The concept of transferring Irish pension overseas is relatively new in Ireland but is now becoming increasingly popular. Professional advice is crucial for navigating the complexities of the transfer process and ensuring that your financial planning goals are met. It is important to consider whether the benefits of transferring to an IORPS support your long-term financial security, lifestyle preferences, and legacy planning goals.

An IORPS is an occupational pension scheme that sits outside of Ireland and is designed to receive transfers from some Irish pensions, providing it meets Irish Revenue rules. It must be an IORP II regulated scheme established in another EU member state which complies with EU regulations. All pension transfers must be ‘Bona Fide’ and should not be done to solely to mitigate tax. Revenue approval will not be needed if the transfer is to an IORPS but may needed to other schemes, such as a QROPS. If you are considering a transfer to a scheme outside the EU, then the pension holder must be a resident in the same country as where the scheme is based and the pension must be a similar structure to the Irish pension being transferred.

It is important to evaluate the regulatory environment and tax implications governing the transfer and assess the impact on your pension savings. Different countries have different rules and regulations regarding pensions so be aware of any restrictions, eligibility criteria, and compliance requirements in both Ireland and the destination country where the IORPS is located. Mitigating the tax on pension pots that will exceed the upper limit before retirement and avoiding the additional tax on larger tax-free cash withdrawals may be key considerations, depending on the value of your accrued benefits.

Like a QROPS, an IORPS allows you to consolidate multiple Irish pensions into a single account, making it easier to manage, monitor, and track your retirement savings. It also offers a broader range of investment options compared to traditional Irish pension schemes. However, it is still a good idea to gain an understanding of the investment choices available and decide whether they fit with your attitude to risk and investments objectives. Diversification and access to a range of assets can be crucial when optimising your pension investments.

Whilst managing currency risk will be less important if you are remaining within the EU for retirement, mitigating currency risk should be part of your financial planning, especially if you are spending a significant amount of time in countries further afield.

It is important evaluate the income options within the IORPS and gain an understanding of how the structure supports your retirement income goals. The structure does allow a more flexible approach when it comes to drawing down on your pension than an Approved Retirement Fund (ARF) so understanding how the IORPS accommodates your preferred approach to generating retirement income will be key.

Before transferring your pension, you should evaluate the fees associated with the transfer and ongoing management of the IORPS. Compare these with the costs of your existing Irish pension scheme. A clear understanding of fees is vital to ensuring that the transfer is financially advantageous and aligns with your overall financial plan.

Finally, staying informed about any changes in pension regulations in Ireland, your new country of residence and where the IORPS is located is essential as regulatory changes can impact the benefits and rules associated with an IORPS, and it may be necessary to make changes to your retirement plans.