Pensions left behind: what happens to them when you move

A pension is the asset people think about last when they move and should think about first. It stays inside a system you have left, governed by that system's rules, and how it is taxed frequently follows the pension rather than following you.

The three questions

Where is it taxed when it pays out? Double tax treaties usually deal with pensions in a dedicated article, and they distinguish between types. State pensions, government service pensions and private or occupational arrangements are often allocated differently — one taxed where paid, another where the recipient lives. Reading "the treaty says pensions are taxed where you live" as a general rule is how people budget wrongly.

Can it be paid to you abroad at all? Most schemes will pay internationally; some require a domestic account, some will not pay to certain jurisdictions, and some require proof of life procedures that are tedious from a distance.

Should it be moved? Transfer options exist in some systems and carry charges, conditions and, in some cases, a tax charge on the transfer itself. The default answer is usually no, and the exceptions are specific.

What tends to go wrong

• Contributions stop and nobody notices. A scheme that required residence or employment stops accruing on the day you leave, and years pass before that is looked at.
• The scheme loses you. An address change not filed is the most common reason people reach retirement with a pension they have forgotten and a provider that cannot find them.
• Withholding at source. Payments may be taxed in the paying country by default, with relief only obtainable by claiming it under a treaty — which requires a residence certificate, in advance, each time it is asked for.
• Currency. A pension paid in one currency into a life priced in another is an exchange rate exposure lasting decades, and it is rarely modelled.
• Early access. Rules on drawing before the scheme's age are strict and the penalties are designed to deter. Being abroad does not change them.

Before you move

• List every scheme you have ever been in, including from employers you left long ago. Tracing services exist for exactly this reason.
• Update the address and contact details with each provider, and record how to reach them.
• Ask each one, in writing, what changes when you become non-resident.
• Check the treaty article for pensions between your new country and each paying country, before assuming anything about the rate.
• Where the Emirates are the destination, note the specific point: no personal income tax here does not automatically mean a pension arrives untaxed, because the paying country may retain the right under the treaty.