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If you’re planning to relocate to enjoy an idyllic coastal lifestyle in Cyprus, one of the essentials to put on your list is a pension review. Now, we know that pension planning isn’t always the first thing that crops into your mind amid property searches and packing. Still, it’s a vital component of a secure financial future as an expat.

There are multiple potential routes to claiming pension benefits for expats moving from the UK to Cyprus. The best solutions for you will depend on the type of pension products you have, when you expect to retire and how you want to utilise your pension savings – among several other considerations.

We do not advocate any particular route without knowing your circumstances, the value of your pension, and what type of plan you have.  For bespoke advice and more information about any options explained here, please contact our local Cyprus team or the UK Administration Office.

UK Pension Planning for Expats in Cyprus

So, for most expats, there are three main options when it comes to organising your pension fund:

  1. Leave UK products as they are and draw your pension from Cyprus.
  2. Transfer your pension schemes to an overseas alternative.
  3. Do something entirely different, such as draw your pension as a lump sum and invest it elsewhere.

Regarding your individual circumstances, there are some important questions, for example – is your pension defined benefit or defined contribution?

Defined benefit pensions have the lucrative advantage of a guaranteed income for life. However, they do have limitations, so you can’t usually draw a lump sum to purchase your new Cypriot home, for example.

Defined contribution schemes are more flexible, so it’s up to you whether you want to receive your pension as a regular payment or draw on a chunk of your pension pot for other uses. However, they have a finite value, so when the fund is exhausted, it will close.

In some scenarios, it might be worth transferring a defined benefit pot into a defined contribution scheme. Still, it’s worth approaching this decision with caution. It is, in fact, a regulatory requirement that you seek independent financial advice before making this move. Sacrificing lifetime benefits is a risk, so it’s critical you have sound advice before following this strategy.

The point here really is that there isn’t a one-size-fits-all answer, and planning for your expat pension demands a tailored approach to ensure the solutions match your retirement aspirations.

Drawing a UK Pension Scheme from Cyprus

If you choose to, you can leave your UK pension funds exactly where they are. There isn’t any requirement to transfer a scheme, so it’s at your discretion whether your British retirement funds are left in situ or moved overseas.

But there are several things we’d consider:

  • Pension Fund Exchange Rate Risks

Drawing pension income in Cyprus from the UK will, inherently, come with an exchange rate risk. Your British pension will be paid in GBP, but you’ll have to convert that to Euros.

Sometimes, that will be advantageous, and sometimes not – but regardless, you will lose some of the income with transactional fees required for an international money transfer.

  • Cyprus Residency Status

If you live in Cyprus long-term and are a registered resident (with tax-residency status), you may be in for a happy surprise since tax rates are generous.

However, if you’re a non-resident, you may still be liable for taxes at the UK rates and exposed to any changes in personal allowances or tax bands.

  • UK State Pension for Expats in Cyprus

We’ve briefly explored above the contrasting pros and cons of different scheme types – although looking at just a fraction of the potential pension structures you might have.

Another consideration is the UK State Pension. If you have made the requisite National Insurance contributions and are entitled to the State Pension, you can still receive this overseas. However, the value will depend on currency exchange rates.

Cyprus Pension Income Taxes

As a Cypriot tax resident, you pay income tax at local rates – unless you receive a Civil Service pension, which is taxed at source in the UK. That is to your benefit since Cyprus is 25% more affordable in living costs and offers low tax rates on pension income.

You have two choices:

  1. Opt to pay tax at 5% of your pension, against anything above €3,420.
  2. Choose to pay taxes against the regular income tax bands.

The first band starts at an annual revenue of €19,500 – so if your yearly pension is below this, you’d be better off with option two and would pay zero tax.

Tax tables for 2021 are as below:

Cyprus Income Tax Band Tax Rate Accumulated Tax
Up to €19,500 0% €0
€19,501 – €28,000 20% €1,700
€28,001 – €36,300 25% €3,775
€36,301 – €60,000 30% €10,885
Over €60,000 35%


The benefits of Cypriot taxation mean that many UK expats opt to apply for official residency status or ensure their living arrangements meet the 183 days plus requirement to be treated as a tax resident.

Transferring a UK Pension Fund to Cyprus

Another potential solution is to look into a pension transfer. You can usually only do so if the scheme is recognised on the HMRC List of Recognised Overseas Pension Schemes (ROPS).

Note that there are currently no ROPS on the HMRC register in Cyprus – but that doesn’t mean you can’t select another fund in a neighbouring EU country, with many such schemes based in Malta.

ROPS transfers can offer substantial advantages, making them an appealing option with tax efficiencies and flexibility that you won’t get if you leave your UK pension as-is:

  • Options to combine multiple pensions into one ROPS plan.
  • Protection from UK taxes and changes to any pension regulations.
  • Flexibility to choose how you invest and access your pension pot.
  • Improved succession planning benefits.
  • Ability to invest and draw your pension in multiple currencies.

The significant factor in looking at a ROPS is that you may be liable to taxes on the value transferred. A lot depends on whether that tax burden is likely to be much lower than you’d pay against your UK pension income.

Taxes can include:

  • HMRC Lifetime Allowance 25% taxes on anything over the £1,073,100 cap.
  • An Overseas Transfer Charge of 25% against any pension fund transfers.

The Overseas Transfer Charge is slightly ambiguous since, technically, HMRC can apply it to EU pension transfers post-Brexit. HMRC hasn’t confirmed this, but it’s essential to be aware of the potential.

Planning for Expat Retirement with Confidence

As we’ve seen, there are variable pros and cons, risks and rewards. You must have expert financial advice before making any long-term decisions about managing your UK pension from Cyprus.

Whether you have a sizeable pension fund and wish to protect the value of your retirement savings or want to explore the potential returns on alternative investment products, it remains vital to seek expert guidance.

Contact our Limassol Office for access to on-the-ground expertise and arrange a good time to chat with one of the Chase Buchanan team. We provide a wholly bespoke, individual, and holistic wealth management service, making professional recommendations about the ideal pension solutions to secure your happy retirement.

*Information correct as of July 2021