SIPP vs QROPS: which pension is right for you as a British expat, and what happens if you move again?
3rd July 2026
If you left the UK with a workplace pension and ended up overseas, you have almost certainly encountered the acronyms SIPP and QROPS at some point. Possibly from a financial adviser, possibly from a fellow expat at a barbecue, and possibly in the context of a sales pitch for something that turned out to cost more than it was worth.
Both are legitimate pension structures. Both have their uses. But they are not interchangeable, the one that suits you depends heavily on your individual circumstances, and there is a sting in the tail that many expats overlook entirely: what happens to a QROPS if you move to a different country?
This post covers the key differences, the scenarios where each structure makes sense, and the moving-country problem that often goes unexamined until it is too late.
Both are legitimate pension structures. Both have their uses. But they are not interchangeable, the one that suits you depends heavily on your individual circumstances, and there is a sting in the tail that many expats overlook entirely: what happens to a QROPS if you move to a different country?
This post covers the key differences, the scenarios where each structure makes sense, and the moving-country problem that often goes unexamined until it is too late.
What a SIPP actually is
A Self-Invested Personal Pension - SIPP - is a UK-based pension wrapper. It sits within the UK tax and regulatory framework, governed by HMRC rules, regulated by the Financial Conduct Authority, and subject to UK pension legislation.
You can hold a SIPP as a British expat living overseas. There is no requirement to be UK-resident to maintain one. What changes when you leave the UK is primarily the tax treatment of contributions: you generally lose the ability to claim UK tax relief on new contributions once you are no longer a UK taxpayer, and drawing income from a SIPP while living abroad is subject to the double taxation agreement - or lack of one - between the UK and your country of residence.
The investment flexibility within a SIPP is broad. You can hold equities, bonds, funds, ETFs, investment trusts, and in some cases commercial property. The key constraint is that the pension remains in the UK, denominated in sterling, and subject to UK inheritance tax rules on death (though this is changing - more on that in a separate post).
For many expats, particularly those who may return to the UK at some point, a SIPP is the right structure. It is familiar, well-regulated, and keeps your options open.
What a QROPS actually is
A Qualifying Recognised Overseas Pension Scheme - QROPS - is an overseas pension arrangement that HMRC has approved to receive UK pension transfers. The list of approved schemes is published by HMRC and updated periodically. When you transfer a UK pension to a QROPS, the funds move out of the UK tax system and into the jurisdiction where the QROPS is based.
The appeal of a QROPS, historically, was the combination of flexibility and potential tax efficiency: investment in local or international currency, possible exemption from UK inheritance tax, and in some cases access to funds earlier or in different ways than UK rules permit. It also allowed consolidation of UK pensions for expats who expected to remain overseas permanently.
The landscape has shifted considerably over the past decade. HMRC introduced the Overseas Transfer Charge (OTC) in 2017 - a 25% tax on transfers to QROPS that do not meet specific conditions. The rules around this charge are the single most important thing to understand before considering a QROPS transfer, and they are where the moving-country problem begins.
The overseas transfer charge and why geography matters
The 25% Overseas Transfer Charge applies to transfers to a QROPS unless one of two conditions is met at the time of transfer:
First, the QROPS must be in the same country where you are resident at the time of the transfer. So if you live in Malta and transfer to a Malta QROPS, the charge does not apply - provided you remain Malta-resident.
Second, the QROPS must be in a country within the European Economic Area and you must be resident within the EEA at the time of transfer.
If neither condition applies, the charge applies. The transfer is treated as an unauthorised payment, and 25% of the transfer value goes to HMRC.
That might seem straightforward enough. Transfer while resident in the right country, avoid the charge. But the charge is not only a transfer-time test. It continues to apply for five years after the transfer.
A Self-Invested Personal Pension - SIPP - is a UK-based pension wrapper. It sits within the UK tax and regulatory framework, governed by HMRC rules, regulated by the Financial Conduct Authority, and subject to UK pension legislation.
You can hold a SIPP as a British expat living overseas. There is no requirement to be UK-resident to maintain one. What changes when you leave the UK is primarily the tax treatment of contributions: you generally lose the ability to claim UK tax relief on new contributions once you are no longer a UK taxpayer, and drawing income from a SIPP while living abroad is subject to the double taxation agreement - or lack of one - between the UK and your country of residence.
The investment flexibility within a SIPP is broad. You can hold equities, bonds, funds, ETFs, investment trusts, and in some cases commercial property. The key constraint is that the pension remains in the UK, denominated in sterling, and subject to UK inheritance tax rules on death (though this is changing - more on that in a separate post).
