Pension Planning for Internationally Mobile Individuals: QROPS, SIPPs, and Cross-Border Strategies

The Post-Lifetime Allowance Landscape

The UK lifetime allowance (LTA) — the maximum amount of pension savings an individual could accumulate without triggering a penal tax charge — was abolished from 6 April 2024 by the Finance (No.2) Act 2023. The LTA had been set at £1,073,100 at the time of abolition.

In its place, a new Lump Sum and Death Benefits Allowance of £1,073,100 applies to the maximum tax-free lump sum that can be paid from a pension on benefits crystallisation. The annual allowance — the maximum amount that can be contributed to a pension in any tax year with UK tax relief — was increased from £40,000 to £60,000 from 6 April 2023.

For internationally mobile individuals, the most significant planning question is not the annual allowance but the treatment of UK pension savings on departure from the UK — specifically, the rules governing Qualifying Recognised Overseas Pension Schemes (QROPS).

Annual Allowance and Carry Forward

The annual allowance of £60,000 can be supplemented by carry forward of unused annual allowance from the three preceding tax years, provided the individual was a member of a registered UK pension scheme in those years.

For high earners, the tapered annual allowance applies: for individuals with threshold income above £200,000 and adjusted income above £260,000, the £60,000 allowance is reduced by £1 for every £2 of adjusted income above £260,000, down to a minimum allowance of £10,000.

Adjusted Income	Annual Allowance
Up to £260,000	£60,000 (full)
£260,001–£360,000	£60,000 reduced by £1 per £2 above £260k
Above £360,000	£10,000 (minimum)

The carry forward rules allow an individual to contribute up to £60,000 plus the unused allowance from the three prior years — potentially up to £240,000 in a single year if no pension contributions were made in the previous three years.

QROPS: Qualifying Recognised Overseas Pension Schemes

A QROPS is an overseas pension scheme that meets HMRC's qualifying conditions. Transferring UK pension savings to a QROPS allows an individual to consolidate their pension into their country of residence's pension system — potentially accessing different investment options, currency alignment, and estate planning benefits.

The main QROPS jurisdictions as of early 2026:

Malta: The most popular QROPS destination for European residents. Malta QROPS are EU-recognised, can hold a wide range of assets, and benefit from Malta's relatively low drawdown taxation (15% on pension income at source, with a minimum annual drawdown of 50% of the scheme income). Malta QROPS are subject to Maltese pension regulation.

Gibraltar: A smaller QROPS market but established. Gibraltar schemes offer flexibility for UK expatriates and are HMRC-registered.

New Zealand: Available only for New Zealand residents or citizens. Not relevant for most European clients.

The Overseas Transfer Charge

The overseas transfer charge (OTC) was introduced by Finance Act 2017 and reformed in 2023. It applies at 25% of the transferred value where:

• The individual is not resident in the same country as the QROPS, or
• The QROPS is not in an EEA country and the individual is not EEA resident

Exemptions from the OTC (post-2023 reform):

1. Transfer to a QROPS in the same country as the individual's current residence
2. Transfer to an employer-arranged QROPS by an employee of that employer
3. Transfer to an "International SIPP" or equivalent UK-registered scheme (not a QROPS transfer)

The practical impact: a UK citizen who moves to the UAE and wants to transfer their UK pension to a UAE QROPS (if such a scheme exists) would pay 25% OTC unless the scheme is specifically structured to qualify for an exemption. Given that UAE is not EEA and few UAE schemes qualify as QROPS, the OTC makes direct UAE transfers expensive.

A UK citizen moving to Malta and transferring to a Maltese QROPS is exempt from the OTC (same-country exemption), provided they are Malta-resident at the time of transfer.

SIPP Offshore Investment Options

For individuals who remain UK tax resident, a Self-Invested Personal Pension (SIPP) can hold a wider range of investments than a standard stakeholder pension:

• UK and overseas listed equities
• UK commercial property (directly held, subject to no personal use rules)
• Unlisted shares (subject to restrictions)
• Alternative assets through certain custodians

SIPPs cannot hold residential property, tangible personal property, or employer-related assets. The restrictions are set out in the Registered Pension Schemes (Prescribed Requirements) Regulations 2006.

For internationally mobile individuals who retain UK pension savings, a SIPP with broad investment options can hold an international portfolio while maintaining the UK pension tax wrapper. Investment income and gains within the SIPP are free of UK income tax and CGT while accumulating.

Pension vs Offshore Trust: A Comparison

For an internationally mobile HNWI considering where to hold wealth for the medium and long term, the pension vs offshore trust comparison is relevant:

Feature	UK Pension (SIPP)	Offshore Trust
Annual contribution limit	£60,000 + carry forward	No limit
Income tax relief on contributions	Yes (up to annual allowance)	No
Investment growth	Tax-free within pension	Depends on trust type and settlor residency
Death benefits	Generally IHT-free (pension funds excluded from estate)	Subject to IHT if UK-connected
Access before 55/57	No (normal minimum pension age rising to 57 from 2028)	Yes
Asset flexibility	Medium (commercial property, listed stocks)	High (real estate, private equity, crypto)
Creditor protection	Strong (pension assets protected in bankruptcy)	Strong (if properly structured)

The pension's IHT advantage is significant: pension funds are generally outside the UK estate for IHT purposes (as they pass via a nomination rather than as part of the estate). From April 2027, the government has proposed to bring inherited pension pots back within IHT — a change that, if enacted, would substantially reduce the pension's IHT advantage.

Interaction with the Annual Allowance on Return to UK

Individuals who were non-UK resident for a period and then return to the UK can face complications with their pension position:

• A non-UK resident individual who continues to contribute to a UK pension may face reduced annual allowances if their relevant UK earnings (employment income from UK duties) are below the contribution amount
• Pension savings accumulated in a foreign pension while non-resident cannot be transferred back to a UK registered scheme without tax consequences
• QROPS transfers out during a period of overseas residence that then triggers an OTC charge if the individual returns to the UK within 5 years of the transfer (the "5-year rule" — a recognised overseas pension scheme transfer is subject to retrospective OTC if the individual becomes UK-resident within 5 years)

HPT Group advises internationally mobile individuals on pre-departure pension strategy, QROPS transfer analysis, SIPP investment structuring, and the interaction of UK pension rules with the tax requirements of the destination country. Pension planning for leavers involves a chain of UK-side and destination-side considerations that must be addressed together — not in isolation. For a pension planning review ahead of departure or return, contact our private wealth team or apply for a consultation.