In Ireland, the concept of moving your pension overseas is fairly new but as Ireland becomes a hub for hundreds of global companies this means we have far more international workers earning income in Ireland. Consequently most of these multinational employees have pensions which they accumulate while working in Ireland and in pension vehicles that only suit retirement in Ireland. This creates a mismatch in requirements, benefits and pension taxation depending on the country they retire in.
Irish born people are also looking to retire in sunnier climates and this also creates complexities and opportunities for pension savers to access their pensions in a more streamlined and tax efficient way.
Much the same as Ireland has become a hub for funds, insurance companies and pharmaceutical multinationals that operate all across the EU, countries such as Malta have created Pan-EU pension industry that makes it incredibly safe and friendly to use a pension administrator/trustee there while your money is actually held in Ireland, London or a variety of other secure country.
Transferring the pension arrangements overseas to somewhere like the UK or Malta depends on a number of factors.
Many occupational pension/ defined benefit schemes can be transferred to similar arrangements elsewhere in the EU under the IORPS II legislation.
It is more complicated when pension savers hold Irish pension vehicles such as PRSA’s, Personal Retirement Bonds (Buy-Out bonds), ARF’s/AMRF’s, Final Salary or Self-administered pensions. We would be happy to have a discussion with you to analyse what you currently have as this can vary widely.
What is IORPS II?
This is the name of the EU wide legislative framework which gives each EEA member state clear legal guidance or directives on how all pensions schemes are administered, governed and most importantly how they can interact with each other. Not every country has fully adopted this legislation which creates uneven local practices from country to country.
The Pensions Authority – IORP II Directive
What are the benefits of IORP II?
- Provide better protection through enhanced governance and risk management.
- Common legal and reporting requirements for trustees with Pan-EU retirees.
- Provide clear, relevant and more consistent communication to members of pension schemes.
- Remove barriers to cross border occupational pension schemes.
- Ensure that trustees have the appropriate powers to supervise the schemes
Why would you consider an International Pension transfer?
- You are no longer living in Ireland or plan to take up residency somewhere else.
- You wish to avail of access and flexibility benefits depending on your new country.
- You previously worked outside of Ireland and wish to consolidate these with your Irish pension.
- You are an international executive and you can fund pension benefits in other jurisdictions.
- Restrictions around the Standard Fund Threshold if you have in excess of €2m euro in pension assets.
- To avoid situations where you are double taxed and need to claim back taxes each year under a double tax agreement.
What are the Revenue’s Requirements for Overseas Pension Transfers?
The Revenue requires that the transfers must be to an IORP established in an EU state.
For transfers outside of the EU, the pension holder must be a resident of the state they are transferring to and the pension structure must be similar to the Irish pension structure.
All pensions must be Bona Fide and must not be done to avoid tax. Revenue approval will not be required if the transfer is to a recognised and highly regulated IORP’s but there are other circumstances where we can guide you to attain Irish revenue decision/approval.
Where can I transfer my pension?
Malta offers up many benefits for anyone who has cross border complexities to their pension savings. Malta is a full EU member state that has a similar legal system to Ireland and has been a significant operator in the international transfer market.
What are the key benefits of transferring an Irish pension to Malta?
- Access to pension at 50 if you have lived overseas for 5 years already.
- Access to thousands of globally recognised fund managers & ETF’s.
- Malta is incredibly tax efficient for pensions with c. 70 Double Tax Agreements (DTA’s)
- Centralised EU hub for pension administration no matter which EU or Non EU country you retire in.
- A 30% tax-free lump sum is allowable versus the 25% in Ireland and the UK.
- No Tax when buying or selling funds within the scheme.
- Option of nominating beneficiaries (across the world) on your pension.
- No Lifetime Allowance Charge or Standard Fund Threshold limit.
- Inheritance benefits – you can potentially pass on your pension pot to your beneficiary upon death without Capital Acquisition Tax or Inheritance Tax.
- You can consolidate a variety of pensions into one scheme no matter which country they were accumulated in.
- Avoid ongoing currency exchange fees in investing in the same currency as the country you reside in or in any currency of your choice.
For further information please get in touch with Mike Shannon or any of the team in Imperius Wealth Ltd and we would be happy to guide you through this whole process to see if it’s suitable for you.