You have worked temporarily in the UK and would like to spend your retirement in Germany? In addition to many organisational measures, questions regarding pension provision must also be clarified. Can you transfer your pension provision from the UK to Germany so that your pension assets are not lost?
And what effects the Brexit has on the transfer of pension provision, you can find out here.
STC has also summarised the most important general information regarding the transfer of your pension provision.
1. What has changed due to the Brexit?
The UK's withdrawal from the EU raises the question of how pension provision will be transferred to Germany.
For a long time, there was legal uncertainty as to how old-age pension entitlements would be handled in the event of Brexit.
The withdrawal from the EU has no effect on pensions drawn taking into account German or EU member state and British insurance periods, if these pension entitlements were accrued by 31 December 2020.
In addition, EU law will continue to apply to insured persons who were or are still in an insurance relationship in the UK before 1 January 2021. This is regulated in the "Agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community" (Withdrawal Agreement). This means that periods of employment completed in the UK or Germany can still be added together for pension entitlements. If you are entitled to a pension, the respective country will generally pay the benefits to which you are entitled.
For periods completed in the UK from 1 January 2021, the new Trade and Cooperation Agreement applies. According to this agreement, however, it will also continue to be possible to add up periods.
2. Transfer of pension provision from the UK
But how exactly can you transfer your pension assets from the UK to a German pension provider?
In principle, you can transfer your pension to a foreign pension fund recognised by HMRC (QROPS - Qualifying Recognised Overseas Pension Scheme) or to a self-invested personal pension (SIPP). For this, the pension requirements in Germany must be similar to those in the UK.
2.1. QROPS – Qualifiying Recognised Overseas Pension Scheme
A QROPS is a qualifying foreign pension plan. It is registered with HMRC (Her Majesty's Revenue and Customs).
What are the requirements for transferring to a QROPS?
- The German pension provider must be registered with HM Revenue and Customs as a Qualifying Recognised Overseas Pension Scheme.
- Transfer amount must be at least EUR 25,000.
- Target pension must be a basic pension.
- Application of the application documents to the British pension provider (here it is possible to transfer this to the German pension provider by means of a power of attorney).
Since 6 April 2023, the "Lifetime Allowance Charge" (LTA) has been abolished. This means that for pension assets above 1,073,100 GBP (£), the LTA charge of 25% no longer has to be paid when transferring to a QROPS carrier.
Currently, EU citizens can still transfer pensions from the UK to a European-based QRPOS provider tax-free. However, it remains to be seen whether this tax advantage will continue in the future.
As this process can be very complex, it is advisable to seek external help. Advice from a British FCA (Financial Conduct Authority) -certified financial advisor is recommended.
STC will be happy to assist you and provide you with comprehensive advice on your personal case.
2.2. International SIPP – self-invested personal pension
An international SIPP is similar to a personal pension, regardless of your employer. Your pension is held as an investment until you retire and draw retirement income. The advantage is that you have flexibility in choosing your investments and managing them.
The international SIPP is administered by the Financial Conduct Authority and continues to treat it as if it were a UK one. This can also make it easier to move back to the UK.
3. Any questions?
Do you have any questions or are you looking for an individual insurance offer?
STC will be happy to advise you - simply fill out the form below and contact us!
