Transferring Irish pensions for those who have previously spent time working in Ireland is a fairly recent trend.
Many people only become aware of their options as they near retirement, but by then, transferring benefits abroad might no longer be allowed.
That’s why getting expert advice early on is crucial.
While Ireland’s pension system is great for those who live and pay taxes there, moving abroad can introduce major complications.
Often, these issues only come to light at retirement or later when it’s time to pass the funds on to family members.
One particular challenge for non-residents with Irish pensions is that flexibly accessing their pension fund is usually off the table.
Instead, their only option is often to buy a lifetime income (also known as a pension annuity).
However, these annuities come with significant downsides:
- They tend to offer low returns.
- Any remaining funds don’t get passed on to your beneficiaries, essentially ending with you.
- Your retirement spending habits will probably change over time, but annuities lack the flexibility to adapt to these shifts.
Given this, it is usually a good idea to explore overseas transfer options that might offer more flexibility.
Key Transfer Rules from Irish Revenue
If you’re thinking about moving your pension away from Ireland, keep in mind that the Irish Revenue requires a genuine reason for doing so.
Acceptable reasons might include:
- Consolidating multiple pension benefits into one.
- Managing retirement funds in local currency to avoid exchange rate risks.
- Working with a regulated adviser in your current location.
The aim should not be to simply bypass Irish tax rules.
Which Irish Pensions Can Be Moved Abroad?
Transferring Irish pensions overseas can offer increased flexibility and control over your retirement savings.
However, not all types of Irish pension schemes can be moved abroad, and the rules can vary depending on your circumstances, such as your residency status and whether you’ve already started drawing on your pension.
Let’s explore the main types of Irish pensions and whether they are eligible for overseas transfer.
1. Defined Contribution (DC) Occupational Pension Schemes
With a DC pension, the retirement benefit depends on how much is contributed by you and/or your employer and how well the investment performs.
Can it be moved abroad?
- Yes, within the EU, before pension benefits have been taken.
- Transfers outside the EU are only allowed if you live or work in the destination country.
2. Personal Retirement Savings Accounts (PRSAs)
PRSAs are personal pensions available to anyone, typically used by individuals who don’t have access to an occupational pension scheme through their employer.
These accounts are flexible, portable, and often allow for self-directed investment options.
However, transferring PRSAs abroad can be limited by residency rules.
Can it be moved abroad?
- Yes, within the EU before retirement. PRSAs can be transferred to another EU country, provided that the transfer aligns with Irish Revenue guidelines.
- Transferring a PRSA outside the EU is more complex and usually not allowed, except under specific circumstances, such as residing in the destination country.
3. Personal Retirement Bonds (Buy-Out Bonds)
Personal Retirement Bonds (PRBs), also known as Buy-Out Bonds, are used to transfer benefits from an occupational pension scheme when you leave employment.
These bonds are held in your name and offer flexibility in managing and accessing your pension benefits.
PRBs can often be transferred overseas, particularly to the UK, making them a favorable option for those who have worked in both Ireland and the UK.
Can it be moved abroad?
- Yes, PRBs can be transferred to a pension scheme in the UK, including a Self-Invested Personal Pension (SIPP), regardless of your residency.
- Transfers to other EU countries are also allowed.
4. Approved Retirement Funds (ARFs)
An ARF is a post-retirement investment option available to retirees who have taken a lump sum from their pension.
It allows you to reinvest the remaining pension funds and make withdrawals when needed.
However, once funds are placed in an ARF, transferring them abroad becomes difficult.
Can it be moved abroad?
- No, ARFs cannot typically be transferred to overseas pension schemes. Once funds are in an ARF, they must remain in Ireland.
5. Unfunded Public Sector Pensions
Unfunded public sector pensions, such as those provided to civil servants, teachers, and members of the health service, are generally non-transferable.
These pensions are paid directly from the government’s revenue and are not funded through investments. As a result, they cannot be moved outside of Ireland.
Can it be moved abroad?
- No, unfunded public sector pensions cannot be transferred overseas. These pensions are paid out by the Irish government and are only available within Ireland.
