Keep or move your UK pension while living abroad?

Most British expats end up with at least one UK pension they no longer pay into. The pot sits quietly for years, then a statement arrives, a provider changes its name, or a friend mentions a transfer, and the question comes up. The useful question is not "should I move it?" It is "what does each option cost me, and what does it protect?"

Start with the type of pension

Everything else depends on what you actually hold, so find out first.

• Defined benefit (final salary style). It pays a guaranteed income for life, often rising with inflation, and may include a pension for a spouse. UK rules require regulated advice before you transfer safeguarded benefits worth £30,000 or more. For many people, leaving a guaranteed income alone is the right answer.
• Defined contribution. A pot you own and invest. You have much more freedom, so the decision turns on charges, investment choice, how it is taxed and where you expect to live.

The options in plain English

1. Leave it where it is

The simplest option, and often a sensible one. The risks are drift (a default fund chosen years ago), high charges you have never compared, and lost contact because the provider holds an old address.

2. Consolidate into one UK regulated pension

Several small pots can become one, sometimes in an international SIPP that is still a UK regulated pension and is built for people living abroad. The aim is one set of statements, lower and clearer charges, and a plan for how you will draw income.

3. Transfer to an overseas pension scheme

This is the option that attracts most attention and carries most risk. A transfer to a qualifying overseas scheme can face an overseas transfer charge of 25% of the amount moved. The charge does not apply if an exclusion is met, most commonly when you live in the same country as the scheme. If you later move to a different country within the first five tax years, the charge can be applied afterwards. The old exemption for transfers within the European Economic Area no longer applies to transfers requested after 30 October 2024 and completed after 30 April 2025.

4. Start drawing from it

Once you are old enough to take benefits, the usual pattern is that up to 25% can be taken tax free, subject to the lump sum allowance, with the rest taxed as income. How the income is taxed depends on where you live and on any tax treaty between that country and the UK. UK providers normally apply UK income tax at source unless HMRC has told them otherwise, so many people living abroad apply for a "no tax" code before drawing income.

Four questions that decide it

1. Where will you live in retirement? Tax on withdrawals depends on your residency then, not now.
2. What do you pay today in total? Add the provider charge, fund charges and any adviser fee.
3. What would you give up? Look for guaranteed annuity rates, protected tax free cash and spouse benefits.
4. Would a move trigger a tax charge, now or later?

A change that affects your family

From 6 April 2027, most unused pension funds and death benefits from registered pension schemes are due to be brought into the value of an estate for UK inheritance tax. Pensions used to sit outside the estate. If you are still within the UK inheritance tax net, which depends on how long you were UK resident, the way you hold and draw on your pension can matter for what your family keeps. See our article on inheritance tax after you leave the UK.

What to do first

• Collect every statement, with the pension type, value and charges for each.
• Ask each provider whether the pension carries guarantees.
• Confirm the provider has your current address.
• Decide where you expect to retire.
• Only then compare options, with regulated advice for anything involving guaranteed benefits.

Pensions, 3 minute read. Last reviewed October 2026. Applies to: UK rules. General information, not personal advice.