A Qualifying Recognised Overseas Pension Scheme (QROPS) may offer greater flexibility, potential tax advantages, and easier currency management. Here’s what you need to know.

What is a QROPS?

A QROPS is an overseas pension scheme that meets specific requirements set by HM Revenue & Customs (HMRC). These schemes can accept transfers from UK-registered pension funds, offering a route for British expatriates to take their pensions with them when they leave the UK.

Once approved by HMRC, a QROPS allows you to transfer and manage your pension abroad while remaining compliant with UK pension rules—within certain limits.

Benefits of a QROPS Pension Transfer

Transferring your pension to a QROPS may provide:

• Currency flexibility: Receive income in your local currency, reducing exchange rate risk.
• Potential tax efficiency: In some jurisdictions, you could benefit from lower income or inheritance tax rates.
• Greater investment control: Choose from a broader range of global investment options than many UK schemes allow.
• Estate planning advantages: Some QROPS allow your pension pot to pass to beneficiaries free of UK inheritance tax.
• Avoiding UK Lifetime Allowance (LTA): Though the LTA has been abolished in the UK, some clients abroad may still find value in existing QROPS protections.

Eligibility for a QROPS Transfer

To transfer a UK pension to a QROPS, you must meet the following conditions:

• Be permanently living abroad or planning to move overseas imminently
• Have a UK private or workplace pension scheme (Defined Contribution or, in some cases, Defined Benefit)
• Be under the age of 75 at the time of transfer
• Transfer to a QROPS listed on the HMRC’s official list

⚠️ Note: UK public sector and state pensions cannot be transferred.

QROPS and the Overseas Transfer Charge

Since 9 March 2017, a 25% Overseas Transfer Charge (OTC) applies to most transfers unless:

• You and the QROPS are based in the same country
• You reside in the EEA and the QROPS is within the EEA
• The QROPS is an occupational scheme provided by your employer

A qualified adviser can help determine if your transfer would be exempt from the OTC.

Popular QROPS Jurisdictions

Certain jurisdictions are more popular due to their robust regulation, tax benefits, and investment options:

• Malta – EU member state with strong regulatory oversight
• Gibraltar – English-speaking, regulated, and frequently used for EEA residents
• Isle of Man – Strong legal framework with bespoke QROPS structures
• New Zealand – Favourable for long-term residents in Australasia

Is a QROPS Right for You?

Whether a QROPS is suitable depends on your long-term residency plans, pension size, and estate planning goals. In many cases, modern International SIPPs may be more flexible or cost-effective, especially for expats in certain locations or with smaller pension pots.

Before making a decision, it’s essential to compare:

• Fees and charges
• Tax implications in your country of residence
• Investment options and platform flexibility
• Inheritance and death benefit rules

Frequently Asked Questions

Can I transfer my UK State Pension to a QROPS?

No. The UK State Pension cannot be transferred to any scheme, including a QROPS.

Do I pay tax when I transfer to a QROPS?

Possibly. The Overseas Transfer Charge may apply unless you meet specific criteria. Ongoing pension income will also be taxed based on your country of residence.

Is QROPS better than an International SIPP?

Not always. While QROPS can provide tax or estate planning advantages, International SIPPs are often more cost-efficient and equally flexible. A tailored review is essential.

How do I find a listed QROPS?

HMRC publishes a list of recognised QROPS. Your financial adviser can also provide guidance and due diligence.