The United States is one of the most popular destinations for British nationals relocating abroad — whether for work opportunities, lifestyle, or retirement. However, for UK expatriates living in America, one of the biggest financial questions is: what should I do with my UK pension?
Managing a UK pension while residing in the US can be complex. Different tax systems, currency exposure, and pension rules often make it challenging to understand your options. One potential solution many expats consider is the QROPS (Qualifying Recognised Overseas Pension Scheme).
At Blacktower Financial Management, we’ve been helping British expatriates manage their cross-border finances for nearly four decades. If you’re a UK national now living in the US, understanding how QROPS work — and their advantages and limitations — is crucial to making the right financial decisions for your retirement.
What Is a QROPS?
A Qualifying Recognised Overseas Pension Scheme (QROPS) is a pension scheme based outside the UK that has been approved by HM Revenue & Customs (HMRC).
It allows UK pension holders who have left the UK to transfer their pension overseas, while still complying with HMRC rules.
QROPS were designed for individuals who plan to live abroad permanently and want to:
- Consolidate multiple UK pensions into a single international plan.
- Reduce exposure to UK taxes and regulations.
- Manage retirement income flexibly in their country of residence.
However, for British expatriates in the United States, there are unique factors to consider before transferring.
QROPS and the United States: The Key Considerations
While a QROPS can offer excellent benefits to expatriates in Europe, Asia, and other regions, the situation for UK nationals living in the US is more complex — primarily because the US currently has no HMRC-recognised QROPS jurisdictions.
This means you cannot transfer your UK pension directly into a QROPS based in the United States.
However, there are alternative strategies and specialist QROPS structures (based in other jurisdictions such as Malta or Gibraltar) that can be used for UK nationals who hold US residency or citizenship — provided the transfer is structured carefully to meet both UK and US tax laws.
This is where expert cross-border financial advice becomes essential.
The Potential Benefits of a QROPS for UK Expats in the US
Even though a direct US-based QROPS does not exist, a properly structured international QROPS may still be suitable for some British expatriates with long-term global financial goals.
1️⃣ Tax Efficiency
A key attraction of QROPS for many expatriates is the ability to avoid double taxation on pension income.
Under the UK–US Double Taxation Treaty, most UK pensions are taxable only in the United States, meaning that your UK pension provider can pay your income gross (without UK tax deducted).
A well-structured QROPS, when combined with appropriate tax planning, can help you:
- Minimise unnecessary UK tax exposure.
- Align your pension withdrawals with US tax brackets.
- Optimise your income across both jurisdictions.
However, because the US applies complex tax rules to foreign pensions, it’s critical that your QROPS or alternative solution is structured in full compliance with IRS (Internal Revenue Service) regulations.
2️⃣ Avoiding UK Lifetime Allowance (LTA) Restrictions
Although the UK’s Lifetime Allowance (LTA) has been effectively abolished, many high-value pension holders are still affected by its historical rules — especially if they plan to draw benefits in the UK.
By transferring to a QROPS, your pension is typically removed from the UK system, meaning it can grow without LTA limits and without future UK government policy changes impacting your savings.
This provides long-term security and growth potential for those who plan to remain abroad permanently.
3️⃣ Investment Flexibility
A QROPS gives you control and choice over how your pension funds are invested.
Unlike traditional UK pension schemes, a QROPS allows access to a wider range of global investments, including:
- International equity and bond markets.
- ETFs and managed funds.
- Multi-currency investment options (GBP, EUR, USD).
For UK expatriates living in the United States, being able to hold and manage your retirement assets in US dollars can help protect your income from currency fluctuations — especially if you expect to remain in the US long term.
4️⃣ Estate Planning and Inheritance Benefits
A QROPS can be an effective estate planning tool. Funds transferred into a QROPS are generally outside of your UK estate, meaning they are not subject to UK Inheritance Tax (IHT), which can otherwise claim 40% of your pension assets above the nil-rate threshold.
You can also nominate beneficiaries directly, ensuring your pension wealth passes smoothly to loved ones, often without probate complications.
This benefit is especially important for globally mobile families with assets in both the UK and the US.
5️⃣ Portability for Future Moves
Many UK expatriates living in the US maintain international lifestyles, often moving between countries during or after retirement.
A QROPS offers global portability, meaning it can typically be transferred between HMRC-recognised jurisdictions if your residency changes.
This flexibility gives peace of mind that your pension can adapt to your circumstances — whether you remain in the US, return to Europe, or move elsewhere.
Why Professional Advice Is Essential
Navigating pensions between the UK and US systems is highly complex. While a QROPS may offer significant advantages, it is not suitable for every individual living in America.
The key is to ensure your retirement strategy is:
✅ Compliant with both HMRC and IRS rules.
✅ Tax-efficient, taking advantage of the UK–US tax treaty.
✅ Aligned with your long-term financial goals and family situation.
At Blacktower Financial Management, we work with cross-border tax and legal experts to help you make informed decisions about managing your UK pension — whether that means exploring a QROPS transfer, maintaining a SIPP, or creating a bespoke investment strategy.
Take Control of Your Pension, Wherever You Live
Your pension is one of your most valuable assets — and managing it properly is vital to protecting your financial future.
If you’ve moved to the United States, you don’t have to leave your pension behind. With professional guidance, you can structure your retirement income efficiently, stay compliant, and build long-term financial security.
📞 Book your complimentary consultation today
Speak with one of Blacktower’s international financial advisers to discover how we can help you manage your UK pension while living in the US — and secure your financial independence abroad.