What you should consider before choosing a QROP or a SIPP?

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What you should consider before choosing a QROP or a SIPP?

Residency considerations: Do you expect to return to the UK to retire or for long periods of time in the future?

Consider a SIPP if: Consider a QROP if:
You expect to return to the UK for long periods, or permanently, in the future You’re no longer resident in the UK, but have an existing UK pension
Or you plan to stay in UK And you are certain you will continue to live outside the UK for at least five tax years
And you have no plans to return, except for short visits
A QROPS may also be suitable if you’re still living in the UK, but plan to retire permanently abroad and are sure that you will then be able to meet the requirements shown above

Your Existing Pension Arrangements

Before transferring to a QROPS, make sure you’re aware of all the benefits offered by your current arrangements.

It could be better to your existing UK plan(s) if:

  • Your pension plan is worth less than £100,000.
  • Or your pension is in a valuable ‘final salary’ or ‘defined benefit’ scheme with protection from the Pension Protection Fund (PPF).
  • Or it includes benefits such as a guarantee, spouse’s pension, life cover, higher tax-free lump sums or competitive charges which would all be given up on transfer.
  • Or your employer bears the costs of the scheme.
  • Any of your benefits are subject to a UK pension sharing order as a result of a divorce settlement (some QROPS providers may be able to accommodate this).

Consider a QROPS if:

  • You have a personal and/or occupational pension plan with a total value of at least £100,000.
  • Your funds do not exceed the current Lifetime Allowance, or you have opted for Transitional Protection (Enhanced, Primary or Fixed):
    • you’re in a ‘final salary’ scheme, but mergers, acquisitions or poor investment returns mean there may not be enough funds to meet all the liabilities (including your pension) and you are not entitled to compensation from the UK Pension protection fund (if you are entitled to compensation, moving to a QROPS would deprive you of that right).
    • you have a ‘defined contribution’ or ‘money purchase’ scheme with no guarantee, tax-free lump entitlement capped at 25% of the fund value.