Qualifying Recognised Overseas Pension Scheme (QROPS) Explained

Quick Facts About QROPS

What is QROPS?

The QROPS full form is Qualifying Recognised Overseas Pension Scheme. The QROPS meaning in practice is a pension scheme outside the UK that meets HMRC conditions to receive UK tax relieved pension savings. The QROPS definition in HMRC guidance (www.gov.uk/guidance/overseas-pensions-tell-hmrc-youre-a-qrops) requires the scheme to be a recognised overseas pension scheme (ROPS) whose manager also agrees to report information to HMRC and pay any tax due.

A transfer from a registered pension scheme to a QROPS is not an unauthorised payment, provided the receiving scheme keeps meeting the rules. HMRC does not approve schemes individually. It publishes a notification list (www.gov.uk/guidance/check-the-recognised-overseas-pension-schemes-notification-list) of schemes that declared they meet the ROPS conditions, and it states that a listing does not guarantee QROPS status or a tax free transfer.

The scheme manager must notify HMRC again every five years to keep the status. Verification therefore needs the notification list, the scheme's QROPS reference number and written confirmation of status from the receiving scheme.

Why Do Individuals Choose QROPS?

Many expatriates return to their home country after completing their employment in the United Kingdom. They may wish to move their retirement resources offshore into an overseas pension plan rather than leave them in the UK.

Some common reasons include:

• Managing retirement savings in the country where they intend to live permanently.
• Receiving pension income in the local currency.
• Accessing investment options that better match their retirement goals.
• Reducing the impact of exchange rate fluctuations.
• Simplifying retirement planning by consolidating pension funds.

Whether a transfer is appropriate depends on your own financial situation, residency status and applicable tax restrictions. Transfers to QROPS may be subject to the UK overseas transfer charge unless an exemption applies under HMRC rules.

Benefits of QROPS

A QROPS (Qualifying Recognised Overseas Pension Scheme) allows individuals who no longer live in the UK to transfer their pension savings abroad. The core advantages for returning Non-Resident Indians (NRIs) are

1. Consolidation of UK pensions

   Several UK pensions built with different employers can be moved into one QROPS, subject to the receiving scheme's terms. This gives the member a single scheme, a single statement and a single point of contact in India.

2. Income in rupees

   A UK pension left in place is usually paid in pounds. The exchange fees and daily rate changes then affect the income received. A QROPS in India pays in rupees, which removes that exposure.

3. Choice between guaranteed income and market linked plans

   Annuity plans pay a guaranteed income for life. Unit linked pension plans invest in funds, and the investment risk is borne by the policyholder. Indian insurers offer both types as QROPS registered plans. For NRIs looking at a regular income stream, annuity plans for NRIs can be especially relevant.

4. Estate planning

   India does not levy an inheritance tax. The nominee named under the Indian plan receives the benefits according to the plan's terms.

   A transfer is difficult to reverse. So compare the new scheme with the existing pension, because features such as guaranteed annuity rates are lost when the pension moves.

Who Is Eligible to Transfer a UK Pension to a QROPS?

Eligibility depends on three things: the type of UK pension, the conditions met by the receiving scheme and the terms of the receiving insurer.

1. UK pensions that can be transferred

   Savings held in a UK registered pension scheme can be transferred to a QROPS. This includes workplace defined contribution schemes, personal pensions and SIPPs. Defined benefit pensions can also be transferred, but regulated advice is usually a requirement where a pension guarantees a retirement income.

2. UK pensions that cannot be transferred

   The UK State Pension cannot be transferred. An annuity already in payment cannot be moved to a QROPS, according to Indian insurers that offer QROPS plans. Members of unfunded public service schemes, such as the NHS and Teachers' schemes, are generally barred from transferring to a scheme that provides flexible benefits. The NHS Business Services Authority confirms this restriction, so each scheme's own transfer out rules should be checked.

3. Conditions the receiving scheme must meet

   To be a recognised overseas pension scheme, the receiving scheme must pass HMRC's tests, described in the Pensions Tax Manual(www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm112300). The main conditions are:

   • The scheme is based outside the UK and is not a UK registered pension scheme
   • It is open to residents of its own country and is registered with that country's tax authority as a pension scheme
   • It is regulated by a pension regulator in the country where it is run, or by a provider regulator where no pension regulator exists
   • It does not pay benefits to members under 55, rising to 57 from 6 April 2028, except on retirement due to ill health and certain specified lump sums
   • It is based in a country with a double taxation agreement providing for exchange of information, or a tax information exchange agreement, with the UK

   The UK and India have a double taxation agreement, but each Indian scheme must still meet the conditions individually.

4. Conditions applied by the receiving insurer

   Indian insurers add their own conditions to the HMRC tests. These include minimum purchase amounts, age limits at purchase and documentation requirements, all of which differ between plans. Some insurers also ask for evidence of the member's residence. Each condition should be confirmed with the insurer in writing before the transfer request is made.

