Jargon is one of the main obstacles to investors understanding pension schemes like a qrops or SIPP.

A qrops is a pension plan based outside the UK that is open to investors, including people with UK pension rights who have moved permanently overseas and don’t intend to return to the UK to retire.

A SIPP – a self-invested pension plan – is a pension scheme that is only open to people with UK pension rights.

The issue is if you intend to retire abroad and have a SIPP, should you consider transferring the fund to a QROPS?

The answer is each case has to be considered on its own merits because this area of financial planning is tailored to each individual and there is no one size fits all solution.

In general, transferring your SIPP fund to a QROPS is a good financial move for most people, but anyone considering the switch should take independent financial advice from a QROPS expert.

However, there is no reason why you can’t have a SIPP in the UK and retire abroad and drawdown your pension.

If you put a SIPP and QROPS head-to-head, here are some pointers about which one comes out on top:

Tax-free lump sum drawdown:

A SIPP allows 25% cash lump sum withdrawal

Most QROPS are 25% as well, but some allow 30%, like an Isle of Man QROPS, and under special rules, a New Zealand QROPS may allow more than a 30% drawdown. HM Revenue and Customs and pension authorities in Gibraltar are also negotiating a new QROPS product with a 30% drawdown.

Score – QROPS 1 – SIPP 0

Taking an annuity:

A SIPP member has to invest in an annuity before they are 75.

QROPS members have no requirement to buy an annuity.

Not having to buy an annuity with a QROPS also means that unlike a UK pension, when you die, your pension does not die with you and the fund is available to pass on as part of your estate – this is an own goal if you allow your annuity provider to deprive your family and loved ones of your hard-earned p0ension fund.

Score – QROPS 3 – SIPP 0

Investment scope:

A SIPP can invest in commercial property as well as any other investment allowed under UK pension rules.

A QROPS has much greater investment flexibility – taking everything in that a SIPP can cover plus lots more opportunities.

Score – QROPS 4 – SIPP 0

These are just some of the main retirement planning points where a QROPS comes out ahead of a SIPP. Other advantages include establishing your QROPS in a low tax jurisdiction to encourage growth of your fund.

Also remember you do not have to live in the same tax jurisdiction as your pension, so you can enjoy the benefits of drawing down your pension in a country with a kind climate and low income tax.

On each of these points a qrops scores better than a SIPP, so the verdict has to be that if you are retiring abroad, definitely consider transferring your SIPP fund to a qrops.