Transfer of Private Pensions to Ireland for returning Irish Emigrants


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GENERAL INFORMATION FOR RETURNING IRISH EMIGRANTS REGARDING THE TRANSFER OF PRIVATE PENSIONS TO IRELAND

The information contained in this document is intended to provide returning Irish emigrants with general reference information only regarding typical factors impacting on any ability to transfer or ‘cash in’ pension savings established overseas, or to retain the pension fund abroad.  It is recommended that any individual seeking to transfer or cash in pension savings seek suitable professional advice from a regulated financial adviser.

It is important to note that any possibility to access pension savings and/or to transfer pension savings to Ireland from another country will be dependent in the first instance on the rules and regulations applying in the country in which the pension savings have been made.

  1. Rules & Regulations in country where pensions savings were established
  2. Pension Requirements Regarding Transfers of Pensions in to Ireland
  3. What information should an individual consider before transferring pension savings to Ireland from another country?
  4. Leaving a Pension Fund Abroad
  5. The Standard Fund Threshold Regime - Limit on Tax Relieved Pension Benefits

1) Rules & Regulations in country where pensions savings were established

Returning emigrants should be aware that the conditions governing any possibility to transfer or access pension savings established in a jurisdiction outside of Ireland will be determined primarily by the rules and regulations applying to pension transfers in that jurisdiction.  These rules and regulations differ significantly from country to country and may be influenced by a wide range of factors.  For instance, these factors may include the type, nature and scale of the pension savings in place, the tax treatment afforded to the pension savings when they were being built up, the residency status of the pension holder (e.g. citizen/resident/work permit holder) and whether the pension holder has dependant or spousal commitments.

For these reasons, returning emigrants wishing to inform themselves of the conditions attached to accessing/transferring their pension savings are advised in the first part to contact the administrator of their pension savings and/or the relevant regulatory authorities in the country in which they have established the pension savings.  

Whilst rules and regulations pertaining to pension transfers will vary from country to country, given the large Irish emigrant population in the United Kingdom, Australia and Canada, Appendix 1 below provides a general overview of conditions applying in those countries.

 

2) Pension Requirements Regarding Transfers of Pensions in to Ireland

The Irish Revenue will allow pensions from overseas to be transferred to an approved occupational pension scheme, Personal Retirement Savings Account (PRSA) or Buy-out bond (BOB) providing:

a)   the transfer takes place before pension benefits under the overseas scheme come into  payment.
b)   the scheme member requests the transfer.
c)   the rules of both the Irish and overseas scheme permit the transfer.
d)   the trustees or administrator of the transferring scheme comply fully with any transfer rules, regulations or requirements in the other jurisdiction.
e)   the Revenue authority in the State from which the transfer is made approves/permits the transfer.

Points (c), insofar as the overseas scheme is concerned, (d) and (e) are matters for the overseas trustee/administrator to confirm to the trustees/administrator of the Irish receiving scheme.

 

3) What information should an individual consider before transferring pension   savings to Ireland from another country?

It is advisable that those considering pension transfers receive appropriate financial advice from a suitably qualified and regulated body to include information on taxation liabilities arising.

Returning emigrants considering the transfer of pension savings should ensure that they are aware of the financial consequences of transferring the value of their savings. This would include (but may not be limited to) the following:

  • How benefits are paid from their existing scheme compared with how benefits would be paid from the Irish pension scheme.
  • The age at which benefits can be accessed from their existing scheme as compared with the Irish scheme.
  • The amount (if any) of the benefits that can be taken as a lump sum from the existing scheme as compared to the Irish scheme
  • Projected values and costs under the existing scheme compared with projected values and costs under the Irish scheme.
  • The taxation of benefits under the existing scheme compared with taxation of benefits under the Irish scheme.
  • The investment fund choices that are available under the Irish pension scheme compared to those already invested in the existing scheme.

 

4) Leaving a Pension Fund Abroad

If you have a pension scheme abroad and are planning to return to Ireland but wish to maintain the overseas pension scheme and continue to make contributions to it, there is a statutory scheme of relief to deal with such situations.  The relief, known as “migrant member relief” is aimed at individuals who come to Ireland and who wish to continue to contribute to a pre-existing "overseas pensions plan" concluded with a pension provider in another EU Member State . Whilst the relief is primarily aimed at nationals of other EU Member States who come to Ireland to live and work, it can also apply to Irish emigrants returning to the State.  The relief is subject to conditions.  The primary conditions are that the overseas plan must be established for the sole purpose of providing retirement benefits similar to those applying to pension plans in Ireland and must qualify for tax relief on contributions under the law of the Member State in which it is established.  The individual must have been a member of the plan immediately before becoming a resident of Ireland and must have been a resident of another EU Member State on taking out the plan.  In addition, the individual must have been resident outside of Ireland for a continuous period of 3 years immediately before returning here.  The scheme of relief covers occupational pension schemes and personal pension plans that a migrant worker might have, regardless of whether he or she was employed or self-employed in the other EU Member State.  It excludes State social security schemes.

Where all of the qualifying conditions are met, relief may be claimed on contributions made to the overseas scheme by or on behalf of the member and is subject to the same limits as apply to contributions to approved pension plans in the State.  Information on claiming the relief, and on the requirements that must be satisfied by the overseas pension plan and the migrant member, is available in Chapter 17 of the Revenue Pensions Manual.

