QROPS
One major financial decision for expatriates when planning a move or already living aboard is how to manage their pension fund. Pensions built up over the years can be incredibly important to ensuring you have the means to enjoy your overseas retirement. This makes pension planning form an essential part of your financial planning to understand your pension options.
What is a QROPS?
A QROPS is an international pension scheme designed for UK expats who want to transfer their pension out of the UK. These schemes are registered with HMRC and must comply with specific regulations. They provide potential tax advantages and greater flexibility outside the UK pension system.
Important QROPS Update For 2025
The UK’s October 2024 Budget introduced significant changes to QROPS, particularly regarding the Overseas Transfer Charge (OTC). Previously, UK pension holders transferring to a QROPS in the EEA or Gibraltar could avoid the 25% OTC if they resided anywhere within these regions. However, from 30 October 2024, this exemption has been removed.
Key Changes
To avoid the 25% OTC, your QROPS must now be based in the same country where you reside.
Transfers to Malta or Gibraltar QROPS—previously popular for EEA residents—will now incur the 25% charge unless the individual lives in the same jurisdiction.
Additional Updates:
From April 2025, QROPS in the EEA must meet the same regulations as those outside the EEA, including being established in a jurisdiction with a tax agreement with the UK.
From April 2026, UK pension scheme administrators must be UK residents.
What The Changes Mean
With these changes, International SIPPs may become a more attractive alternative to QROPS, as they are more cost-effective and avoid the OTC.