The UK Pension Transfer
Service For British Expats

Navigating a pension as a British Expat is time-consuming and can be complicated. But it doesn’t have to be. Read our UK pension transfer overview and discover the potential benefits.

What is a defined benefit pension scheme?

A defined benefit pension scheme is where the amount you are paid is based on the number of years you have been a member of the employer’s pension scheme and the final salary you’ve earned when you leave or retire.

The employer will pay a secure income for life, which increases each year in line with inflation. That figure is calculated using a formula that considers your salary and years of service.

Note: From 2030, a UK Government scheme will see a switch from inflating the pensions with Consumer Price Index (CPI) to the Retail Price Index (RPI), which results in members getting significantly less over their retirement lifetime.

The funds are held, managed, and invested throughout the scheme. The pension scheme administrator guarantees the amount you receive when you retire.

What is a private pension?

A private pension – also known as a personal pension – is a type of pension you can set up to save money for your retirement.

These are typically defined contribution pensions, where the end value is determined by the money you’ve paid in and the performance of your investments. These can either be self-managed or managed by an advisor.

One type of personal pension scheme is a Self-Invested Personal Pension (SIPP), which works similarly to a standard personal pension. However, a SIPP allows you more control and flexibility with the investments you can choose and is approved by a pension advisor.

Limitations of defined benefit schemes

Defined benefit schemes are expensive to the employer – as the population is living longer than ever before. Moreover, as the scheme must pay out a fixed figure from retirement until death, many schemes do not have the funds to cover their pension promises.

The UK government has tried to mitigate this by setting up the Pension Protection Fund, which is designed to cover the gap. This means retirees will receive the total amount of their scheme when they reach 65 years old (up to £36,400) or 90% of their pension up to £32,760.

Many defined benefit schemes are now closed to new members and only remain active for pre-existing investors.

What income will you receive from your defined benefit pension scheme?

The following factors determine your final income from your defined benefit pension scheme:

  1. The number of years you have worked at the company
  2. Your final salary
  3. The accrual rate of the pension scheme (usually 1/60th or 1/80th. Your scheme agreement will have this information).

The final income from your defined benefit pension scheme is calculated by multiplying the years you were a member of the scheme by the accrual rate. This figure is then multiplied by your salary at retirement.

The calculation for the amount you will receive per year from your defined benefit pension scheme is:

(The number of years you have worked at the company X The accrual rate of the pension scheme) X Your final salary


For example, let’s say you pay into a defined benefit pension scheme for 40 years, with an accrual rate of 1/80th and a final salary of £30,000.

Here is the calculation:

(40 x 1/80th) x 30000 = 15000. Therefore, you would receive a yearly salary of £15,000.

Defined benefit schemes and lump sum payments

Depending on your pension scheme and administrator, you may be offered a tax-free lump sum when you retire. This will affect the remaining pension pot, reducing your annual payments by a fixed figure.

This is calculated using what is known as a cash commutation factor, which is the amount of tax-free money you get for each £1 of pension that you give up.

The amount you will receive per year from your defined benefit pension scheme after a lump sum payment is calculated by:

Defined pension salary – (Lump sum / Cash commutation factor) = new annual defined benefit payment


So with a cash commutation factor of 12, you get £12 for every £1 sacrificed.

Let’s say you are offered a £45,000 lump sum based on the £15,000 pension above.

Your new annual payment would be calculated:

15000 – (45000 /12)
15000 – 3750 = 11250.

Therefore your new annual defined benefit payment would be £11,250 after receiving a £45,000 lump sum.

(40 x 1/80th) x 30000 = 15000. Therefore, you would receive a yearly salary of £15,000.

Who Should Consider Transferring a Defined Benefit Pension?

A defined benefit pension transfer is when you move your pension pot from one company to another. These pension transfers are an increasingly popular option for individuals who have decided to spend their retirement years outside the UK.

It gives you the flexibility and freedom to take advantage of potentially more advantageous tax and financial structures available in other countries.

A defined benefit pension, also known as a final salary pension, gives you a fixed or regular amount for your life – usually based on your final salary at retirement and years of service.

The money your employer pays into the scheme is invested by your scheme administrator, with no input from you.

Transferring the funds to a personal pension scheme allows you to choose your investment and better align your finances with your overall goals.

Download our free Defined Benefit Pension guide and discover the many benefits available to British expats with a UK defined benefit pension.

Why consider a UK pension transfer?