 

5) The Standard Fund Threshold Regime - Limit on Tax Relieved Pension Benefits

While it is unlikely to affect the vast majority of individuals with pension funds in the State (including returning emigrants), it should be noted that Ireland applies a limit or ceiling on the total capital value of pension benefits that an individual can draw in their lifetime from tax-relieved pension arrangements, where those benefits come into payment for the first time on or after 7 December 2005.  The limit, which currently stands at €2m, is known as the Standard Fund Threshold (SFT) and there are tax consequences where the limit is exceeded. Any excess over the limit is subject to an immediate “ring-fenced” income tax charge at the higher rate of tax applying at the time the excess arises (currently 40%).  This is in addition to income tax applying to, for example, the pension or annuity when paid out.  Further information on the SFT Regime is available in Chapter 25 of the Revenue Pensions Manual.

The SFT regime is designed to “claw-back” Irish tax relief afforded to the contributions that built up the excess funds in the first place.  However, it is not designed to capture pension funds/benefits the contributions in respect of which did not avail of Irish tax relief.  Therefore, emigrants returning to Ireland and transferring their pension funds here are entitled, at the point their pension benefits are drawn down, to have the element of those benefits attributable to the fund they built up while abroad without the benefit of Irish tax relief, excluded for the purposes of determining if the capital value of their pension benefits exceeds the SFT.

If you transfer your overseas pension fund to Ireland and consider that the SFT regime could affect you, you should ensure, in advance of drawing down your pension benefits, that your pension fund administrator contacts Revenue to confirm the correct calculation of the capital value of your benefits for SFT purposes. 

Useful Irish Contacts/Links

 


Transferring an Irish Occupational/Personal Retirement Savings Account Fund Overseas:

For those emigrating from Ireland and who have been paying into an occupational or personal retirement savings account, it is possible to transfer your fund to an overseas pension arrangement.  Further information can be accessed through the Pension Authorities website here.

Pensions Authority Note on Irish Pensions Transfers Outside of the State

Useful Link:
FAQ moving to/from Ireland



UNITED KINGDOM


Tax relief in the UK is given on pensions to encourage saving to provide benefits in later life. Accessing benefits (directly or indirectly) before age 55 may result in a liability to UK tax charges.

A person who is born outside the UK having built up pension savings in an approved UK pension scheme can move their pension offshore if they want to retire outside the UK.  For those wishing to transfer a private pension from a registered UK scheme, the UK allows transfers to overseas schemes with ‘QROPS’ status (Qualifying Recognised Overseas Pension Scheme).  Requests for transfers may be assessed for tax purposes by the scheme administrator and by the UK’s tax authorities.

If the scheme to which you are considering transferring your pension savings is not a QROPS, your UK pension scheme may refuse to make the transfer, or you may have to pay at least 40% tax on the transfer.

Useful UK Contacts/Links

  • UK Government information on overseas pension transfers including application details and tax treatment can be accessed here
  • A list of recognised Irish overseas pension scheme notified to the UK authorities can be accessed here
  • HM Revenue & Customs

 

AUSTRALIA

Irish emigrants permanently moving back from Australia can apply to have pension contributions returned providing they have not become citizens/permanent residents of Australia.  

Irish emigrants who have worked in Australia as ‘temporary residents’ having entered Australia on a temporary visa and paid in to the Australian ‘Superannuation’(pension) system can apply for a ‘departing super payment’ (DASP).  You must have held a temporary visa under the Migration Act 1958 (except visas under subclasses 405 and 410) to be eligible to apply for the DASP. 

Application conditions and further information can be found through the links below.  Australia’s DASP payments are made to the individuals to whom the application relates and do not require that the payment be transferred to an Irish pension scheme.  Australian withholding tax will apply to departing superannuation payments.

For more information about the departing Australia superannuation payment you should first contact your superfund administration.

Useful Contacts/Links

  • For information and application details regarding a ‘departing superannuation payment’ click here
  • Superannuation Information for temporary residents departing Australia
  • Application Form for a departing Australia Superannuation payment
  • Australian Tax Office
    • If you have left Australia, phone +61 2 6216 1111 between 8.00am and 5.00pm Australian Eastern Standard Time, Monday to Friday and ask to be put through to the Super area.
    • If you are still in Australia, phone 13 10 20 between 8.00am and 6.00pm, Monday to Friday, to speak to a tax officer.
    • Email the Australian Tax Office at DASPmail@ato.gov.au
    • Write to the Australian Taxation Office
      PO Box 3100
      Penrith  NSW  2740

 

CANADA

In order to gain transparency regarding the regulations applying to pension transfers or accessing pension funds in Canada, as the issue is managed federally on a state by state basis rather than nationally, the pension owner should in the first instance contact the financial institution/administrators responsible for their pension savings or ‘locked-in account’.

Effective from January 1, 2008, a ‘locked-in account’ owner who is a non-resident of Canada, as determined by the Canada Revenue Agency (CRA) for the purposes of the federal Income Tax Act, may apply to unlock and withdraw all the money in his/her pension savings or ‘locked-in account’ two years after departing Canada.  Applications to access savings, which may be accessed through the Financial Services Commission of the relevant province, must be completed by the owner of the savings and sent to the administrators of the pension scheme. 

Canada’s federal pension legislation does not specify the manner in which the funds are to be paid, but only that they are not subject to its ‘locking-in provision’.   Notwithstanding this, there may be tax implications which should be addressed to the CRA.

Individuals will require a written determination from the CRA that states they are a non-resident of Canada for the purposes of the Canadian Income Tax Act and, if applicable, written consent from a spouse or a certification that you do not have a spouse.

Useful Canadian Contacts/Links

 

Refers here to the pensions savings of individuals who have not yet reached retirement age and before a pension has been drawn down.

The legislation involved is contained in Chapter 2B of Part 30 (Sections 787M – 787N) of the Taxes Consolidation Act 1997.

Last modified:19/01/2016