Retiring and transferring pension abroad

15 April 2026

Smiling British couple planning finances, putting coins in a piggy bank with a globe, travel items, and calculator—symbolizing retirement and overseas pension planning.

Where to Start with Financial Planning

Understanding your current position and knowing the value of your pension plans can give expats a sense of control and clarity about their retirement options.

This might be a combination of:

State Pensions
Final Salary schemes
Personal Pensions

The next step is to understand how much of that income is guaranteed and how much is dependent on market forces.

Pensions

Final Salary schemes usually pay a guaranteed income that is indexed according to a factor set out in the scheme rules.

This could be:

A minimum percentage per annum
Consumer Prices Index (CPI)
Retail Prices Index (RPI)

It’s also important at this stage to check the payment and increase record of your pension plan. Have there been any significant alterations to benefit levels?

Most Final Salary schemes also offer a tax free lump sum and reduced pension option. This may seem attractive if you have sufficient other income, but be aware that it may be taxable in your country of residence.

Pension Commencement Lump Sum payments from UK Personal Pensions are paid tax-free to UK residents.

However, the tax treatment in your country of residence depends on your tax residency status. Clarifying this helps professionals advise clients on optimal timing and tax planning strategies.

Transferring UK Pensions

We are often asked whether it’s best to transfer a UK pension to a QROPS or iSIPPs, and what the tax implications are in both the UK and your country of residence. Providing clear guidance on these options helps expats understand the potential costs, benefits, and tax consequences of each choice.

Update 2024 November Budget

Business professional using a smartphone over financial reports with a digital budget interface

QROPS transfers are no longer free of the Overseas Transfer Charge (OTC). Before the 2024 budget, transfers to those living in an EU or EEA country were exempt from the 25%.

For this reason, QROPS transfers are unlikely to be a good idea, although there are specific circumstances where paying the tax may be fiscally prudent in the long term.

Related Article: QROPS Pension Transfers

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UK SIPPs are assets based in the UK, so can be considered as part of a person’s estate for Inheritance Tax purposes. If the whole of a SIPP could be considered for IHT, a 40% tax charge could be incurred.

As QROPS are non-UK situs assets, the fund could be exempt from UK IHT, provided the owner qualifies as a Long-Term Non-UK Resident.

Although transferring an existing SIPP to a QROPS is unlikely to be beneficial, QROPS-to-QROPS transfers don’t incur tax in the UK.

For existing QROPS holders, it’s worth checking:

The effectiveness of your provider
Adviser performance
Cost structure

You may well be able to reduce costs and improve investment performance.

This means transfer options are more limited; however, non-resident SIPPs are an effective way to maximise benefits and retain full service from product providers and advisory firms.

It’s still worth looking at the similarities and differences between QROPS and non-resident SIPPs, as many people hold both types of plan.

QROPS vs SIPP: Key Considerations

Flexible Access Drawdown (FAD)

Essentially, this means the policyholder can access their money in the way that best suits their financial situation.

Theoretically, the whole fund can be taken in one go, but this is rarely a good option as the tax implications would be prohibitive. It’s usually better to draw down as much additional income as is required year by year.

Tax Treatment Differences

One of the differences between QROPS and SIPP plans is:

QROPS providers will pay gross of Malta tax in most circumstances
Non-resident SIPPs pay net of any potential UK tax

This isn’t necessarily an issue, as:

Up to 25% can be taken free of UK tax
Annual allowance withdrawals can be tax-efficient
An NT Code from HMRC can allow gross payments

Any overpayment can also be reclaimed from HMRC if an NT Code isn’t in place.

It should be noted that the tax-free element of a UK pension is only free from UK tax. It doesn’t mean it’s tax-free in the country where the individual is tax resident.

Related Article: QROPS or SIPP?

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Investment Platforms

QROPS or SIPP plans can hold various investment platforms and structures.

Most providers have strict investment guidelines that should protect investors from:

Overly costly funds
Unregulated funds
Scams

Fees and Charges

When dealing with an adviser, it’s essential to be clear about the fee structure before starting the transfer process.

The adviser should fully disclose all costs and fees, and both parties should sign the Terms of Business.

Typical Fee Categories

QROPS or SIPP annual fees
QROPS tend to be more expensive than non-resident SIPP plans
Investment platform fee
Usually clearly shown in official illustrations
Adviser fees
May be percentage-based or fixed
Often hidden in complex structures
Annual adviser fees
Covers ongoing service and administration
Fund fees
The only meaningful metric is the OCF (Overall Charges Figure)

Avoid relying solely on AMC figures, as these often understate the true cost.

Pension Transfer Regulations (Flag System)

The Pensions Regulator introduced a flag system for transfers in 2021 to prevent fraudulent transfers.

Whilst beneficial, it has created additional complexity:

Providers may impose extra requirements
QROPS transfers are sometimes delayed
Communication gaps exist between UK and Malta regulators

Many transfers now require a Money Helper appointment, adding time to the process.

The system is evolving, but improvements are still needed.

Personal Pensions and Annuities

Some UK Personal Pension plans are only available as annuities.

Post-Brexit:

UK providers cannot pay annuities to non-UK residents
Funds may become inaccessible unless transferred

There are specialist providers for non-UK residents, but eligibility must be checked carefully.

The Importance of Tax Advice

Already, we can see that it’s vital to use the services of a Tax Adviser in the country we will become or are already tax resident.

Using the services of a qualified tax Adviser can provide expats with reassurance and confidence, ensuring they receive trustworthy guidance tailored to their residency situation.