There are several reasons to consider transferring your defined benefit pension, including more favourable tax and fee situations and more freedom to choose the investment structure and portfolio allocation.

Many individuals who transfer their pensions do so into a personal pension, which gives significantly more investment freedom. This is a popular option for clients who have an investment preference for a specific market or type.

A defined benefit pension scheme can come with restrictions. For instance:

  • How and when you can access your money.
  • Where you can invest your pension.

Transferring out of a defined benefit pension scheme and into a defined contribution scheme will require you to obtain a cash equivalent transfer value (CETV).

This is the value of your pension pot that will be transferred into your new fund. This considers several lifestyle factors, including your age, life expectancy, living cost, and relationship status.

You can use our free pension transfer value calculator to estimate your cash equivalent transfer value. For further UK pension transfer advice, get in touch with an AHR specialist advisor today.

Expats who left pensions back in the UK

Monitoring and managing your pension accounts when you move abroad can be incredibly frustrating and time-consuming, especially if there is a substantial time difference.

Consolidating and transferring your fund to a personal pension scheme makes this significantly easier.

Inflated transfer values

Now might be the best time to transfer your defined benefit pension scheme.

Many companies are offering inflated transfer values (where the amount offered to transfer out exceeds the current fund amount) due to the use of gilts as investment vehicles and historically low-interest rates.

Leaving 100% of your pension to your family

Defined benefit pensions will usually only transfer to your spouse at 50% of the value, paid monthly until their death, or 25% to children (if your spouse is already deceased) up to the age of 18, or 23 if they remain in full-time education.

To leave 100% of the pension fund to the beneficiary of your choosing, you need a personal pension scheme.

Access your pension early

Keeping your pension in a defined benefit scheme will restrict you to a predetermined retirement age – usually fixed at 60 to 65 – before accessing your money.

To access your pension earlier than that, you will need to transfer it to a personal pension, which will let you access your money once you turn 55.

Concerns over final salary schemes

The biggest concern about final salary pension schemes is insufficient funds – where the company managing the fund does not have enough money to pay all its members.

According to Pension Age, only 16% of private-sector UK pensions have a funding level of 100% or more. Meaning, that a substantial number of employers may not have funding available to deliver payments when it comes time for your retirement.

Transferring out of a defined benefit/final salary scheme is the only way to mitigate this issue.

UK pension reforms

HMRC made substantial changes to the pensions legislation with the Pensions Freedom Act 2015. These changes made transferring out of a defined benefit more accessible and attractive.

Tax efficiency

Moving your pension pot abroad can provide you with better tax options than keeping it in the UK, particularly if you carefully choose a country with beneficial double taxation agreements (DTAs).

Remove inheritance tax liability

An inheritance tax of up to 55% can be applied to your defined benefit pension fund. In contrast, that same money in a private pension pot can often be tax-free or substantially less than 55% (depending on how old you are when you pass). 

Lifetime Allowance

The pension lifetime allowance refers to the amount you can save into your pension fund without paying tax.

For 2022, this is £1,073,100. If you have exceeded or are approaching this figure, speak with one of our experts as early as possible to discover a personalised solution that mitigates paying unnecessary tax.

Pension Consolidation

If you have more than one pension fund in place, you can consolidate them into one fund that can be more easily monitored, managed, and invested.

There are often cases where pension pots have become ‘lost’ – if you worked at a company for only a short time and have forgotten or misplaced the pension details. We can help retrieve your old pensions.

Tracking down and consolidating these pension funds means you are not missing out on money that belongs to you. It will clarify your retirement as it’s easier to manage and forecast your income.

Discover How Much You Could Transfer Into Your Own Personal Pension

Complimentary pension transfer assessment report

AHR Private Wealth offers a free three-stage personalised complementary pension transfer assessment report.

The report allows us to understand your unique situation and tailor our recommendations to your specific needs to recommend the best option for you.

For convenience, all contact with advisors is made via a video call via zoom, which means you can be anywhere.

Pension investigation stage

The first stage is to write to the trustees of your UK pension schemes and ask them for information specific to your final salary scheme and pension.

You will discover your cash equivalent transfer value (CETV) and its relationship to the promised yearly income and the relevant multiple it relates to.

Your financial situation and objectives stage

Once we receive information specific to your final salary scheme and pension, we will discuss your financial situation and personal objectives: To do this, we will conduct a pension review and:

  1. Help you answer a financial questionnaire to understand your financial situation precisely.
  2. Listen to what plans you have for the future, what financial security represents for you, where you plan on living and how much you expect to spend.

