UK Pension Transfer For Thai Residents
LEARNING OBJECTIVES
We’re passionate about providing high quality, relevant and up-to-date financial information to British Expats in Thailand.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
How a UK pension works abroad
Your UK pension options in Thailand
Questions to consider before transferring
Best practise when taking advice
With over 40,000 British expats in Thailand, many of whom are in or entering retirement, what to do with their UK pension is a key consideration.
If you are a UK expat with UK pensions and want to transfer, this article will outline some of the main areas to consider.
What Is A UK Pension?
A UK pension is a retirement savings plan designed to provide individuals with income during their retirement years. Pensions in the UK can be provided by employers, the government, or individuals themselves through private pension arrangements. There are several types of UK pensions, including:
State Pension: Provided by the UK government and based on National Insurance contributions.
Occupational Pension: Provided by employers to their employees as part of their employment benefits. Occupational pensions can be;
Defined benefit: Where the pension amount is based on factors such as salary and years of service;
Defined contribution: Where the pension amount depends on contributions made and investment performance.
Self-Invested Personal Pension (SIPP): A SIPP is a type of defined contribution pension that gives individuals more control over their pension investments.
Note we can only assist with occupational pension schemes. You would need to contact the UK government directly for matters related to State pensions.
Pension Transfer From UK To Thailand
You can only transfer your pension to another recognised pension scheme as per HMRC rules.
As Thailand does not have any pensions that meet these criteria, you have 2 types of pensions to choose from.
01 Qualifying Recognised Overseas Pension Scheme QROPS
Involves removing your money from UK legislation which can offer both advantages and disadvantages.
We would however disregard this option due to the Overseas Transfer Charge being applied for members who live outside the EEA European Economic Area.
02 International SIPP Self Invest Personal Pension
A UK pension plan that's been created for non UK residents.
As it is still UK-regulated, you retain the protection of the Financial Services Compensation Scheme FSCS, Financial Conduct Authority FCA and Pensions Regulator.
UK Pension Transfer to SIPP
There are many reasons for wanting to transfer your UK pension to an International SIPP. The key benefits to consider are the following:
Gain Access: If your current scheme provider doesn't allow you to take money from your pension, transferring to a scheme that does, is the only option.
Portfolio Management and Ongoing Advice: Old workplace pension schemes will be invested on a generic basis based on your normal retirement age. You can also not receive advice from a UK FCA authorised adviser.
As such, by working with an expat financial adviser, you can ensure your investments align with your short, medium, and long-term requirements.
Tax efficient draw-down: If the only option is to en-cash the full pension value resulting in a significant tax liability, transferring to an International SIPP can allow flexible draw-down. This enables withdrawals to be made on ad hoc, monthly, or a combination of the two.
Consolidate a number of pensions: Two or more pensions can be consolidated into one new scheme allowing an overall investment strategy to be implemented. It also simplifies withdrawals whilst reducing costs.
Pension Transfer Fees UK
Pension transfer fees will vary depending on your pension provider, the advisory firm assisting you, and the types of investment products used.
Before proceeding with a transfer, its important to understand all the fees associated with the process. Certain pension schemes can have exit fees while if your new arrangement is set up on a commission basis, you may incur significant fees.
Furthermore, the investments themselves can pay out commissions resulting in exit penalties when wanting to make a withdrawal.
Be mindful of any company advising you to use an investment bond within the new pension arrangement or investments that guarantee a return.
Whilst it may sound daunting, transparency is key don't be afraid to ask the most simple of questions. These might include:
What are you being paid for the transfer advice provided?
Is the investment product, or any of the investment managers, paying you an initial or ongoing fee?
Can I access 100% of my pension pot at any time, without charge?
Pension Tax Rules UK
There is no tax treaty between the UK and Thailand for pensions. As such, all pension income will taxed at source by your pension scheme. You will then need to claim the money back from HMRC.
You can however make use of the personal allowance of £12,570 before being taxed. Once you go over this, it will fall in line with UK tax bandings.
Please note, that as of January 1, 2024, any foreign income is now taxable in Thailand upon being remitted to the country. This a significant change from the previous rules where subject to remittance being different to the calendar year earned, it wasn't taxable.
UK Expat Penson Advice
As a specialist Expat Financial Advice firm, we provide expert expat pension advice for residents in Thailand. This covers selecting the best international SIPP and fund allocation whilst advising on tax-efficient drawdown options.
The first step is our discovery meeting where we understand your individual circumstances and requirements.
Contact us using the button below to discuss your pension fund and the options available.
FAQs
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The Wealth Genesis charges a flat £3000 initial fee which is only due upon completion, deducted from the pension pot, and 0.85% ongoing management fee.
Find more information on our fees here.
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Yes, if remitted to Thailand. The money will however be paid to you gross of any tax.
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A DB pension scheme provides a guaranteed income for life as well as other valuable benefits. As such, any transfer needs to adhere to a strict process as set out by the financial conduct authority.
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You cannot access your pension before 55 unless there is exceptional circumstances such as poor health.
More information on transferring your final salary scheme can be found here.
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Free impartial advice on pension scams can be found on the Money Helper website here.