For many expats, particularly those who may return to the UK at some point, a SIPP is the right structure. It is familiar, well-regulated, and keeps your options open.
What a QROPS actually is
A Qualifying Recognised Overseas Pension Scheme - QROPS - is an overseas pension arrangement that HMRC has approved to receive UK pension transfers. The list of approved schemes is published by HMRC and updated periodically. When you transfer a UK pension to a QROPS, the funds move out of the UK tax system and into the jurisdiction where the QROPS is based.
The appeal of a QROPS, historically, was the combination of flexibility and potential tax efficiency: investment in local or international currency, possible exemption from UK inheritance tax, and in some cases access to funds earlier or in different ways than UK rules permit. It also allowed consolidation of UK pensions for expats who expected to remain overseas permanently.
The landscape has shifted considerably over the past decade. HMRC introduced the Overseas Transfer Charge (OTC) in 2017 - a 25% tax on transfers to QROPS that do not meet specific conditions. The rules around this charge are the single most important thing to understand before considering a QROPS transfer, and they are where the moving-country problem begins.
The overseas transfer charge and why geography matters
The 25% Overseas Transfer Charge applies to transfers to a QROPS unless one of two conditions is met at the time of transfer:
First, the QROPS must be in the same country where you are resident at the time of the transfer. So if you live in Malta and transfer to a Malta QROPS, the charge does not apply - provided you remain Malta-resident.
Second, the QROPS must be in a country within the European Economic Area and you must be resident within the EEA at the time of transfer.
If neither condition applies, the charge applies. The transfer is treated as an unauthorised payment, and 25% of the transfer value goes to HMRC.
That might seem straightforward enough. Transfer while resident in the right country, avoid the charge. But the charge is not only a transfer-time test. It continues to apply for five years after the transfer.
What happens if you move countries after transferring
This is where many expats run into serious problems.
If you transfer your UK pension to a QROPS in Country A, and within five years of that transfer you move to Country B - and Country B is not the same country as your QROPS - HMRC can apply the Overseas Transfer Charge retrospectively. The 25% charge becomes due at the point you become resident in a country that does not match the QROPS jurisdiction.
To be clear: you transferred correctly. You met the conditions at the time. But subsequent relocation has triggered the charge anyway, because the five-year window was still open.
This catches people who:
The QROPS country list and what it means for expats in Asia
HMRC maintains and publishes the list of recognised overseas pension schemes. As of the most recent update, the jurisdictions where QROPS remain available and commonly used for British expats include Malta, Gibraltar, Guernsey, the Isle of Man, New Zealand, and a handful of others.
There is no QROPS available in Thailand, Singapore, the UAE, or most of Asia. This has a practical consequence: if you live in Asia and want to transfer to a QROPS, the scheme will typically be based in Malta or a Crown Dependency. You are therefore immediately holding a QROPS in a different country to where you live. The condition that you be resident in the same country as the QROPS is not met, and the Overseas Transfer Charge applies from day one.
The exception is if you were previously EEA-resident and used the EEA exemption - but that does not help someone who transferred while already living in Asia.
This means that for most British expats living in Southeast Asia or the Middle East, a QROPS transfer requires extremely careful analysis before proceeding. In many cases, the combination of the overseas transfer charge, the scheme charges embedded in many QROPS structures, and the loss of flexibility makes a QROPS transfer economically difficult to justify.
When a QROPS does make sense
This is not an argument against QROPS universally. There are scenarios where a transfer makes genuine sense.
If you are permanently settled in Malta or Gibraltar with no intention of moving, and you want consolidation of UK pensions with local currency exposure and simplified estate planning, a QROPS may serve you well. The transfer charge is avoided, the five-year clock is manageable if your relocation plans are settled, and the legal and tax framework in those jurisdictions is sound.
If you have a very large pension pot, strong reasons to want it outside the UK tax framework permanently, and professional advice confirming the numbers work after all charges, a QROPS is worth serious consideration.
The problem is that the expat financial services market has historically oversold QROPS to people for whom they were not appropriate - partly because transfer-based commissions made them attractive to advisers and partly because the nuance of the five-year rule and the OTC was not always explained clearly.
The honest comparison
Both a SIPP and a QROPS are legitimate pension structures. The question is which one suits your actual situation - your country of residence now, your likely country of residence in five years, your tax position, your estate planning objectives, and the total cost of the structure.