Pension Transfer Assessment Report stage

We will provide you with a pension transfer assessment report that considers all of the information from both your pension and current situation.

The pension transfer assessment report will:

  • Explain exactly how your UK pension works
  • Include a future projection status of your entire financial asset base, including:
    • property,
    • stocks and shares,
    • superannuation,
    • state pensions,
    • age pensions,
    • any other relevant asset.
  • Provide a clear comparison of projected income streams between your “current” arrangements and the “options” available.
  • We will then offer our expert advice on whether or not you should transfer your pension. If we recommend that you transfer your pension, we will communicate the fees involved.
Ready to speak to a pension expert about your unique situation?

After dealing with a number of advisors relating to my UK pension schemes, I am happy to say I have had the pleasure of working with AHR Private Wealth. They have been very professional and showcased the highest levels of integrity. I can honestly say that my dealings with them have been exactly what I was hoping for as they explained the opportunities in a very clear and positive way.

Ricki A

Understanding Your Pension Benefits

Pensions can be complicated, and if you have more than one scheme in place, the complexity rises even further.

At AHR, we believe that for sound financial decision-making, each of us should know what type of pension(s) we have in place and if/how they can be transferred.

Some common pension terms you might come across and what they mean are listed below:


In the UK and many other countries, superannuation is another term for a defined benefit pension plan – the word itself means to retire through age or infirmity.

However, in Australia specifically, superannuation is the name given to the compulsory fund that employers must pay into for their employees.

SIPP (Self-Invested Personal Pensions)

SIPP stands for Self-Invested Personal Pension and refers to a pension fund that you have ultimate control over – a pension trustee approves various investment vehicles or opportunities, which you can then choose from to invest your money.

UK Pension Transfer to QROPS

QROPS stands for qualifying recognised overseas pension scheme. It essentially refers to an HMRC approved pension scheme that holds the same standards as a UK-based scheme but is based in another country.

UK Pension Transfer to QNUPS

QNUPS stands for qualifying non-UK pension scheme and is an excellent way to provide you with access to your pension fund while also allowing you to leave the remainder to your loved ones when you pass.

Defined Benefit/Final Salary Pension

Defined benefit or final salary pension is one of the main pension schemes. This type gives you a regular income from the day you retire to the day you die.

You can only transfer private-sector defined benefit schemes and a select number of public sector schemes.

Public sector defined benefit sector schemes that can be transferred are:

  • Local Government Pension Schemes (LGPS)
  • University Pension Schemes (USS)

Public sector defined benefit sector schemes that cannot be transferred are:

  • NHS
  • Civil Service
  • Military
  • Royal Mail
  • Police
  • Fire Service
  • Teacher’s

Defined Contribution

Defined contribution is the other primary pension scheme. In this model, you (and usually your employer) contribute to the fund, which is then available for you to access from age 55.

Small Self-Administered Schemes (SSAS)

A small self-administered scheme, or SSAS, is a way for several individuals (less than twelve) to combine their pension pots and invest a more significant amount of money.

State Pension

The State Pension is the amount of money available to you from the government when you reach a certain age (dependent on the year you were born). You are unable to transfer a State Pension.

Lifetime Allowance

The lifetime allowance is the maximum amount of money in your pension fund without incurring taxes. For 2022, the lifetime allowance is £1,073,100.

UK pension transfer FAQs:

Is there a charge to transfer my pension?

There is no charge to explore the options that you have. However, if you decide to transfer your UK pension, there will be a small fee, which will be explained during your free pension report.

What types of pensions can I transfer?

You can transfer most types of pensions, although there are exceptions. For example, the UK government doesn’t allow the transfer of public service pensions.

Can I transfer a pension that I already access?

You cannot transfer your defined benefit pensions that are already in payment.

You can explore the option of transferring any defined contribution pensions, whether you have already accessed them or not.

What are "gilt yields", and why are they important?

Gilts are UK-government issued bonds and are typically very low-risk investments; gilt yields are the income earned from the ownership of gilts.

These are important as many defined benefit pension schemes are significant holders of gilts (due to the low risk). Therefore, any gilt price fluctuations will substantially impact the pension fund.

Over the last few years, gilt yields have reached all-time lows, meaning the funding position of the schemes that hold these gilts have significantly worsened.

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