Why pensions are more complex for expats
For many expatriates, pensions are one of the most valuable assets they will ever own. Yet living abroad introduces layers of complexity that can make retirement planning far from straightforward.
Questions about where your pension is held, how it will be taxed, and whether it should be transferred into a new structure all require careful consideration. Exchange rates, differing tax regimes, and cross-border rules add further challenges.
At Hoxton Wealth, we specialise in expat pension advice—helping internationally mobile individuals make informed decisions that protect and grow their retirement savings.
This article provides general information only and should not be regarded as personal financial advice. Always seek regulated advice tailored to your specific circumstances before taking any action.
Why expats need specialist pension advice
Unlike residents who remain in one country, expats face additional pension considerations:
- Currency exposure – fluctuations can erode the value of benefits.
- Jurisdictional differences – rules vary depending on where your pension is located and where you live.
- Cross-border taxation – double taxation treaties and local tax laws can impact withdrawals.
- Transfer options – expats often have access to structures such as QROPS, which may be beneficial in limited circumstances.
- Regulatory oversight – advice must consider both UK regulations and local requirements where you reside.
Specialist regulated advice helps avoid costly mistakes such as unsuitable transfers, unnecessary taxation, or the loss of valuable benefits.
SIPP vs QROPS explained
For British expatriates, the two most common pension transfer options are Self-Invested Personal Pensions (SIPPs) and Qualifying Recognised Overseas Pension Schemes (QROPS).
Feature | SIPP (UK-based) | QROPS (Overseas-based) |
Location | UK | Overseas (must be HMRC-recognised) |
Regulation | FCA regulated | Local regulator (HMRC recognition only) |
Currency | Typically GBP | Can be held in other currencies |
Investment Flexibility | Broad | Broad, but jurisdiction dependent |
Tax Treatment | UK rules apply | Local rules, plus HMRC reporting requirements |
Suitability | Many expats, especially with UK links | Long-term expats abroad, higher-value pensions (subject to Overseas Transfer Charge rules) |
Self-Invested Personal Pension (SIPP)
A SIPP is a UK pension that gives you greater control over investment choices. It remains under the UK regulatory framework and can be appropriate for expats who:
- Want continued UK oversight and protection.
- Retain UK ties, such as property or family.
- Are not permanently abroad.
Qualifying Recognised Overseas Pension Scheme (QROPS)
A QROPS is a foreign pension scheme recognised by HMRC. It can be beneficial for expats who:
- Plan to remain abroad long-term.
- Want pensions held in a stable local currency.
- Live in jurisdictions where local tax treatment of pensions is more favourable than the UK.
Important update on QROPS and the Overseas Transfer Charge (OTC)
Since 30 October 2024, the rules for the OTC have changed significantly:
- Transfers to QROPS located in the EEA or Gibraltar, even if the member is resident in the UK or an EEA state, no longer benefit from the exemption that used to apply. These transfers are now subject to the 25% OTC unless the member is resident in the same country as the QROPS, or another exclusion condition is met.
- There is a transitional rule: for transfer requests made before 30 October 2024, the old exclusion may still apply if the transfer is completed by 30 April 2025.
- The Overseas Transfer Allowance (OTA) now plays a key role: transfers that exceed the individual’s remaining OTA may incur the 25% OTC on the excess.
Exemptions to the OTC still include (but are not limited to):
- The member is resident in the same country as the QROPS receiving the pension transfer.
- The QROPS is an occupational pension scheme, and the member is an employee of the sponsoring employer under that scheme.
- The QROPS is an overseas public service scheme, and the member is employed by an employer participating in it.
- The QROPS is established by an international organisation for employees of that organisation.
Because these changes affect the ability to avoid a 25% transfer charge, obtaining professional advice is essential before making any transfer, especially if considering a QROPS in the EEA or Gibraltar.
Key risks to watch out for
While SIPPs and QROPS can offer benefits, transfers come with risks that must be carefully weighed:
- High charges – Some QROPS schemes have significant setup and ongoing fees.
- Investment risk – Greater control brings more responsibility. Unsuitable investments can erode pension value.
- Tax traps – Poorly structured transfers may create unexpected tax liabilities in your country of residence.
- Regulatory risk – Not all jurisdictions offer the same investor protections as the UK.
- Irreversible decisions – Once transferred, moving back can be costly or impossible.
Engaging with a licensed adviser reduces the risk of unsuitable products, hidden charges, or exposure to unregulated schemes.
Who is suitable for pension transfers?
Not every expat should transfer their pension. Suitability depends on individual circumstances, including:
- Residency - Are you abroad temporarily or permanently?
- Pension size - Higher-value pensions may benefit from QROPS; smaller ones may not.
- Currency needs - Will you retire in GBP or another currency?
- Tax position - Consider both current and future jurisdictions, plus double taxation treaties.
- Investment objectives - Your attitude to risk and retirement income goals.
Indicators a transfer may be appropriate:
- You hold multiple UK pensions and want to consolidate.
- You intend to retire outside the UK permanently.
- You seek currency flexibility.
- You want broader investment choice.
Indicators a transfer may not be appropriate:
- You plan to return to the UK soon.
- Your pension value is modest.
- You would lose valuable guarantees (e.g., defined benefit scheme benefits).
Defined Benefit (DB) schemes: If you are considering transferring a DB pension with safeguarded benefits valued at over £30,000, UK law requires advice from an FCA-authorised Pension Transfer Specialist.
FCA Warning: Transferring out of a Defined Benefit pension scheme is unlikely to be in the best interests of most people.
Why choose Hoxton Wealth?
At Hoxton Wealth, our global team supports thousands of internationally mobile clients each year.
With regulated entities in the UK, EU, UAE, Australia, Asia, and the US, we combine technical expertise with a deep understanding of cross-border challenges.
Our advisers ensure you receive guidance through the appropriately licensed Hoxton entity wherever you are based.
Take the Next Step
Making pension decisions without advice can be costly. Book a complimentary consultation with Hoxton Wealth to discuss your situation with a specialist.
By booking a consultation, you will be referred to the relevant regulated Hoxton entity based on your country of residence. A consultation does not constitute a recommendation or an offer to transfer your pension.
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FAQs: Expat Pension Advice
Yes, but it depends on your residency, pension type, and the receiving scheme. Professional advice is essential.
A SIPP is a UK-based personal pension with broad investment options. A QROPS is an overseas scheme recognised by HMRC, often used for long-term expats.
Yes, in certain cases. While the UK Lifetime Allowance was abolished in 2024, new allowances apply: the Lump Sum Allowance (LSA) and Lump Sum & Death Benefit Allowance (LSDBA). QROPS may still offer currency and tax advantages depending on your residency.
Yes. Transfers involve risks such as charges, unsuitable investments, or tax consequences. Advice is vital to avoid pitfalls.
No. Many expats retain their pensions in the UK, often through a SIPP. Suitability depends on personal circumstances.
Global Risk Warning
Transferring or restructuring pensions is complex and may not be suitable for everyone. The value of investments and income from them can fall as well as rise, and you may get back less than you invest. Tax treatment depends on your individual circumstances and may change in the future.
Hoxton Wealth and its affiliated entities operate under separate regulatory licences across the UK, EU, UAE, Australia, Malaysia, Hong Kong, and the United States. Financial advice is provided only by the appropriately authorised Hoxton entity in each jurisdiction.
