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Maximizing Your UK Pension Whilst Living Outside the UK

The UK Government introduced new legislation in April 2006 (and then in April 2012 further relaxed restrictions and regulations) making it possible for Indian expats who may have, at some time, worked in the UK to transfer their UK pensions to a destination outside the UK with the approval of Her Majesty's Revenue & Customs (HMRC), the UK tax man. This means that when moving overseas (including India) or if you intend to leave the UK on a long term basis, most UK pensions can be transferred to a Qualified Recognized Overseas Pension Scheme (QROPS).

This can also apply to those already receiving benefits from a UK SIPP (Self-Invested Personal Pension Scheme). Besides, if you have a pension fund in a European country other than the UK, such pension can also be transferred.

When you leave the UK you can no longer make pension contributions to your UK pension schemes. Your existing pension funds become frozen and therefore grow at a much slower rate than when they were active. If you do nothing you can take a tax-fee lump sum of up to 25% of your fund at age 55.
For the remaining 75% of your fund, you have three options:
1) Defer your pension until a later date.
2) Take a pension income which will be taxed up to 40%.
3) Purchase an annuity which will provide a pension for the remainder of your life which again will be taxed and depending on the type of annuity purchased, it will die with you on your death. Worse still, pension annuity investment rates have decreased drastically in recent years. Later, on death, your surviving spouse will receive a reduced pension or nothing at all. The alternative is to transfer your UK pension fund to a QROPS. QROPS providers exist all around the globe and offer varying benefits depending on the jurisdiction in which the QROPS provider is based.

QROPS Benefits

The benefits of transferring your UK pension into a QROPS are huge as compared to leaving such funds with your UK pension administrator.

  • QROPS can be passed 100% to your beneficiaries free of UK Inheritance Tax.
  • Your pension benefits will grow tax free, increasing your retirement fund.
  • When you retire, you will receive all benefits free of UK tax.
  • QROPS can provide a higher tax-free cash lump sum than UK Pensions.
  • QROPS are internationally mobile and can follow you around the world to your country of residence, thus reducing currency risk.
  • QROPS allow you to drawdown a higher annual income than UK pensions. E.g. If inflation and interest rates are higher in your country of residence, your pension can grow at the higher rate rather than at the UK rate of inflation.
  • Fund investment and drawdown in currency of your choice, thus reducing currency risk.
  • Out of the scope of all UK tax changes.
  • Greater flexibility and freedom to control investments, meaning you can choose a more aggressive and active investment strategy offering higher growth potential.

Padmakshi-Mondial Wealth Management is a boutique financial services intermediary formed from an association of Padmakshi Financial Services Ltd. based in Mumbai, India, and Mondial (Dubai) LLC, the overseas partner, for providing personalized local and global solutions including QROPS transfers.

Mondial's pension advice and education is designed to provide clients with greater control over their retirement options. Mondial works with leading product providers in the financial industry to offer comprehensive choice as well as peace of mind.

Padmakshi-Mondial offers, depending on your personal circumstances, expert advice and guidance for transfer of your UK Pension funds to a QROPS and to execute such transfer to a destination outside the UK to a QROPS provider. Padmakshi-Modial operates out of its offices in Mumbai as well as Dubai.

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