UK pensions when you live abroad
Moving overseas does not mean abandoning your UK pension, but it does change what you can do with it. The two big questions are whether you can keep contributing, and whether to leave the pension in the UK or transfer it abroad. The answers depend on your tax residence, where you now live, and your provider's rules. Getting it wrong can trigger large tax charges, so this is an area where advice is especially valuable.
Key options for expats in 2026
| Option | How it works | Main consideration |
|---|---|---|
| Keep a UK SIPP | Leave it invested, draw later | Few providers accept non-resident clients |
| QROPS transfer | Move to a qualifying overseas scheme | Possible 25% overseas transfer charge |
| SIPP for expats | Specialist non-resident SIPP | Higher fees, but accepts overseas address |
| Continue contributing | Up to £3,600/yr for up to 5 years after leaving | Relief limited once non-resident |
For most expats, the simplest and cheapest route is to leave an existing UK SIPP invested and draw from it later. QROPS (Qualifying Recognised Overseas Pension Schemes) can suit those permanently settled abroad, but they carry set-up costs and a potential 25% overseas transfer charge unless you live in the same country as the QROPS or within the EEA under certain conditions.
Tax relief and contributions abroad
- Limited relief once non-resident - you can usually still contribute up to £3,600 gross a year and get relief for up to five tax years after leaving the UK, even with no UK earnings.
- Provider restrictions - many mainstream SIPPs (and some platforms) will not open or maintain accounts for non-residents; specialist expat SIPP providers fill this gap, typically at higher cost.
- Double-tax treaties - how your pension income is taxed depends on the treaty between the UK and your country of residence. Some allow income to be paid gross and taxed locally.
- Currency - drawing a sterling pension while spending in another currency adds exchange-rate risk worth planning for.
Where you retire shapes everything
Your destination country changes the picture more than any product choice. Some countries tax UK pension income lightly or offer favourable regimes for new residents; others tax it heavily, and a few treat the 25% UK tax-free lump sum as fully taxable locally, wiping out a key benefit. Reporting obligations differ too - the US, for example, has complex rules that make holding certain UK funds problematic for residents there. Before assuming your UK pension travels well, check both the double-tax treaty and how your specific country treats pension income, lump sums and the underlying funds. The same pension can be excellent in one jurisdiction and awkward in another.
Practical pitfalls for expats
Several everyday issues trip up expats. Many UK platforms now refuse to keep accounts for clients without a UK address, so you may receive a closure notice and need a specialist expat SIPP. Drawing a sterling income while spending euros, dollars or dirhams exposes you to currency swings that can vary your real income by 10% or more year to year. And keeping a UK bank account open is often essential, as some providers will only pay into one. None of these is insurmountable, but they reward planning before you move rather than scrambling afterwards, and they are a strong argument for taking cross-border financial advice early.
Verdict
For most overseas residents, the best approach is to keep a low-cost UK SIPP invested rather than transfer abroad, unless a QROPS clearly fits a permanent move and the numbers stack up after the transfer charge. Always check the relevant double-tax treaty and take cross-border advice. Compare flexible UK wrappers in best flexible pension, understand drawing options in best income drawdown provider, and estimate your income with our pension calculator.