Key Points to Consider
Before moving any Irish pension abroad, it’s essential to review the following factors:
- Residency Status: Most transfers are only permitted if you are not an Irish resident or if you are relocating to an EU country. Transfers outside the EU are generally restricted to individuals who are either living or working in the destination country.
- Timing of Transfer: Once you’ve started drawing from your pension, transferring it abroad is no longer an option. Early planning is essential to keep your options open.
- Tax Implications: Each transfer needs to comply with Irish Revenue rules, and taxes may apply depending on where the pension is moved. Double taxation treaties can help avoid paying taxes twice on your retirement income.
Considering QROPS for Irish Pension Transfers
When looking into transferring Irish pensions abroad, many expats come across the term QROPS (Qualifying Recognised Overseas Pension Scheme).
While QROPS is often associated with UK pensions, it’s worth understanding how it can relate to Irish pensions if you’re considering relocating your retirement funds overseas.
QROPS is a pension transfer solution recognized by HMRC, designed for individuals moving their pensions from the UK to another country.
Although Irish pensions don’t technically fall under UK pension rules, there can be overlap in terms of international transfers, particularly if you have both Irish and UK pension benefits, or if you’re considering a UK-based retirement scheme as a destination for your Irish pension.
For those with Irish pensions, QROPS can become relevant in a few scenarios:
- Consolidating UK and Irish Pensions: If you’ve worked in both Ireland and the UK, you may have accrued pensions in both countries. In this case, QROPS may allow you to transfer your UK pension to a scheme in the EU or another country alongside your Irish pension, offering the convenience of managing both funds under one umbrella.
- Transferring to UK-Based Schemes: If you’ve moved to the UK or plan to retire there, and you’re considering transferring your Irish pension to a UK-based scheme, it’s important to note that such transfers aren’t straightforward. Under current Irish law, transferring Irish pension benefits outside of the EU, including to the UK, is only allowed if you’re living or working in the UK. A QROPS transfer might be a consideration here if your situation fits the criteria.
- Avoiding Future Taxation Issues: QROPS is designed to prevent double taxation when retirement benefits are drawn. While Ireland has double taxation agreements with many countries, using a QROPS in an approved jurisdiction could potentially simplify your tax obligations when managing pensions from multiple countries.
However, it’s important to remember that QROPS is not a direct solution for transferring Irish pensions outside of Ireland unless a UK pension is involved.
The rules and tax implications around Irish pension transfers are unique and should be approached with careful consideration, especially if you’re combining pensions from multiple jurisdictions.
Before deciding on a transfer, especially when QROPS or other international schemes are part of the equation, it’s crucial to seek advice from a financial adviser experienced in both Irish and international pension frameworks.
This ensures your retirement plans are both tax-efficient and tailored to your personal circumstances.
My Irish Pension Transfer Service
This service is tailored for Irish expats or anyone with an Irish pension who plans to retire outside Ireland.
I offer access to secure, UK or EU-based pension options that provide flexibility in managing your retirement funds.
These options may allow you to:
- Ensure your pension is structured to fit your retirement and estate planning needs.
- Diversify your investments and choose the currency you prefer, reducing exposure to currency risk.
- Combine pension benefits from Ireland, the UK, and other countries.
- Withdraw an initial lump sum of 25-30% potentially tax-free from your new UK or EU-based scheme.
- Take advantage of double taxation treaties, reducing the risk of paying taxes twice on your retirement income.
Taking the time to review your Irish pension options when moving abroad can help you maximize your retirement benefits and avoid unnecessary complications later on.
The Bottom Line
Irish pensions are great for those who retire in Ireland. Less so for those who retire overseas.
By understanding the transfer rules for different types of Irish pensions, you can make informed decisions about how to best manage your retirement savings.
Seeking professional advice early on is vital to navigating the complexities of international pension transfers and optimizing your retirement plans.
Further Reading
QROPS guide for expats – Read to understand your options
Can I transfer my Irish pension to the UK?
Unlocking Your Retirement: A Guide to Flexi-access Drawdown Rules
