What happens to my UK private pension if I move abroad?
Many South Africans who have worked or are working in the UK are automatically enrolled in their employer’s pension scheme or make private pension contributions.
Savannah Johnston ● May 20, 2025
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What happens to that pension when you leave the UK? Do you need to transfer it? Will it be taxed and if so, in which country?
Do you need to move your UK pension when you leave?
There’s no obligation to cash in your UK pension or transfer the funds when you leave the UK. You can even keep contributing after you’ve moved abroad, although there are some limitations.
If you’re no longer earning in the UK, you’ll generally stop receiving UK tax relief on your contributions. However, if your scheme operates under “relief at source,” you may still be able to contribute up to £3,600 gross per year for up to five tax years after leaving the UK.
It’s also worth noting that defined benefit schemes and some providers may restrict or stop contributions from non-UK residents altogether.
How are UK pensions taxed when you’re living abroad?
The Double Taxation Agreement (DTA) between the UK and South Africa means that most UK private pension payments are only taxable in your country of tax residence – in this case, South Africa.
Once you’re no longer a UK tax resident and have become a South African tax resident, you can apply for your UK pension gross (without any UK tax deducted).
Currently, under section 10(1)(gC)(ii) of South Africa’s Income Tax Act, foreign pensions from foreign employment are exempt from South African tax. That means your UK pension might not be taxed at all – if you meet the necessary conditions.
But this may change soon. The South African Budget Review tabled earlier this year proposes removing this exemption, which could make foreign pensions fully taxable in South Africa.
Even so, the DTA still gives South Africa the right to tax both regular pension income and lump sums – potentially offering a more favourable outcome than UK taxation.
What if you’re moving to a different country?
The UK has signed DTAs with over 130 countries, many of which follow the Organisation for Economic Co-operation and Development (OECD) model, where the country of residence has the right to tax private pension income.
If you're moving to (or already living in) one of these countries, similar rules may apply. Destinations with OECD-style DTAs include:
- Portugal
- Germany
- Netherlands
- New Zealand
- Canada
- France
- Spain
- Ireland
However, DTAs vary. Some exclude lump sums or state pensions, while others assign taxing rights back to the UK in certain cases. It’s best to speak to a cross-border tax expert before making any decisions.
Should you transfer your pension?
Some people consider transferring their UK pensions abroad through a Qualifying Recognised Overseas Pension Scheme (QROPS). But this isn’t always straightforward, especially for South Africans.
If you're a South African tax resident, moving your UK pension overseas could trigger a 25% Overseas Transfer Charge, unless very specific conditions are met.
There are also other factors to consider:
- Limited QROPS options for South Africans
- Potentially high fees
- Currency risks
- Possible tax consequences
In most cases, it’s safer to leave your pension where it is and apply for gross payments – but speak to a specialist first.
How to apply for gross pension payments
While the DTA gives South Africa taxing rights, your UK pension provider must continue deducting UK tax until HMRC confirms otherwise.
To receive your pension gross (without UK tax deducted), you’ll need to:
- Complete HMRC Form DT-Individual
- Get a Certificate of Tax Residence from SARS
- Submit both documents to HMRC
Once approved, HMRC will issue a nil tax code to your pension provider and arrange for any overpaid UK tax to be refunded. This process can take up to six months, so start early.
The application can be complex, especially if you’re applying from South Africa, so it’s a good idea to get professional advice.