When moving overseas you have several options for managing your pension, including SIPPs and QROPS. Each has pros, cons and currency implications.
For many British retirees, the dream of a sun-drenched life in Spain or Portugal, among the vineyards of France, the cultural riches of Italy or the Mediterranean pleasures of Cyprus or Greece is increasingly attainable.
But turning that dream into a sustainable reality requires more than choosing the right location. It calls for smart financial planning, particularly when it comes to managing your pension. Two options are SIPPs (Self-Invested Personal Pensions) and QROPS (Qualifying Recognised Overseas Pension Schemes).
Understanding what each of these options entails, and the advantages and pitfalls they offer, is essential before making any long-term decisions about your retirement finances abroad.
What is a SIPP?
A SIPP is a UK-based personal pension scheme that gives you direct control over your investments. While traditional pensions might limit you to a narrow range of funds, a SIPP allows for a broader scope, such as individual shares, investment trusts and commercial property, making it an attractive option for those who want more say in how their pension pot is managed.
If you retire to France, Spain, Italy or elsewhere in Europe, you can still keep your SIPP in the UK. It remains subject to UK rules and regulations, is generally denominated in sterling, and benefits from oversight by the Financial Conduct Authority (FCA).
You can start a SIPP from age 18 but you normally cannot start and pay into a SIPP after you reach age 75, unless you’re transferring across an existing pension.
Drawing down your pension can start from age 55 (rising to 57 in 2028), and the funds remain protected under the UK’s pension framework. For many, the reassurance of a familiar, well-regulated system is a key reason to keep their pension within the UK, even when living abroad.
What is a QROPS?
QROPS are overseas pension schemes that meet HMRC’s approval criteria for UK pension transfers. The main appeal of QROPS lies in their ability to sit outside the UK regulatory regime while still offering a legitimate path for pension transfers. They are often established in jurisdictions such as Malta or Gibraltar, which are popular among British retirees due to their regulatory frameworks and tax treaties with EU countries.
One key advantage of a QROPS is that it can usually be held in your local currency, which would be euros in the case of most European destinations. This helps to reduce exposure to exchange rate fluctuations. In addition, QROPS may offer more flexible inheritance planning options, and after 10 years of non-UK residency, they are no longer subject to UK pension rules (MoneyHelper).
However, these advantages come with conditions. Since 2017, if your QROPS is not based in the same country where you live, a 25% overseas transfer charge may apply. For those relocating within the EU, such as to Spain, France, Portugal, Italy, Greece or Cyprus, transferring to an EU-based QROPS like those in Malta can often avoid this charge, provided you live within the European Economic Area.
Comparing the two: key considerations
One of the biggest practical distinctions between SIPPs and QROPS is how they handle currency and tax exposure.
A SIPP typically pays income in sterling, which can create exchange rate risk when you’re spending euros. This risk can be managed through products on offer at Smart Currency Exchange, but it’s still a factor to plan for. QROPS can pay you in euros, which may simplify your financial life abroad and reduce volatility in your spending power.
Taxation is another critical consideration. Although you may no longer be a UK tax resident, your UK pension income, including withdrawals from a SIPP, may still be taxed depending on the double taxation treaty between the UK and your new country of residence. Countries like Spain, France and Portugal have treaties with the UK that generally avoid double taxation but may still tax foreign pension income locally (HMRC – tax treaties).
Reviewing your pension options
With QROPS, tax rules depend heavily on both the jurisdiction of the pension and your country of residence. In some cases, income may be taxed more favourably than under UK rules—but this is highly specific and can change over time, so professional advice is essential.
Who should consider a SIPP?
A SIPP may be the right choice if you:
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Want to maintain UK regulation and consumer protection
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Are happy managing your pension in sterling and handling currency exchange separately
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May return to the UK at some point
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Have a pension pot below £100,000, where the cost and complexity of QROPS may outweigh the benefits
It is a straightforward, flexible and familiar option, especially when combined with a currency partner to help manage regular transfers and conversions efficiently.
When might a QROPS be more appropriate?
A QROPS might suit you if:
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You are retiring permanently to an EU country and want your pension paid in euros
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You want to remove your pension from the UK tax and regulatory system
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Your pension is above £100,000 and you are looking for inheritance planning flexibility
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You’ve been a non-UK resident for several years and want to reduce future exposure to UK pension legislation
Still, it’s important to be aware that QROPS may come with higher costs, limited fund choices and, depending on the provider and adviser, a less clear fee structure. Always confirm that the scheme and your adviser are properly regulated.
A positive choice, but with caution
Retiring to Europe can be a deeply rewarding move, offering culture, climate and lifestyle advantages. But your pension is your primary source of income, and how you manage it matters enormously.
Whether you opt for a SIPP or a QROPS, ensure you understand how your choice affects tax, currency risk and long-term access. Currency exchange services, like those provided by Smart Currency Exchange, can help you minimise conversion costs and protect the value of your pension income. Equally, expert advice from a qualified financial adviser with experience in expat pensions is essential.
The right pension structure can help you enjoy the life you’ve worked hard for, securely, comfortably, and with fewer financial surprises along the way.
