and their tax benefits to offer meaningful pensions advice to expatriate retirees.

I am fully qualified to offer professional financial advice on an international pension transfer and its potential tax implications. This safeguards your retirement savings and long-term financial security.

If you are a Singapore national looking to transfer your UK pension, I can offer you pension transfer advice on all aspects of overseas transfers. However, the UK’s Financial Ombudsman Service does not cover you in quite the same way as a British ex-pat who is moving their pension abroad.

Which UK Pension Scheme do you have?

Before you can even think about transferring a UK pension abroad, it is essential to identify your plan type.

All UK pension schemes have significant tax benefits and usually take the form of workplace or private pensions. Your pension contributions to both types are always eligible for UK tax relief at your marginal income tax rate.

Some workplace pensions are not suitable for pension transfer to an overseas scheme.

Workplace Pension

Anyone with an employer in the UK since 2012 should have been compulsorily enrolled on an occupational UK pension scheme. It is possible to opt out of a workplace pension but seldom advisable because then you could miss out on all the money your employer contributes to your retirement funds.

You likely accumulated more than one pension fund with multiple pension providers if you changed employers over the years. You can get help locating lost pensions via the Pension Tracing Service on His Majesty’s Revenue and Customs (HMRC) website.

Workplace pension schemes will usually be either defined benefit, also known as ‘unfunded’ and ‘final salary’ schemes or defined contribution, sometimes called ‘money purchase’ plans.

If you are a company director or senior executive of a private firm, you might also have a small self-administered scheme (SSAS).

Some employers may also offer a group SIPP (self-invested personal pension). These are also sometimes held by a few professionals, such as solicitors or accountants.

If you’re unsure what kind of UK-registered pension scheme your employer provides, you can always ask to speak to the pension manager at work or contact the human resources department.

Defined Benefit Pension Scheme

You are most likely to have a defined benefit (DB) pension scheme if you have worked in the public sector, but some private employers also offer them. They are kept safe by the Pension Protection Fund should your employer become insolvent.

Speak with your UK pension scheme administrator first if you have one of these plans.

Defined benefit pensions are not usually suitable for transfer to overseas schemes because your pension benefits are paid for by your employer or the taxpayer, hence ‘unfunded’. Technically, there is no separate pension pot for you to move.

You increase these pension benefits through your contributions and the time you have worked rather than by growing your retirement funds.

Your pension income from a DB scheme is guaranteed and indexed up in line with inflation. It can often be a proportion of your usual salary and will be paid similarly when you retire.

Defined Contribution Scheme

Most companies will offer a defined contribution (DC) pension plan. Generally, the tax relief is applied when your employer deducts your pension contributions from your salary before tax.

You will have an individual pot of pension savings which sits within the larger pension funds as a whole, and the pension provider invests this money on your behalf. The performance of these investments determines how much income in pension benefits you receive when you retire.

There is a restricted range of investment opportunities with this kind of pension to minimise risk while the fund gradually grows.

Small Self-Administered Scheme, SSAS

If you’re a company director, senior executive or relative, you may also have a small self-administered scheme (SSAS), a specialist type of DC scheme forming a trust.

Up to eleven individuals can participate in any SSAS, and they become the trustees, holding all the assets in their names.

Often, there is no UK pension scheme administrator with this type of plan. Instead, the trustees take responsibility for all decisions, including borrowing money to invest or making loans to the company.

Personal Pension

Personal pensions are defined contribution schemes that work the same way as their workplace counterpart, but you choose the provider. They are ideal for the self-employed who do not have access to company schemes, people who may be unemployed while caring for dependents or anyone who wants to make extra provisions for their retirement outside a workplace pension.

The pension provider invests the money for you, and its performance determines your eventual retirement benefits. They will also levy fees and charges, which in some cases, particularly with older products, can significantly reduce your pension fund.

Tax Relief on Private Pensions

If you are a basic rate taxpayer, the pension provider claims your UK income tax relief from the government and automatically credits it to your account every time you make a pension contribution.

For higher-rate taxpayers, filling in a self-assessment tax return or making a claim in writing or over the phone to HMRC is usually necessary to claim your higher-rate tax rebate.

Types of Personal Pensions

A personal or private pension is any you arrange independently of the workplace. You may have done so via an insurance company, bank or building society and should receive an annual statement summarising how much you have saved. This statement will also contain further information about your pension type.

