40(ee) International Pension: Benefits and Tax Rules

A 40EE international pension is a Guernsey pension arrangement associated with the tax exemption in section 40(ee) of the Income Tax (Guernsey) Law 1975.

It can offer qualifying members Guernsey tax advantages and flexible retirement benefits, while the scheme’s conditions and the member’s country of tax residence determine how those advantages apply.

For expats building retirement savings across several countries, a key consideration is whether a pension will remain suitable after their next move.

Key Takeaways

• A 40(ee) pension is a Guernsey-based international pension for internationally mobile individuals.
• Qualifying 40(ee) pensions can receive investment growth without Guernsey income tax.
• Pension income can be paid without Guernsey income tax, but your country of tax residence may still tax it.
• 40(ee) pensions and QROPS are different structures, with important implications for UK pension transfers.

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The information in this article is for general guidance only. It does not constitute financial, legal, or tax advice, and is not a recommendation or solicitation to invest. Some facts may have changed since the time of writing.

What is a 40(ee) international pension scheme?

A 40(ee) international pension is a type of international personal pension established through a Guernsey retirement annuity trust scheme (RATS) that qualifies for the Section 40(ee) exemption.

The structure is particularly relevant to internationally mobile individuals who may work and live in different countries during their careers.

Unlike a conventional state or employer pension tied closely to one country, an international pension can provide a retirement structure that remains in place while the member's circumstances change.

Qualifying arrangements must meet specific conditions under Guernsey law. These include being established under irrevocable Guernsey trusts and administered in Guernsey.

The relevant exemption is generally aimed at payments to individuals who meet the applicable non-residence requirements.

A 40(ee) arrangement may be useful for someone whose current country of residence does not provide a suitable private pension structure or who wants greater international investment flexibility.

What is the minimum contribution to a 40(ee) pension?

There is generally no statutory minimum contribution level imposed by Section 40(ee) itself. The actual minimum contribution, however, can be set by the particular pension provider or plan.

The minimum contribution is set out in the particular provider’s scheme terms, so check the required initial investment and any minimum for additional contributions.

These requirements should be considered alongside establishment fees, annual administration charges and investment costs.

How is 40(ee) pension income taxed?

Qualifying 40(ee) pension income can be paid without Guernsey income tax, effectively giving a 0% Guernsey tax rate, but your country of tax residence may still tax the pension.

Some countries may tax pension payments as ordinary income, while others may provide exemptions, reduced rates or special treatment for certain foreign pensions.

The tax treatment can also vary depending on how benefits are taken.

A regular pension income, lump sum payment or other distribution may be subject to different rules in the recipient's country.

Tax treaties may further affect which country has taxing rights over pension payments and whether relief from double taxation is available.

How is investment growth within a 40(ee) pension taxed?

One of the main attractions of a qualifying 40(ee) arrangement is that investment growth within the pension can generally accumulate without Guernsey income tax under the Section 40(ee) framework.

The pension assets can remain invested and compound within the structure until benefits are drawn.

However, this does not automatically mean that investment growth is tax-free everywhere.

The member's country of tax residence may impose tax on pension income, distributions or other benefits.

Local anti-avoidance, pension and reporting rules can also apply.

What happens to a Guernsey 40(ee) pension if you move countries?

Moving countries does not automatically require you to transfer your 40(ee) pension, but it can change how the arrangement is taxed and whether the provider can continue accepting contributions or servicing your account.

Before relocating, ask the administrator whether your new country of residence affects membership, contributions, investment access or benefit payments. Update your address and tax residence information, together with any documents the provider requires.

The destination country may treat the arrangement differently from Guernsey. It may not recognize the same pension exemptions or tax deferral, and reporting obligations may apply even before you withdraw money.

If you plan to move to Guernsey itself, check how becoming resident would affect the conditions for section 40(ee) tax treatment.

How do you access a 40(ee) international pension?

A 40(ee) pension is normally accessed through the benefit rules of the specific retirement plan rather than through a state pension application.

A Guernsey 40(ee) arrangement allows benefits to commence from around age 50, subject to the rules of the particular scheme and applicable circumstances.

Some plans may allow earlier access in situations such as serious incapacity.

