Should I transfer my UK pension to a QROPS or a SIPP?

Working in the United Kingdom has several benefits like better work-life balance, work pay, and work opportunities. In the UK, there are different types of pension and retirement benefits that you may get. Many people work abroad, but for their retirement return to India. While the lifestyle of the UK is appealing, India is where their heart is. If you are someone who plans to move to India after retiring then, you must figure a way to bring home the pension that you are entitled to, isn’t it? Let’s find out how:  

You have two ways to transfer your UK pension account into term plans: 


  • To a QROPS (Qualifying Recognized Overseas Pension Scheme) in your new country of origin  
  • SIPP (usually used by non-UK residents and ex-pats)  

But which one is the right one and what are their benefits, it’s time to find out: 

Up until now, QROPS was seen as the better option amongst the two, but due to the recent amendments made to the UK pension law, many are confused between the two. In the amendment, 55% of the pension death tax was abolished. Because of this amendment, QROPS seems to have lost its fans. Now, QROPS has become very similar to SIPP. Yet that are key differences that make one better than the other. Let’s look at them individually to find out more:  

Let’s first understand QROPS:  

Recognized by HM Revenue and Customs (HMRC), QROPS is an overseas pension scheme that accepts transfers from other recognized and registered UK pension schemes. There are some rules that determine whether one is eligible for QROPS or not. They are as follows: 
QROPS won’t be accessible to those below 55 years of age. There is an Overseas Transfer Charge that one will have to bear if they opt for QROPS. The charge is nearly 25% of tax. However, if you are the resident of the country where QROPS is being transferred and received, then you may not have to pay the transfer fees. Even after the transfer, the QROPS will be subject to UK tax laws.  

SIPP:  

SIPP is the abbreviation of Self invested personal pension plan. It is designed for ex-pats and non-UK residents. Let’s say you are an Indian who has been working in the UK for the past several years. You are eligible for a UK pension. Then SIPP is the best alternative to QROPS. This is a simple, hassle-free alternative and keeps your money just as safe. SIPP also comes with an overseas transfer cost, however, it may be due in the country of residence. The tax is deducted after you turn 55 years of age. SIPP was introduced way before QROPS and still is one of the preferred types of pension term plans, especially for non-UK residents.  

Still confused? Speak to someone, like an expert at Exide life, who has full information and understands the nuances and the key differences between the two. Which amongst the two retirement term plans work best for you, find out now.  

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