Two of the most common private UK-registered pension schemes you may have are stakeholder and self-invested personal pensions (SIPPs).

Stakeholder Pension

Stakeholder pensions are simple schemes that comply with strict rules relating to contributions, withdrawals, transfers and charges. The fees are statutorily capped at 1.5% for the first ten years, dropping to 1% after that. You can often find providers offering even lower charges than this who cannot call themselves stakeholder pensions because they provide a range of more expensive funds as optional extras.

While these reasonable charges may appeal to both low and high-income individuals alike, they severely restrict the funds available for your pension provider to invest in. The higher-performing investment funds tend to charge providers correspondingly higher annual management fees.

You may have some choice over where to invest your pension savings, but it will be from a narrow range, or you can opt for the scheme provider’s default investment fund.

Taking advantage of the free pension transfer option that is guaranteed with every stakeholder scheme by moving it into a SIPP can be an excellent way to prepare for bringing your pension overseas before proceeding to Singapore.

Self-invested Personal Pension, SIPP

SIPPs are often the perfect choice for anyone looking to retire overseas later in life as they are easily converted into an international form with a broad range of currencies. You can often consolidate all your existing UK pensions into one SIPP.

A SIPP is simply another type of personal pension. As such, it is subject to the same regulations concerning tax relief, withdrawals and contributions as any other personal or stakeholder scheme.

SIPP Investment Options

However, with a SIPP, there is an almost limitless choice of investments. You can take complete control of these investments or work with a fund manager, independent financial advisor or stockbroker to manage them.

The range of permitted investments includes, but is by no means limited to:

• Investment trusts
• Stocks and shares
• Insurance company funds
• Venture capital trusts
• Commercial property
• Unit trusts

Types of SIPP

SIPPs can be roughly divided into ‘full’ and low-cost online ‘supermarket’ SIPPs. A critical difference between them is that one requires an IFA, and the other does not.

Full SIPP

Full SIPPs are accessed only through specialist providers, including some life insurers. They grant access to the majority, if not all, of permitted investments for SIPPs. An IFA is needed as some providers do not work directly with members of the public.

Low-Cost SIPP

You can set up a low-cost SIPP if you are confident and knowledgeable about financial markets. Doing as much research as possible is crucial to finding the best SIPP provider.

All types of SIPP are eligible for transfer to a recognised overseas pension scheme or can be converted into an international version for the utmost flexibility.

Potential Advantages of SIPPs

• Transferring and consolidating your pension savings into one makes life much easier, particularly when you want to retire abroad.
• You will have access to a broader range of investments and free up assets stuck in low-performing funds.
• It can be very straightforward to convert your SIPP into an international SIPP, ready for when you emigrate to Singapore.

Potential Disadvantages of SIPPs

• Charges for SIPPs can vary, and some work out more costly than ‘standard’ pensions over time. Investing in the more complex assets tends to lead to higher fees which reflect the technical specialisms needed to administer them.
• You could lose guaranteed return or annuity rates from your old pension.
• Exit penalties can be as high as 10% of the transfer value of your pension fund.

Working with a financial adviser can often be best to find the most cost-effective SIPP for your circumstances.

Why Transfer to an Overseas Pension Scheme?

You don’t have to transfer your pension abroad when you move to Singapore. In some cases, as discussed above, the UK pension provider might not authorise pension transfers to an overseas pension anyway.

It is still possible to receive your UK pension benefits by having them paid directly into a Singapore bank account or by moving the money online from a UK bank account into a local one.

Offshore arrangements for UK-registered pension schemes are often the most convenient way forward when moving to Singapore because they consolidate all your existing funds into one.

Currency Risk

Additionally, all overseas pension schemes allow you to denominate the currency of your choice. Although this doesn’t include $SGD (Singapore dollar), you can choose strong currencies more relevant to the region, such as $US or $HK. This way, you can significantly reduce the currency risk when withdrawing your pension overseas.

Types of overseas pension schemes

You usually choose between transferring UK pensions to a qualifying recognised overseas pension scheme (QROPS) or an international SIPP.

Both iSIPPs and QROPS have multiple expat-friendly characteristics in common, including but not limited to the following:

• Your choice of international currency – reduce currency risk by avoiding costly fluctuations in exchange rates when spending your pension overseas.
• Flexible drawdown – choose when and how to receive retirement income.
• Greater investment flexibility – access to an exciting range of global opportunities.
• Tax-free pension commencement lump sum payments of up to 25%.
• Potential tax advantages – no UK income tax to pay on your pension abroad.
• The opportunity to consolidate your pension funds into one convenient pot.