Benefits can potentially be structured as a lump sum, regular income or another permitted form of pension payment.

The exact options depend on the plan's trust deed and rules.

The process generally involves contacting the scheme administrator or trustee, confirming eligibility to take benefits, providing the required documentation and selecting the available benefit option.

Before taking benefits, it is important to establish how the payment will be treated in the country where you are tax resident.

How much pension will you get per month?

There is no standard monthly pension amount for a 40(ee) international retirement scheme.

The eventual income is based primarily on the value of the pension fund, investment performance, contributions made, fees, the timing of withdrawals and the method used to take benefits.

Some 40(ee) arrangements can also provide flexible income or fund annuity payments rather than requiring the member to purchase a conventional annuity.

40(ee) pension vs QROPS: What is the difference?

For an expat transferring UK pension savings overseas, QROPS status determines whether the receiving scheme meets the relevant UK transfer requirements. A Guernsey 40(ee) pension’s local tax treatment alone does not establish that eligibility, so it should not be assumed to offer the same transfer options as a QROPS.

The distinction matters because section 40(ee) concerns Guernsey taxation, while QROPS requirements govern qualifying overseas transfers from UK pensions.

If the receiving arrangement is not a QROPS, the UK provider may refuse the transfer, or the transfer may attract tax of at least 40%. A transfer to a QROPS can also attract a separate 25% overseas transfer charge unless an exemption applies.

For someone contributing new savings instead of transferring a UK pension, the more relevant comparison is between the Guernsey arrangement and other available retirement or investment accounts, including their costs, withdrawal rules and tax treatment.

What should you check before choosing a Guernsey 40(ee) pension?

Ask the provider to explain which section 40(ee) exemptions apply to the proposed arrangement, what conditions you must meet and what evidence supports that treatment. Then establish whether those Guernsey advantages produce a tax benefit where you live.

• What confirms the scheme’s section 40(ee) status? Request the relevant tax documentation and an explanation of which exemptions cover the scheme’s income and your benefit payments.
• Which Guernsey residence conditions apply to you? Ask how previous residence in Guernsey, becoming resident there or returning there could affect the treatment of your benefits.
• Will your country recognise this Guernsey arrangement as a pension? Obtain advice on the actual trust deed and scheme rules, including whether income retained within the arrangement could be taxable before withdrawal.
• What does the provider’s GFSC status establish? Check the trustee or administrator’s regulatory status separately from the scheme’s tax status. GFSC registration does not itself confirm entitlement to section 40(ee) exemptions.
• If you are transferring a UK pension, what establishes transfer eligibility? Request confirmation of the receiving scheme’s QROPS status and the applicable UK tax treatment. A reference to section 40(ee) alone does not answer that question.

Conclusion

A 40(ee) pension deserves consideration when its investment options, benefit rules and total costs suit the member’s retirement plans. Its value also rests on how the arrangement is treated in the countries where the member lives and expects to retire.

Before funding a scheme, establish its eligibility conditions, compare the full charges with other available arrangements and confirm whether any proposed pension transfer is permitted.

Those checks provide a firmer basis for deciding whether its Guernsey tax advantages translate into a useful retirement structure.

This makes cross-border tax planning and pension structuring particularly important before making contributions, transfers or withdrawals.

FAQs

Can you transfer part of a pension into another pension?

Yes, some pension schemes allow partial transfers, but this is based on the rules of the existing scheme and the requirements of the receiving scheme.

International transfers may also be subject to additional tax and regulatory requirements.

Do I have to declare a foreign pension?

Your country of tax residence determines whether you must report a foreign pension, its income, assets or certain transactions.

A 40(ee) pension's Guernsey tax exemption does not remove foreign reporting or tax obligations in your country of residence.

Which country has the best pension in the world?

The Netherlands has the highest-rated pension system in the 2025 Mercer CFA Institute Global Pension Index, scoring 85.4 out of 100.

For expats, however, the best pension jurisdiction can vary based on tax treatment, eligibility and portability.

Can I get a pension from two countries?

Yes, you can receive pensions from two or more countries if you have accrued pension rights and meet each country's eligibility requirements.

The tax treatment of those pensions is then governed by the relevant domestic rules and, where applicable, tax treaties between the countries.

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