QROPS for US Residents and Citizens


There are close to 900,000 Britons who live permanently in the United States.  In addition there are many thousands of US citizens who have spent a period of time working in the UK, and have returned to the US to continue their careers.  Many of these people have UK pensions from when they worked in the UK, however up until very recently these UK pensions were effectively frozen – doing nothing until the pension holder was of pensionable age.

Until 2011, it was not possible for a UK citizen resident in the US, or a US citizen to transfer their UK pension to the US through a QROPS, as a result of the fact that US Internal Revenue Service (‘IRS’) does not recognise UK pensions.  As a result, any pension income and growth would have been liable to federal income tax in the US.

QROPS for US Residents and US Citizens

The problems of transferring a UK pension into a QROPS for US residents has now been solved by the recent double taxation agreement signed between Malta and the US. This tax treaty is unique in that it expressly deals with the issues of pensions, and article 18 of the treaty states that QROPS schemes established in Malta will be treated as ‘US qualifying’ pension funds.

What this means is that effectively a Malta QROPS will be recognised as a qualifying pension fund under US law, and therefore compliant with IRS rules.  As a result, a transfer of a UK pension into a QROPS scheme established in Malta will enable all investment growth within the fund to accrue free of any US income tax.

Benefits of a Transfer to a Malta QROPS

QROPS in Malta have become one of the most popular destinations in recent years of UK pension transfers, for the following reasons:

  • 30% of the pension can be taken out as a tax free lump sum;
  • There is a possibility to take out further lump sums, free of US federal Income Tax pursuant to the Malta/US Tax treaty.
  • Increased investment flexibility;
  • the ability to hold investments in USD, and to draw an income in USD, thus avoiding any currency risk;
  • receive income gross;
  • avoid limitations imposed by the UK Lifetime Allowance (currently £1.5 million, and to be reduced further to £1.25 million in the 2014/15 tax year);
  • avoid UK inheritance tax;

Who Can Benefit from a US QROPS?

The following groups can benefit from a transfer into a US QROPS:

  • US citizens who have acquired UK pension rights in the UK who are now resident in the United States;
  • US citizens who have worked in the UK and have a UK pensions, and who have permanently left the UK, but are now living or working in another country;
  • UK citizens who are living permanently in the US;
  • Green Card holders who have a UK pension.

Advice on QROPS for US Residents and Citizens

Due to the inherent complexities of dealing with UK pension transfers into QROPS for US residents and citizens, it is vital that professional, independent is sought before considering a transfer of your UK pension into a QROPS scheme.  In addition, there are ongoing reporting requirements in relation to your QROPS pension, and these need to be carried out by a US qualified tax adviser who is familiar with overseas pension schemes.


The QROPS and Pensions section of this website is written by QROPS Adviser.net, a leading independent QROPS and pensions advisory firm. QROPS Adviser has advised numerous residents of the US to successfully navigate the myriad US and UK pension rules in order to transfer their UK pensions into a QROPS which satisfies all US requirements. For a free, no obligation consultation, or for more information about QROPS for US residents, please feel free to contact us.

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