But what are the differences between them, and how do the new rules on the lifetime allowance affect decisions about moving your pension overseas?

International SIPP

International SIPPs are structurally identical to the domestic SIPPs described above, and your retirement savings remain in the UK, where they are governed by the Financial Conduct Authority (FCA) for your security and peace of mind.

An international SIPP is an excellent idea whether you are a Singapore national building up pension savings while working in the UK or a British ex-pat simply planning to be internationally mobile during retirement.

It is usually quicker and cheaper to set up an international SIPP than to transfer a pension abroad into a qualifying recognised overseas pension plan. Because your SIPP remains in the UK, there is no overseas transfer charge.

As soon as you are ten years below your state retirement age, you can withdraw up to 25% of your fund as a lump sum without needing to pay tax as long as you do so whilst you are still a UK tax resident.

Before the UK government scrapped the lifetime allowance, the advice for those with retirement savings close to this limit was to transfer their UK pension overseas to a QROPS rather than an international SIPP. However, despite its abolition in April 2023, a change of the UK government in the next general election could see it reinstated.

Therefore, if you are still in the early preparatory stages of planning your retirement in Singapore and your pension funds will be close to the lifetime allowance (last £1,073,100), you might want to transfer your pension to a QROPS.

Qualifying Recognised Overseas Pension Scheme, QROPS

In contrast to the international SIPP, a qualifying overseas pension scheme, QROPS, is based offshore, usually in the same financial jurisdiction where you choose to live.

A QROPS is a recognised overseas pension scheme that can accept pension transfers from a UK-registered pension scheme. HM Revenue sets strict guidelines to ensure that overseas scheme providers are broadly similar to any UK pension provider in tax and withdrawal arrangements.

In the same way as an iSIPP, you can withdraw up to 25% of your fund as a lump sum at the commencement of your pension. This is tax-free, provided you do so while still a UK tax resident.

If you have been a UK tax resident in the last six tax years, when withdrawing or transferring benefits from your QROPS, there will be some tax implications to consider.

You can find a regularly updated list of QROPS providers on the HMRC website, and it is essential to make sure any overseas scheme manager you are considering is on this list. If not, your UK pension provider may refuse to make overseas transfers, and you could be hit by a hefty penalty charge.

There are currently no QROPS providers listed for Singapore. Still, you could base one somewhere in the European Economic Area, such as Malta. However, then you will have to pay the overseas transfer charge of 25% of the transfer value because once you move to Singapore, you will be living outside the European Economic Area.

There is no overseas transfer charge when you transfer your pensions into an international SIPP.

New Lifetime Allowance Rules and QROPS

When the lifetime allowance was in force, a QROPS was often a cost-effective option for bringing your pension overseas despite the transfer charge. Nobody knows whether a new UK government will reinstate the lifetime allowance, but it is something to bear in mind.

Suppose the lifetime allowance is not relevant to the eventual size of your retirement savings. For example, when you have less than £250,000 in your pot, you should consider an international SIPP rather than a QROPS.

Transferring a UK pension overseas to a QROPS when a lifetime allowance is in force is a benefit crystallisation event. As such, the process can become quite costly and convoluted. Yet, for some people, it will be the best way forward.

Feel free to ask me if it is better to transfer your pension funds to a QROPS or whether an international SIPP is an ideal way for you to enjoy your pension abroad. I can advise you on the potential tax benefits of transferring pensions and help you avoid costly tax penalties such as an unnecessary overseas transfer charge.

Tax Charges on Pension Income in Singapore

There is a double taxation agreement between the UK and Singapore, so you should not have to pay tax twice on your retirement income.

However, to fully understand all the tax implications concerning your pension in Singapore, it is essential to note that local tax rules and tax charges largely depend on your residency status.

Singapore Residency Requirements

There is no specific retirement visa for expats seeking permanent residency in Singapore. However, if you currently work there with an Employment Pass, you can apply for permanent residence via the Professionals/Technical Personnel & Skilled Worker scheme.

An alternative route to permanent residency is the Global Investor Programme or GIP, suitable for individuals with around £1.5 million to invest in either a business or a GIP-approved fund.

How do I transfer my UK pension to Singapore 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.