Thinking about transferring your UK pension to a Qualifying Recognised Overseas Pension Scheme (QROPS)? Recent 2025 rule updates mean this familiar route now comes with more constraints and charges. For UK expats, understanding the latest tax changes, eligibility criteria, and potential alternatives can help you make the right decision for your retirement.

What Has Changed and Why It Matters

Recent policy updates impact all British expatriates considering a QROPS transfer:

• Express removal of automatic exemptions for residents within EEA from the 25% Overseas Transfer Charge (OTC). Now, you must reside in the same jurisdiction as the pension scheme to avoid that charge.  
• HMRC now focuses more on residency alignment. If the pension holder and scheme are based in the same country and you have been resident there before transfer, the OTC may not apply. Otherwise, it likely will.  

These changes narrow the viable QROPS options for many expats, especially those living abroad in countries without locally approved schemes. 

Pros and Cons of QROPS in Today’s Landscape

Benefits

• May offer favourable tax treatment and investment flexibility in the same jurisdiction as the scheme.
• Provides access to local currency income and estate planning flexibility depending on scheme rules.  

Drawbacks 

• Most transfers will now trigger the 25% OTC unless you and the QROPS are in the same country.
• UK tax might still apply if you return within certain time frames—such as the five‑year or ten‑year residency rules.
• Regulatory protection varies depending on the overseas jurisdiction.  

Suitability of QROPS: Who It Might Work For and Who Should Avoid It

QROPS can still make sense for those who:

• Plan to retire permanently in the jurisdiction where the scheme is established
• Want the flexibility to withdraw in local currency
• Are comfortable with the rules and protections in that country

 In contrast, QROPS may not be appropriate for expats who:

• Will remain in different countries from where the scheme is based
• Face high transfer taxes due to rule changes
• Prefer regulated UK-based pension alternatives, such as an international SIPP

Practical Steps Before Considering Any Pension Transfer

1. Confirm current residency status and check if it matches the scheme jurisdiction to avoid tax penalties.
2. Compare costs carefully—evaluate transfer fees, ongoing charges, tax implications, and long‑term value.
3. Review your existing pension: an international SIPP may offer better flexibility and fewer risks.
4. Find qualified advice with advisers who are regulated both in your country of residence and the UK. Avoid advice structures based purely on commission models.  

Alternatives Worth Considering

International SIPPs remain a popular alternative for many expats. They offer investment flexibility, regulatory oversight and typically lower costs than QROPS. In some cases, you can also benefit from more transparent fee structures and fewer tax traps.  

Conclusion

The rules governing QROPS have undergone significant changes in 2025, reducing their attractiveness for many UK expats. The requirement to share jurisdiction with the scheme, coupled with the Overseas Transfer Charge, makes them far less flexible than they once were. Before transferring, review your circumstances, weigh alternatives like international SIPPs, and seek reliable cross‑border financial advice. This helps your pension strategy remain smart, compliant and aligned with your long‑term goals. 

Need help assessing your situation or comparing transfer options? I can assist with personalised guidance to secure your expatriate retirement.