Relocating to Portugal With a UK-Based Pension

British nationals moving to Portugal will always need to make important financial decisions, whether they’re relocating as a family and intend to become permanent residents, or retiring and either already drawing on their pension or planning to once the move is complete.

Pensions are one of several key considerations, because leaving a UK pension as it is may not be favourable. That could be due to factors such as currency exchange risks, restrictions imposed by the pension provider, tax liabilities, and future exposure to UK inheritance tax.

Being proactive will ensure you understand what your pension is worth, know how much retirement income you’ll receive, and can take steps to safeguard your wealth for the years to come, as we’ve explained in this concise guide.

Why Expats Relocating to Portugal Need to Act to Protect Their Pension Wealth

While there isn’t any rule that dictates you must transfer a British pension to Portugal, or reinvest pension savings in an alternative product, issues can arise when UK nationals relocate to the European Union and assume their pensions will be fine left where they are.

Although the options will depend on the type of pension products you hold, the drawbacks of ignoring pension wealth can include:

• Difficulties accessing your pension, often because providers won’t make transfers to an overseas bank account or are reluctant to make changes to your scheme once you become a non-resident.
• Exposure to currency fluctuations, where your income will change regularly based on FX rates, making it impossible to budget with certainty.
• Additional costs linked with pension drawdowns, with extra banking charges incurred for cross-border transactions and currency conversions.
• Possible future issues with UK inheritance tax (IHT) owing to assets being held in the UK following the inclusion of unused pension wealth in the scope of IHT from April 2027.

If you, like many British expats, have multiple pensions, investments, assets, and savings products, it may also simply make sense to keep them all in one place and in the right currency to avoid complications when managing your finances and monitoring performance and returns.

Potential Ways to Manage a UK Pension as a Portuguese Expat Resident

Under the previous Non-Habitual Resident (NHR) programme, UK residents planning to live in Portugal may have decided that leaving pension funds and other assets in Britain was beneficial.

The scheme offered tax exemptions on many types of foreign-sourced income remitted to Portugal and a flat 10% foreign pension tax rate for up to ten years.

Now that this has closed, and the replacement scheme has removed all exemptions and lower rates on pension earnings, many more expats are looking for opportunities to transfer or restructure their retirement assets as tax-efficiently as possible.

It’s impossible to state with certainty which routes will be right for you, because this depends on a host of variables like your tax position, the type of residence permit you are eligible for, and whether you’re intending to live permanently in Portugal.

However, you could consider a Recognised Overseas Pension Scheme (ROPS) transfer, while being cautious of the possible exposure to the Overseas Transfer Charge (OTC), Self-Invested Personal Pensions (SIPPs), which can be international or UK-based, or reinvesting your pension wealth in a different product altogether.

Claiming the UK State Pension in Portugal

State pensions, unlike private pensions, cannot be transferred. However, you’ll still be able to claim this benefit from any EU country provided you’ve made the necessary National Insurance Contributions during your time as a UK tax resident.

Expats living overseas need to contact the International Pension Centre and can nominate their preferred bank account and the currency in which they’d like to receive their State Pension.

The caveat is that currency exchange rates will fluctuate, so the actual value received will vary from month to month. A conversion charge is also levied before the transaction, deducting 0.39% from every payment.

Portuguese Pension Taxation

Taxes are a necessary part of expat financial planning, and you’ll need to know how your pensions will be taxed in Portugal. This may also influence your options, because in Portugal some pensions are treated as income for tax purposes and subject to the prevailing income tax rates, while others are classed as investments.

Another consideration is your tax residency status. If you’re living permanently in Portugal or hope to become a Portuguese citizen, you’ll usually become a tax resident, in which case all of your worldwide income will be taxed in the country.

However, if you split your time between Portugal and the UK, or retain strong links with Britain, for instance, by owning a primary home or having a business or employment there, this might not be the case.

Should you become a Portuguese tax resident, most pensions, including occupational pension funds and the UK State Pension, will be treated as general income under the current income tax brackets as below.

Other funds, including private pensions that haven’t received any contributions from a UK employer, can be classed as investments or savings. They will typically be taxed at a 28% flat rate, although you have the option to elect to be taxed at the marginal rates.

The norm is for pensions that comprise both employer contributions and deposits made by the pension holder to be taxed as income, but this isn’t automatically correct for every fund.

Income Tax Rates in Portugal

Access Independent Guidance on Managing Your UK Pension When Relocating to Portugal

There are two very common and understandable mistakes UK expats make when planning their move to Portugal: either leaving their pension funds where they are without considering the tax implications or seeking advice from a UK adviser who lacks the knowledge to support cross-border pension planning and transfers.

Your pension wealth is essential to a long, comfortable retirement, and we strongly recommend contacting the Chase Buchanan Private Wealth Management Portuguese team to discuss your circumstances.

We’re here to help ensure you’ve taken the right steps to enjoy a stable, tax-efficient pension that will support your retirement lifestyle.

© Chase Buchanan Private Wealth Management.
Chase Buchanan Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission with CIF Licence 287/15 and offers its services in the EU on a cross-border basis as per the provisions of MiFID.

Chase Buchanan Insurance Services, Agents & Advisors is authorised and regulated by the Cyprus Insurance Companies Control Service with License No 6883 and offers services in the EU on a cross-border basis as per the provisions of the Insurance Distribution Directive (IDD).

Investing in financial instruments involves risk and may not be suitable for all investors. The value of investments may go up as well as down and past performance is not a reliable indicator of future results. You may lose part or all of your invested capital.

*Information correct as at February 2026