When the 25% Overseas Transfer Charge Applies to QROPS Transfers

The overseas transfer charge is a UK tax of 25% on the transferred value of certain transfers to a QROPS. It applies to transfer requests made on or after 9 March 2017 unless an exclusion is met. The member and the scheme administrator are jointly liable for the charge, according to the HMRC transfer guidance.

1. Exclusions from the charge

   The charge does not apply where the member has enough available overseas transfer allowance and gives information showing one of the following:

   • The member is resident in the country where the QROPS is based
   • The QROPS is an occupational pension scheme and the member is an employee of a sponsoring employer under it at the time of transfer
   • The QROPS is an overseas public service scheme and the member is employed by an employer participating in it
   • The QROPS is a scheme of an international organisation and the member is employed by that organisation

   The exclusion for members and schemes in the EEA or Gibraltar was removed from 30 October 2024. For a returning NRI, the first exclusion is the relevant one. The member must be resident in India, and the receiving scheme must be in India, at the time of transfer.

   A member who is still resident in the UK or another country at the time of transfer generally faces the full 25% charge. If the member becomes resident in India within the relevant period, a refund can be claimed from the scheme.

2. Overseas transfer allowance

   The overseas transfer allowance is £1,073,100 for most members. It is reduced by lifetime allowance used before 6 April 2024 and by earlier transfers to a QROPS. Members who applied for lifetime allowance protection before 6 April 2025 may have a higher figure. Any amount above the available allowance is charged at 25%, even where an exclusion applies.

3. Change of circumstances within five years

   An exclusion is not permanent. The charge can arise later if the member's circumstances change within the relevant period, which runs to the end of the fifth full tax year after the tax year of transfer, as shown in HMRC's manual(www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm102400). Examples are moving to a country other than the one where the QROPS is based, or transferring on to another QROPS outside the country of residence. The overseas scheme must tell HMRC within 90 days when a charge becomes payable.

   Worked examples

   Example 1. A member resident in the UK transfers £400,000 to a QROPS in India, and no exclusion applies. The charge is 25% of £400,000, which is £100,000. The QROPS receives £300,000. A refund can be claimed if the member becomes resident in India within the relevant period.

   Example 2. A member resident in India transfers £1,300,000 to a QROPS in India and has the full allowance of £1,073,100 available. The same country exclusion covers the part within the allowance. The excess is £226,900, and the charge is 25% of that excess, which is £56,725. The QROPS receives £1,243,275.

4. Transfers to a scheme that is not a QROPS

   A transfer to an overseas scheme that is not a QROPS is treated as an unauthorised payment. HMRC guidance states the member may be charged at least 40% tax. The unauthorised payment charges can reach 55%, with other penalties.

QROPS Fees and Charges

A QROPS transfer can involve several costs which generally fall into three main categories.

1. Charges in the UK

   Many modern pensions charge nothing to transfer out. Some older personal pensions carry exit charges, which are capped at 1% for members aged 55 and over and banned on plans started since 2017. The UK provider should give any exit charge in writing before the transfer request. Regulated advice in the UK is a separate fee.

2. Charges in the receiving scheme

   The fees usually quoted for a QROPS are annual charges, initial transfer fees, investment fees and advisory fees. In India, the charges depend on the plan type. Unit linked pension plans disclose allocation, administration and fund management charges in the product brochure. Annuity plans do not show them separately, because the charges are reflected in the annuity rate offered.

3. Tax and currency costs

   The 25% overseas transfer charge is a tax rather than a fee, but it is the largest potential cost. Converting sterling to rupees may also involve foreign exchange margins, and you may incur separate charges if you seek professional tax or financial advice in the UK or your destination country.

Documents Required for a QROPS Transfer

Requirements differ between UK providers and Indian insurers. The following documents are usually requested.

1. From the UK provider:

   • A recent fund statement showing the value and details of the pension
   • The provider's overseas transfer application or discharge form
   • HMRC form APSS263, the member information form for an overseas transfer
   • A passport copy, with originals where the UK provider requires them

2. From the Indian insurer:

   • KYC documents, including identity proof, address proof and tax identification records
   • A customer declaration
   • A cancelled cheque copy
   • Nominee details

   A letter of authority is needed where a financial adviser deals with the UK provider on the member's behalf. The member has 60 days from the transfer request to supply the information used to test the exclusions. If it is not received in time, the scheme must deduct the 25% charge.

How the QROPS Transfer Works

The process of transferring QROPS is similar across providers, although timelines differ.

Step 1: Advice and Comparison

The member takes regulated advice in the UK and tax advice in India, and compares a QROPS with leaving the pension in place.

Step 2: Verify the Receiving Scheme

The scheme is checked against the HMRC notification list. The insurer confirms its QROPS status and reference number in writing.

