A few misconceptions come up again and again in expat pension conversations, some left over from rules that no longer apply, others just persistent myths that never quite match reality. Here are seven worth clearing up.
Myth 1: “I Have to Transfer My UK Pension Once I Move Abroad”
Reality: there’s no requirement to transfer anything simply because you’ve emigrated. Many expats leave UK pensions exactly where they are, and for smaller pots with reasonable charges, that’s often the right answer. Whether a transfer helps depends entirely on your specific pensions and circumstances – not a general rule about moving abroad.
Myth 2: “A QROPS Always Avoids UK Tax”
Reality: the 25% Overseas Transfer Charge, where it applies, is itself a UK tax charge on the transfer. UK reporting obligations also continue for up to ten years after a QROPS transfer, and unauthorised payments during that window can still trigger a UK tax liability. A QROPS moves your pension outside the UK pension system – it doesn’t remove UK tax rules from the picture entirely.
Myth 3: “Living Somewhere Tax-Free Means My UK Pension Is Tax-Free Too”
Reality: a country’s own tax-free or low-tax status – the UAE, Hong Kong, Singapore – governs local income, not how the UK taxes your UK pension. UK pension income remains governed by UK tax rules and your UK tax residency status, and is generally still paid with UK tax deducted at source by default unless you specifically apply otherwise under a double taxation agreement.
Myth 4: “Commonwealth Countries All Get the UK State Pension Uprated”
Reality: Commonwealth membership, historical ties, or being English-speaking have no bearing on State Pension uprating whatsoever. Australia, Canada, New Zealand and South Africa – all Commonwealth countries with deep historical UK ties – are all on the frozen list, while some non-Commonwealth countries with a specific reciprocal agreement do get uprating. The list simply doesn’t map onto Commonwealth status, language, or geography.
Myth 5: “My Adviser Gets Paid the Same Whatever I Decide, So the Advice Is Neutral”
Reality: not necessarily. Some advisers charge a percentage of the transfer value rather than a flat fee – a structure the FCA has specifically flagged as a potential conflict of interest, since it can create an incentive to recommend transferring even where staying put would genuinely serve you better. It’s always worth asking directly how your adviser is paid, and whether that changes based on the recommendation.
Myth 6: “A Recommendation to Transfer My Final Salary Pension Is the ‘Correct’ Outcome, and Staying Put Means the Adviser Didn’t Do Their Job”
Reality: it’s the opposite in most cases. The regulator’s starting position is that transferring out of a defined benefit scheme is not usually in the member’s best interests, because replicating a guaranteed, inflation-linked income for life through investment returns alone is genuinely difficult. A recommendation to stay in your existing scheme, following a proper regulated assessment, is a common and entirely valid outcome – not a sign the process failed.
Myth 7: “Once I’ve Set Up My Pension Structure, I Don’t Need to Think About It Again Until Retirement”
Reality: expat pension rules change more often than people expect. The QROPS Overseas Transfer Charge exemptions narrowed significantly in October 2024. The Lifetime Allowance was abolished and replaced with new allowances in April 2024. Portugal’s NHR tax regime closed to new applicants in 2024. A review roughly every two to three years, or whenever something material changes – a move, a change in tax residency, new legislation – is a far more reliable approach than setting a structure up once and assuming it stays right forever.
Where to Go From Here
Our Expat Pension Planning hub covers each of these areas properly, with dedicated pages on QROPS, pension transfers, and final salary transfers. For our wider services, visit our Premier Expat Mortgages homepage.
Frequently Asked Questions
Is there ever a genuine requirement to transfer a UK pension abroad?
No – it’s always a choice based on your specific circumstances, never a requirement simply because you’ve moved.
Why do these myths persist despite rule changes?
Often because older guidance, written before rules like the October 2024 QROPS changes or the 2024 Lifetime Allowance abolition, is still circulating online without being updated.
What’s the single most costly myth on this list?
Probably Myth 2 – assuming a QROPS automatically avoids UK tax, when the Overseas Transfer Charge and ongoing reporting can mean it doesn’t.
Get in touch with any pension assumption you’d like checked against the current rules, and we’ll help you separate fact from outdated guidance.
