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Transferring to the UK from an overseas pension

Date: 06 April 2023

This article is a simple guide to the acceptance of an overseas transfer into a UK registered scheme with the general process required and potential for gaining an enhancement to the lifetime allowance. It should be noted that each overseas scheme may be different in terms of their approach and requirements, and we are assuming the client is UK resident.

Although there are many people who have been transferring or considering transfers into QROPS as they move overseas, there are also many people who have worked overseas, or are moving to the UK for the first time who have overseas pension schemes. This article is a brief description of these plans and how they can be transferred into a UK pension scheme.

Transfers can be made from any scheme that is seen as a pension scheme in the ceding country into a registered pension scheme. Generally, people will have pension schemes which will be classed as recognised overseas pension scheme (ROPS) and non-recognised overseas pension schemes. This should not make a difference to the acceptance of the contract into the UK scheme but will create a difference to how these schemes can be treated for lifetime allowance (LTA) purposes.

Any transfer into a registered pension scheme should be treated like any other transfer in terms of normal paperwork, although as this is an overseas scheme, money laundering checks will be required on the ceding scheme if it is not a ROPS.

A transfer in from an overseas pension will not cause any issues with annual allowance as this will not be treated as a pension contribution into the scheme.


Recognised overseas transfer factor

Depending on the status of the ceding overseas scheme it may be possible for the client to apply for an enhancement to be made for their lifetime allowance. For any scheme that is seen as a ROPS and benefits that have been accrued and do not relate to any UK tax relieved contributions made (post A Day accrual only), the client can apply to HMRC for an enhancement to their LTA to ensure that the available LTA is not reduced by these non-tax relieved benefits. The client can apply to HMRC up to 5 years after the 31st of January following the tax year these benefits were transferred. The HMRC form is called an APSS202 and, once agreed, HMRC will send out a certificate with the date of application. This certificate will need to be presented at each benefit crystallisation event.

The factor is calculated by dividing the non-tax relieved transfer amount by the applicable LTA at the time of the transfer (e.g., £120,000 / £1,073,100 = 0.11). This factor would then be added to the applicable LTA at the point of crystallising benefits using the following formula;


That is; Standard Lifetime Allowance at the point of crystallisation plus (the SLA applicable at the point of transfer x Lifetime Allowance Enhancement Factor). This is discussed in the Finance Act 2004 section 218.


Stephen returned to the UK on 6 April 2013 after spending many years living and working in Cyprus. He had built up a pension in a ROPS while in Cyprus of £200,000 and transferred this back into his existing UK registered pension scheme in June 2013. Because he already has accrued benefits in the UK registered scheme valued at £900,000, he applied for a recognised overseas transfer factor.

This was granted on the following basis:

Date of ROPS transfer was June 2013 (13/14 tax year) so lifetime allowance was £1.5 million.

£200,000 / £1.5 million = 0.13 recognised overseas transfer factor. 

In August 2021 Stephen decides to crystallise all his accrued pension benefits. At this point his total fund value including the transferred in Cypriot scheme, is £1.3 million.

To work out the total LTA for Stephen the calculation is:


The first SLA is the current year's LTA and the second LTA in this calculation is based on the LTA applicable when the client transferred in his recognised overseas transfer.

So £1,073,100 + (£1.5 million x 0.13) = £1,268,100

This means Stephen has an LTA excess of £31,900 after taking into consideration his recognised overseas transfer factor.

The benefits, once within the UK registered scheme, will be treated in the same way as other benefits and pension income payments. The lifetime allowance including the enhancement factor will be the figure used to determine the total level of benefits.

However, the Pension Commencement Lump Sum (PLCS) will not be affected or increased by the enhancement factor and will be based on the standard lifetime allowance applicable at the time of crystallisation.

In general terms a transfer would be expected to be received in £ Sterling and there should be no restrictions on the benefits that can be taken (within HMRC limits). This is not a legislative restriction but rather a common restriction applied by receiving UK registered pension schemes Quilter will apply these conditions.

A transfer from an overseas pension scheme in payment will generally not be accepted. This is because an overseas pension scheme will be very unlikely to have carried out a benefit crystallisation event (BCE1, funds going into drawdown). As funds held in drawdown need to be able to have a further BCE (5A) carried out at age 75, this first event is required and if not available no test can be done.

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The information provided in this article is not intended to offer advice.

It is based on Quilter's interpretation of the relevant law and is correct at the date shown. While we believe this interpretation to be correct, we cannot guarantee it. Quilter cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained in this article.