QROPS Factsheet


QROPS stands for Qualifying Recognised Overseas Pension Scheme. These are non-UK schemes that have been declared to HMRC which then fit the QROPS criteria and should be recognised as such.

Living offshore and transferring a UK pension offshore can possibly help an individual to avoid paying higher tax rates than if they stayed or kept their pension in the UK.

On the 6th April 2006 also known as A-Day, the British government bought in sweeping changes to the pension system affecting anyone with a UK Personal or Corporate Pension.

The idea was to simplify the hugely complex system for UK personal and corporate pensions and to relax the rules governing how much and how we pay money into pensions schemes. The new rules apply to all personal and employer paid pensions, bringing them all into line for the first time.

Pension A-Day changed the way that you can draw your pension and the date at which you can receive the benefits forever, below you will see the fundamental differences between UK resident pensions and a QROPS.

UK Resident Pension

  • You are now able to draw part of your pension from a company scheme when you are still working full or part time for the same employer.
  • UK Residents – Many pension schemes now offer pension commencement lump sum, meaning you can take up to a quarter of your pension as long as it is less than 25% of your lifetime allowance. This was originally £1.8 million up until 2012, lowered to £1 million on 6 April in 2016.
  • From 2010 the minimum age for receiving your pension increased from 50 to 55.

In a case when a non-UK resident has a UK source of income or receives payment from a UK Registered Pension this person is obliged to pay UK tax at marginal rate, unless there is a Double Tax Agreement with their country of tax residence and the UK offers exemption from UK tax on such income.


As mentioned earlier QROPS offers an opportunity to improve an individual’s tax position on their pension. I would like to now share with you who is eligible to apply for QROPS and what kind of benefits you may gain.

  1. Any person who is planning or already retiring overseas and becoming resident in a foreign jurisdiction or country for five years or more.
  2. Furthermore, in order to get benefits from QROPS, an individual does not have to leave the UK forever. An individual can continue his/her visits to UK, but must stay as a non-tax UK resident.

Below are the main fundamental points about QROPS:

  • You can consolidate all of your pensions into the same account and reduce your fees
  • Currently you are able to take up to 30% commencement lump sum in Gibraltar & Isle of Man at aged 55 and currently 25% in Malta.

However, if the QROPS contains UK tax relieved pensions funds and the member is UK tax resident, or has been UK tax resident at any time inside the previous five full complete and consecutive UK tax years, the maximum lump sum is limited to 25%

  • You can potentially draw down up to 150% of GAD each year, depending on your jurisdiction – Or flexible drawdown in Malta
  • A QROPS member is not subject to death tax if he dies after the age of 75 and has lived out of the UK for 5 full tax years, while UK resident is liable to a flat rate tax charge of 45%.
  • You can possibly withdraw monies tax free from a QROPS depending on jurisdiction or at a lower tax rate.
  • You have access to thousands of investments, as opposed to a limited number at present
  • You have complete control with regards to currency

There are various QROPS jurisdictions for investors and the best location for transfers depends on the result each individual is looking for. Most common jurisdictions for QROPS are Malta, Gibraltar and Isle of Man.

The fiscal laws vary from one jurisdiction to another, therefore the key point in choosing jurisdiction is the future location for retirement.

I would like now to compare the key features of these jurisdictions.

  Gibraltar Malta Isle of Man
Investments Flexible Flexible Flexible
Retirement Age 55-75 55-75 55-75
Pension Commencement Lump Sum 30% 25% 30%
Income Basis 150% of UK GAD Rates Flexi-Access Drawdown 150% of UK GAD Rates
Income Tax 2.5% Up to 35% 20%
Full Double Taxation Agreements 0 60+ 9 in force
Death Benefits Pre- age 75 100% lump sum or dependent’s pension 100% lump sum or dependent’s pension 100% lump sum or dependent’s pension
Death Benefits Postage 75 100% lump sum or dependent’s pension 100% lump sum or dependent’s pension 100% lump sum or dependent’s pension

As you can see, Malta relies heavily on its extensive range of Double Tax Agreements (a full list can be obtained from the Maltese Financial Services Authorities. http://www.mfsa.com.mt/pages/viewcontent.aspx?id=196.

Unlike Malta, Gibraltar does not have an extensive range of Double Taxation Agreement and instead applies a flat income tax of 2.5% on income payments from a QROPS. The Isle of Man is similar to Malta as the income tax rate is dependent on whether there is a DTA in place with the country the individual is tax resident in when he draws an income.

As it can be observed QROPS is a complex system where regulations vary based on the jurisdictions, however circumstances change and you are able to switch to a more suitable jurisdiction if required. Furthermore, not everyone will take advantage from transferring their pension funds overseas.

Farringdon Group and their team of expert advisors can assist in pension valuations and whether it is beneficial for you to move a pension offshore and we are always happy to discuss this with you further.

 If you need any assistance please contact us at syeomans@farringdongroup.com

I hope that you have enjoyed reading this post.

Stuart Yeomans 


Farringdon Group

Kuala Lumpur : Malaysia


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