A SIPP kept in the UK remains a strong default for expats who:
What to do next
If you have a UK pension and you are unsure which structure is right for you, the starting point is not a product comparison - it is a review of your situation. Where do you live now, where are you likely to live in five years, what are your income needs in retirement, and what does the total cost of any proposed structure look like over the long term?
These questions have answers. They just require proper analysis rather than a product recommendation.
If you would like to talk through your pension position, you can book a call below. There is no charge for an initial conversation and no obligation to proceed.
Sources
HMRC: List of Qualifying Recognised Overseas Pension Schemes (updated periodically, gov.uk)
HMRC: Overseas transfer charge guidance, PTM102200
HMRC: Pension Tax Manual, unauthorised payments
This is where many expats run into serious problems.
If you transfer your UK pension to a QROPS in Country A, and within five years of that transfer you move to Country B - and Country B is not the same country as your QROPS - HMRC can apply the Overseas Transfer Charge retrospectively. The 25% charge becomes due at the point you become resident in a country that does not match the QROPS jurisdiction.
To be clear: you transferred correctly. You met the conditions at the time. But subsequent relocation has triggered the charge anyway, because the five-year window was still open.
This catches people who:
- Transfer to a Malta QROPS while living in Malta, then move to Thailand two years later
- Transfer to a New Zealand QROPS while living in New Zealand, then retire to Southeast Asia
- Transfer to a Gibraltar QROPS while working there short-term, then relocate for work
The QROPS country list and what it means for expats in Asia
HMRC maintains and publishes the list of recognised overseas pension schemes. As of the most recent update, the jurisdictions where QROPS remain available and commonly used for British expats include Malta, Gibraltar, Guernsey, the Isle of Man, New Zealand, and a handful of others.
There is no QROPS available in Thailand, Singapore, the UAE, or most of Asia. This has a practical consequence: if you live in Asia and want to transfer to a QROPS, the scheme will typically be based in Malta or a Crown Dependency. You are therefore immediately holding a QROPS in a different country to where you live. The condition that you be resident in the same country as the QROPS is not met, and the Overseas Transfer Charge applies from day one.
The exception is if you were previously EEA-resident and used the EEA exemption - but that does not help someone who transferred while already living in Asia.
This means that for most British expats living in Southeast Asia or the Middle East, a QROPS transfer requires extremely careful analysis before proceeding. In many cases, the combination of the overseas transfer charge, the scheme charges embedded in many QROPS structures, and the loss of flexibility makes a QROPS transfer economically difficult to justify.
When a QROPS does make sense
This is not an argument against QROPS universally. There are scenarios where a transfer makes genuine sense.
If you are permanently settled in Malta or Gibraltar with no intention of moving, and you want consolidation of UK pensions with local currency exposure and simplified estate planning, a QROPS may serve you well. The transfer charge is avoided, the five-year clock is manageable if your relocation plans are settled, and the legal and tax framework in those jurisdictions is sound.
If you have a very large pension pot, strong reasons to want it outside the UK tax framework permanently, and professional advice confirming the numbers work after all charges, a QROPS is worth serious consideration.
The problem is that the expat financial services market has historically oversold QROPS to people for whom they were not appropriate - partly because transfer-based commissions made them attractive to advisers and partly because the nuance of the five-year rule and the OTC was not always explained clearly.
The honest comparison
Both a SIPP and a QROPS are legitimate pension structures. The question is which one suits your actual situation - your country of residence now, your likely country of residence in five years, your tax position, your estate planning objectives, and the total cost of the structure.
A SIPP kept in the UK remains a strong default for expats who:
- May return to the UK at some point
- Are resident in a country where no QROPS is available without triggering the OTC
- Want simplicity, regulatory familiarity, and low costs
- Have a pension below the size where more complex structuring becomes economically justified
- Are genuinely, permanently settled in a QROPS jurisdiction
- Have a large enough pension that the economics of the structure work after all charges
- Have clear estate planning or currency reasons that a SIPP cannot serve
- Can demonstrate through professional advice that the five-year rule does not create exposure
What to do next
If you have a UK pension and you are unsure which structure is right for you, the starting point is not a product comparison - it is a review of your situation. Where do you live now, where are you likely to live in five years, what are your income needs in retirement, and what does the total cost of any proposed structure look like over the long term?
These questions have answers. They just require proper analysis rather than a product recommendation.
If you would like to talk through your pension position, you can book a call below. There is no charge for an initial conversation and no obligation to proceed.
Sources
HMRC: List of Qualifying Recognised Overseas Pension Schemes (updated periodically, gov.uk)
HMRC: Overseas transfer charge guidance, PTM102200
HMRC: Pension Tax Manual, unauthorised payments
