Moving to Portugal - Can I keep my UK pension? (2022)

I'm asked by many clients if they are able to keep their UK pension scheme in place, and the short answer is: yes.

The income tax position of having a UK pension as compared with an overseas scheme is generally neutral, and so too are the Inheritance Tax issues i.e. a recognised pension scheme will always be outside your taxable estate for IHT purposes.

You will also receive the same preferential tax treatment if you are applying for the Non Habitual Residence scheme in Portugal.

Whilst you are able to retain the UK pension scheme, there may be certain reasons for considering a switch to an overseas pension scheme i.e.:

1. Currency risk - a UK pension scheme will inevitably be denominated in sterling and this will involve regular currency conversions to meet spending needs in euros. If the sterling/euro rate is low then your purchasing power diminishes which leads some to look at overseas pensions which can be denominated in euros

2. Lifetime allowance issues (LTA). The UK government imposes upper ceilings on the amount that can be saved within a pension scheme and any amount in excess of this level is taxable. The LTA charge does not apply to overseas schemes so if you pension fund is valued close to, or in excess of, the LTA, then you may wish to look at an overseas pension option.

https://www.spectrum-ifa.com/financial-advisers-portugal/mark-quinn/