Can I transfer my UK pension to India?

Pension transfers from the UK to India have become increasingly popular due to investment opportunities and some favourable tax options.

However, it’s worth doing your research so you can make the most of your hard-earned retirement funds and avoid any pitfalls.

Transferring to other countries: Canada | New Zealand | Malta | Spain | Portugal | Australia

Can you transfer your UK pension to India? 

Most private or workplace pensions are eligible for a transfer to a Qualified Recognised Overseas Pension Scheme (QROPS).

However, it’s important to check as some defined benefit schemes may have restrictions.

There are some significant benefits you could enjoy by transferring your UK pension fund to India.

What is a QROPS, and why is it important? 

Since 2017, transferring your UK pension to an overseas scheme may result in a 25% tax charge unless the new scheme meets certain criteria. It needs to qualify as a qualifying recognised overseas pension scheme (QROPS or ROPS). 

HMRC must approve every QROPS scheme, and they publish a list of eligible schemes twice a month.

How do you transfer your UK pension to India? 

If you want to transfer your UK pension and are ready to retire abroad, the first thing you need to do is send your current pension provider a letter of authority. 

This will inform them of your intentions and tell them who will be acting on your behalf.

You’ll also need to request transfer-out paperwork and the transfer value, which you can do over the phone. 

You need to fill in and submit a APSS 263 form to your provider within 60 days of requesting the transfer. Not doing so within the deadline could result in a tax charge.

Once you’ve got the paperwork, there is much to consider, and it can take up to six months to resolve. 

If you want assistance with this process, a financial adviser may be able to help and offer advice. 

Transferring a pension can result in complex tax implications in the UK and India, so they can help guide you through this process.

What are the benefits of transferring your UK pension to India? 

Here are some of the benefits when you transfer to an Indian scheme: 

• You can invest your fund and take income in the currency of your choice. This means you could be less exposed to currency fluctuations.
• You could have more investment options as a QROPS gives you wide access to global investments.
• The ability to invest more widely in Indian technology and equity companies.

How does the transfer work?

To transfer your UK pension to India using a QROPS, you should follow these steps. It might be worth getting guidance from a financial adviser before you get started. 

Make sure you’re eligible 

Ensure that your pension meets the criteria for a QROPS in India and that the Indian QROPS is a registered scheme that meets HMRC’s qualifying criteria. 

Choose your QROPS provider in India 

This will involve some careful research, so you choose a reputable provider in India that matches your needs. Look at various aspects such as fees and investment options when doing your research. 

Tell your UK pension provider 

You must let your pension provider know that you intend to transfer your pension to a QROPS in India. They will send you forms and other documents you need to complete for your transfer. 

Complete and submit the transfer forms 

Carefully complete the transfer forms sent by your UK pension provider and the QROPS provider in India. Everything must be accurate, and you must include any requested supporting information. 

Next, submit the completed forms to both providers. Your UK provider will transfer your pension to the QROPS in India, which is subject to HMRC approval.

What are the advantages of a QROPS? 

There are several advantages when you transfer your pension fund to a registered QROPS. 

These include: 

• There’s a good choice of investment options on many QROPS, offering good growth potential for your fund.
• Your pension will be held and paid in Indian currency, so you won't need to worry about fluctuations in exchange rates.

What are the disadvantages of transferring your pension to India? 

You could encounter serious issues if you attempted to transfer your UK pension into a fund that is not qualified by HMRC. 

In this instance, your UK pension provider might refuse to release your funds, or HMRC could view the transfer as illegitimate, and you may face a big tax bill.  

Large transfers over the  ‘overseas transfer allowance’ (OTA) will attract a 25% tax charge on the excess amount.  The OTA is £1,073,100 for the 2024/25 tax year. 

If you move back to the UK within 10 years, you could end up with an additional tax charge on any money you took out from a QROPS.

There are also important costs to consider when transferring and understanding currency fluctuations, when best to move your pension, and the administration fees which will be required. 

One way to avoid this stressful and potentially expensive situation is to use a financial adviser when choosing your QROPS and making the transfer. An adviser will be able to help you select the best provider for your circumstances and avoid scams.

Can I still get access to my state pension? 

When you retire to India, you are still entitled to your UK state pension if you have made sufficient national insurance payments and are of retirement age. But the amount payable will be frozen, so you won’t receive any annual increases. 

As an Indian resident, you may want to have your UK pension converted into Indian rupees. 

However, your payments will be exposed to changes in currency exchange rates, altering the income you receive on a monthly basis. 

What other financial issues should you consider when moving to India?

It’s a good idea to plan ahead before moving to India. 

Here are some key financial considerations:

• Your property purchase: Decide how you plan to finance your new home in India. Will you get a mortgage, use your savings or sell your property in the UK? If you’re getting a mortgage, a broker can work out how much you can borrow.
• Make sure your tax affairs are in order: HMRC needs to know about any permanent changes. A tax expert can help you notify HMRC of your departure, sort out any tax liabilities and provide advice on boosting your pension.
• Inheritance: Once you own a property in India, you should prioritise drawing up a will to make sure you leave your assets to any beneficiaries.
• Sort out insurance: Insuring your new life in India is an essential step. You should ensure you find a good insurance provider to cover your property, contents and vehicles, and consider private medical insurance.
• Open an Indian bank account: Before you move, open an Indian bank account. This will enable you to transfer funds before your arrival. Make sure you have proof of identity. 

Before you move, you’ll need a contingency fund for flights, hotels, and car hire for any house viewings. A removals fund is also advisable, so you can transport your possessions. 

The key to moving to India and transferring your UK pension without any stress is preparation and professional advice. 

With advice, you’ll have a clear idea of what to do, what not to do, and how to avoid punitive tax bills from HMRC.

Get expert financial advice

Transferring your UK pension to India can offer several advantages, including potential tax benefits and investment opportunities.

However, it’s essential to navigate the complexities of this process carefully. 

Ensuring that you understand the tax implications in both the UK and India, and seeking professional advice, will help you make informed decisions and manage your retirement funds effectively. With the right planning, you can enjoy a smooth transition and secure a stable financial future abroad.

Unbiased can quickly match you with a financial adviser for expert financial advice to ensure you receive tailored guidance on transferring your UK pension to India and navigate any associated tax and investment considerations.