Moving abroad for adventure, work, or a new lifestyle is an exciting prospect. But before you pack your bags, don’t forget about one of your most valuable financial assets, your private pension in Ireland.
Your pension is money you’ve worked hard to save, and it’s one of your most significant financial assets. So if you’re planning a move, it’s worth taking the time to think about your finances, especially your pension, before you go.
Before Anything Else: Define Your Situation
Are You Moving Permanently, or Just for a Short Term?
- Temporary moves (e.g., studying or working abroad for a few years) often mean retaining closer ties to Ireland, potentially keeping your pension terms simpler.
- Permanent moves may require a more in-depth analysis, including tax residency, long-term implications, and whether transferring your pension is beneficial.
What’s Your Purpose for Moving?
Review Your Irish Pensions Thoroughly
Before leaving, take stock of all your Irish pension arrangements; this might include PRSAs (Personal Retirement Savings Accounts), occupational pensions, and other personal retirement savings such as self-employed private pension. Carefully review each scheme’s terms to understand.
Make sure you understand the details of each scheme, like whether you can still contribute once you’re living overseas, if your pension savings will continue to grow with tax advantages, and what restrictions might apply when you’re no longer a resident.
Know Your Options: Retain or Transfer?
Keeping Your Pension in Ireland
You can choose to leave your pension where it is, which can be:
- Cost-effective and administratively simple;
- Subject to Irish taxation rules at retirement unless your new country has a suitable tax treaty (Double Taxation Agreement, or DTA).
Ensure you maintain a valid PPS number and consider keeping an Irish bank account to simplify pension payments.
Transferring Your Pension Abroad
Transferring assets might help mitigate currency risks, facilitate tax planning, and simplify your financial life, but proceed with caution. Not all schemes are transferable, and rules vary.
Consider transfer fees, regulatory approval, and whether the receiving scheme qualifies under Irish Revenue rules or meets the criteria in the destination country. Always seek financial advice for a tailored, secure solution.
Understand the Tax Implications
Tax treatment of your pension after moving abroad depends heavily on:
- Residency: Are you considered Irish tax resident after the move?
- Presence of a DTA with your destination country.
- Type of pension: Private occupational vs. public sector vs. ARF/vested PRSA vs. State Pension.
Here’s how things typically pan out:
- Private occupational pensions: if you’re non-resident and living in a DTA country, you can often claim a PAYE Exclusion Order, so Irish tax isn’t deducted. Without a DTA, Ireland will generally continue taxing your payments.
- Public sector pensions: these are usually taxed in Ireland, regardless of your residence.
- ARFs and vested PRSAs: tax is deducted at source in Ireland, with no relief order available.
- State Pensions: typically taxed only in your country of residence.
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