Relocate Show 2024

Relocating to Guernsey…
don’t forget your pension!
Individuals and families choose to
relocate for several reasons.
For many, the appeal of permanently
relocating to Guernsey is for a better
work/life balance or for the safety and
security the island offers that makes it
an ideal place to live and raise a family.
There is always a lot to consider when
relocating and one matter that may not
be at the top of everyone’s list to think
about is what to do with their pension.
However, this should be on the “To
Do” list because it is possible for an
individual to move their pension with
them when they relocate, which can
provide some unique benefits.
The UK introduced an overseas pension
transfer framework in 2006 to comply
with an EU Directive for freedom of
capital movement, and that framework
has been maintained despite the
UK having since exited the EU. The
legislation allows for certain types
of non-UK pension schemes known
as Qualifying Recognised Overseas
Pension Scheme (QROPS) to receive
authorised transfers from UK registered
pension schemes.
Specifically, for those relocating to
Guernsey who have pensions which
are or were in the UK it is possible to
transfer the pension(s) into a suitable
receiving scheme in Guernsey subject to
that scheme meeting the requirements
to be a QROPS. This is a complex area
and requires specialist advice given
the UK transfer rules and potential tax
charges on certain types of transfer,
particularly for high value pension
transfers.
There can be advantages for someone
relocating to Guernsey to transfer their
UK registered pension schemes, not
from a tax perspective necessarily as
the position will often be similar but
more from a practical perspective. Not
least of all, having a pension provider
and financial adviser based locally
in Guernsey for someone living in
Guernsey will help make their life far
easier. This can make a real difference
and ensure the hassle-free intention of
relocating is not disrupted by the burden
of unnecessary admin when it comes to
the time to receive their pension.
It can often be time consuming and
frustrating for non-UK resident clients
to deal with UK pension providers
as, understandably, the bulk of their
processes, rules and procedures are
developed for UK resident clients and
are not always suitable and often not
user friendly for a non-UK resident.
For an individual transferring to a
Guernsey QROPS from a UK registered
pension scheme they can benefit from a
tax-free pension commencement lump
sum entitlement of up to 25% without
any upper limit as opposed to a current
upper limit of £268,275 payable tax-free
from a UK registered pension scheme.
The benefits of the above may be offset
by the Overseas Transfer Allowance
where the value of a transfer exceeds
£1,073,100, as this can result in a tax
charge of 25% applying on the surplus
amount above £1,073,100, hence why
specialist advice is key in this area. The
Overseas Transfer Allowance is a newly
introduced concept in the UK following
the removal of the Lifetime Allowance.
Longer term, there can be other
benefits for those leaving the UK
and transferring a UK pension to the
jurisdiction to which they are relocating
as this can support that ties with the
UK are being severed and a permanent
home elsewhere is being established.
This may be helpful for those wishing
to evidence that they have left the UK
permanently and have no intention
to return, which can be important for
inheritance and estate purposes.
It is also fair to say that the pensions
legal and tax framework in the UK
is complex and subject to frequent
change. The position in Guernsey is very
different with very few changes made
to the legislative and tax framework
creating a stable, consistent, and secure
environment that allows peace of mind
that planning will provide long term
benefits.
Anyone relocating to Guernsey from
the UK who is interested in transferring
their UK pension benefits to Guernsey
should seek specialist financial advice.
It is a complex area that may require
advice both in the UK and in Guernsey,
but the long-term upside of ease,
convenience, stability, security, and
potential tax/financial related benefits
mean in the right circumstances it can
be a very worthwhile process.
This article was prepared by
26
27