• David Livingstone


Before we get stuck into the relative merits of QROPS vs SIPP, let’s just review what each of these two terms mean:

A Qualifying Recognised Overseas Pension Scheme (QROPS) is a HMRC approved form of international pension. Recognised as being of an equivalent standard to a UK pension, a QROPS enables transfers to made from a UK pension and provides access to a large initial lump sum payment.

A Self-Invested Personal Pension (SIPP) can be used both in and outside of the UK by individuals looking to take control of their pension investments. It is suitable for those who have the confidence, knowledge and experience to take on the responsibility and risk of managing their own investment portfolio.

But if both offer greater control and flexibility, why would you choose one over the other? Whilst very similar, there are a number of key differences to consider between the two types of pension schemes.

QROPS vs SIPP: What are the differences?

Lump Sum

Both a QROPS and a SIPP will give you access to a lump sum payment free from UK tax, but the size of the QROPS payment can be larger. With a SIPP, the sum can be up to 25% of your pension whereas a QROPS allows up to 30%. In both cases, you can withdraw the lump sum upon turning 55.

Income Tax

Neither a QROPS or a SIPP is subject to UK income tax if you no longer reside in the UK 5 years after accessing your pension. In the case of high earners, that means avoiding the top tax rate of 45%. However, your pension will still be subject to the local income tax of either your country of residence or that of the country where your pension is based. Some countries have a 0% income tax rate which nullifies this issue. If your pension isn’t based in the same country that you’re living, investigate whether any double taxation agreements are in place to stop you having to pay twice.

Death Tax

When it comes to estate planning, both QROPS and SIPPs provide a highly attractive proposition. Any funds that are held within a QROPS/SIPP are exempt from the 55% private pension tax rate upon your death, ensuring that your beneficiaries receive 100% of what have you chosen to leave to them. In addition, you are free to choose your beneficiaries.

Return To The UK

SIPPs always remain under the jurisdiction of the UK, and so nothing will change should you return. With a QROPS, we would recommend seeking financial advice before making your return to the UK, as there are a number of options available. These include the ability to transfer it to a different type of scheme. If you don’t make any changes, your QROPS will simply be treated in the same way as a SIPP.

If you are interested in learning more about QROPS vs SIPP, or are seeking independent financial advice on your investment choices, please do get in touch.

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