Step 3: Request the Transfer and Submit Documents

The member asks the UK provider what information, fees and timeline apply. The provider sends forms, which the member completes within 60 days.

Step 4: Review by the UK Provider

The UK provider verifies the pension details and tests whether an exclusion applies and how much overseas transfer allowance is available. Any overseas transfer charge is deducted or paid at this stage.

Step 5: Transfer Completion

The funds are paid to the Indian insurer which issues the plan. An overseas transfer can often take several months.

How QROPS Income Is Taxed in India

The tax treatment of QROPS income in India depends on where the pension comes from and the rules that apply.

Residential status

Taxation in India depends on the member's residential status in the year of receipt. A non resident is taxed in India only on income received or arising in India. A resident and ordinarily resident individual is taxed on worldwide income. A returning NRI may be resident but not ordinarily resident for a period, during which foreign income not received in India is generally outside Indian tax.

Pension paid by a QROPS in India comes from an Indian insurer and is received in India. Therefore, that concession for foreign income does not apply to it.

India UK DTAA

Article 20 of the India UK double taxation agreement states that any pension or annuity paid to a resident of a contracting state is taxable only in that state. Government service pensions covered by Article 19(2) are excluded. The article defines a pension as a periodic payment made in consideration of past employment or under social security legislation. A member resident in India is therefore taxed in India on the pension, because the treaty allocates the taxing right to India.

Rates and credit for foreign tax

Pension received by an Indian resident is taxed at the slab rates of the tax regime chosen for the year. The Income Tax Act 2025, which replaced the 1961 Act from 1 April 2026, governs the computation. Where UK tax has been charged on the same income, a foreign tax credit claim is made in India on the prescribed form, filed with the return.

Lump sums and commutation

The size of any lump sum is fixed by the plan terms and by the UK age rule. The Indian tax treatment of a lump sum or commutation is determined under the Income Tax Act 2025 for the year of receipt. The plan document and a tax adviser should confirm the position before any withdrawal is planned.

UK Tax and Reporting Rules After a QROPS Transfer

The overseas scheme must report payments to members, transfers and changes in a member's country of residence to HMRC within 90 days. Reporting continues for 10 years after the transfer. Pension income taken within five years of the transfer and ten years of living permanently outside the UK may attract UK Income Tax.

A payment before age 55, other than on retirement due to ill health, can be an unauthorised payment with UK tax charges and penalties. A member who becomes UK resident again within these periods can face UK tax on payments from the transferred funds.

QROPS Registered Pension Plans in India

HMRC does not publish a list of approved plans. It publishes the ROPS notification list, and insurers describe the plans they have notified on their own pages. ICICI Prudential Life, HDFC Life, Tata AIA Life and Axis Max Life all publish QROPS pages.

Tata AIA Life names its Saral Pension Plan and Fortune Guarantee Pension on its QROPS page, both non linked annuity plans. Axis Max Life names its Guaranteed Lifetime Income Plan, a non linked non participating annuity savings plan. Plan names, notification status and availability change, so the following checks are made before a transfer:

• The scheme appears on the current HMRC notification list
• The insurer confirms the QROPS status and reference number in writing
• The plan does not allow benefits before age 55, rising to 57 from 6 April 2028
• The brochure discloses all charges, and the plan type (annuity or unit linked) suits the member's income needs

QROPS or Leaving the Pension in the UK

Leaving the pension in the UK is one option to consider before transferring to a QROPS. The main disadvantage is uncertainty about the rupee income received, because exchange fees and currency movements can affect each payment. A UK-registered SIPP that accepts overseas members is another option, as the funds remain within the UK pension system and the overseas transfer charge does not arise.

A transfer to an unrecognised scheme carries the highest risk. Such schemes may invest in high-risk assets, may not have adequate regulatory oversight or compensation arrangements, and may increase the risk of pension scams. Transfers prompted by unsolicited calls, emails or text messages should be approached with caution.

Who May Consider QROPS?

A transfer may suit the following members:

• Returning NRIs with UK registered pensions who intend to remain resident in India
• Members with several UK pensions who want a single scheme
• Retirees who want pension income paid in rupees
• Members who have assessed the guaranteed benefits they would give up

Suitability depends on personal circumstances and should be assessed with regulated advice in both countries.

What to Consider Before Transferring Your UK Pension to QROPS

A qualifying recognised overseas pension scheme lets an eligible member move UK pension savings into a recognised scheme in India. The main tax test is the 25% overseas transfer charge, which is avoided where the member and the scheme are in the same country and the amount is within the overseas transfer allowance. Costs, documents and the Indian tax treatment of pension income also need review before a request is made.

Retirement planning platforms such as PensionBazaar can also help individuals explore available pension and retirement solutions, including annuity options for NRIs, before taking the next step.