Retirement planning for internationally mobile professionals raises questions that most financial advisers — and most financial planning guides — simply do not address. Not because the questions are particularly difficult, but because they were designed for people whose lives fit neatly within one country’s tax and regulatory system. Yours does not.
The central challenge is this: the pension rules that govern when you can access your money, how much you can take, and what tax you will pay on it were written for people who earned, saved and will retire in the same place. The moment your retirement spans a second country, the rules become an interaction of two systems — and that interaction is rarely straightforward.
Taking a UK Pension From Abroad
A UK defined contribution pension allows you to start drawing from age 55 — rising to 57 in 2028. But the tax treatment of those withdrawals depends heavily on where you are tax resident at the time you take them. A UK non-resident taking income from a UK pension may find that income taxed in the UK under PAYE, taxed in their country of residence under local rules, or split between the two jurisdictions depending on the double tax treaty in place.
The 25 percent tax-free lump sum — one of the most valuable features of UK pension arrangements — is available to non-residents in most cases, but the interaction with the pension lifetime allowance and the specific rules of the receiving country can affect how much of it you actually keep. Not every country treats an incoming lump sum the same way the UK treats the equivalent domestic payment.
The Currency Problem in Retirement
Most people who retire abroad do so in a country where their daily expenses are denominated in a different currency from their pension. A UK pension pays in sterling. If you retire to Portugal, your spending is in euros. If sterling weakens significantly between now and when you draw the pension — which it has done materially over the past decade — the real value of your retirement income falls without the pension itself changing at all.
This is not a theoretical risk. It is a real and material factor in retirement planning for internationally mobile professionals, and it is routinely underweighted because it is not visible in any single account statement or pension projection.
The Estate Planning Dimension
Dying with assets in multiple countries creates its own set of complications. UK pension funds passed to beneficiaries at death are currently free of UK inheritance tax in many circumstances — one of the most significant estate planning advantages of the UK pension wrapper. But that advantage interacts with the inheritance and estate rules of whatever country the beneficiaries are resident in, and the result is not always what you would expect.
A UK pension left to a beneficiary resident in France, for example, may be treated very differently from one left to a UK-resident beneficiary — both in terms of the process required and the eventual tax outcome. These interactions need to be understood before they become urgent, not after.
Planning Ahead
The specific answers to all of these questions depend on your individual circumstances: which country you are currently resident in, where you plan to retire, what kind of pension you hold, and what other assets will form part of your retirement income. There is no generic answer that serves everyone.
What we can tell you with confidence is that waiting until retirement to address these questions is expensive. The decisions you make in the years before retirement — about where you hold assets, in what currencies, through what structures — determine the options available to you when you actually stop working. Planning ahead gives you choices. Leaving it late leaves you managing consequences.
If you are approaching retirement with assets in multiple countries and have not had a cross-border retirement planning review, we recommend arranging one. Contact us at enquiries@tcg-ltd.com or book a complimentary consultation through our website.