QROPS

Managing Currency Risk in QROPS Transfers

By QROP Direct Editorial Team · Reviewed by an independent regulated pension specialist · Reviewed 2026-06-10

Currency Risk in QROPS Transfers: What Every Expat Must Understand

Currency risk is one of the most overlooked and underestimated aspects of overseas pension planning. When a UK expat considers transferring their pension from a UK-registered scheme to a QROPS or drawing income from a UK SIPP while living abroad, every pound of pension value is exposed to exchange rate movements. Over a retirement lasting 20 or 30 years, cumulative currency fluctuations can add up to a difference of tens of thousands of pounds in real purchasing power — far outweighing many of the tax advantages that advisers focus on.

This guide explains the types of currency risk involved in QROPS transfers, how exchange rate movements affect both the transfer value and ongoing income, what options are available to manage the risk, and how this consideration interacts with the choice between a QROPS and an International SIPP.

This guide is for information purposes only and does not constitute financial, tax or legal advice. Currency planning is a specialist area. Always consult a regulated financial adviser with international pension expertise before making any transfer decision.

Key Takeaways

• Transfer-day risk: The exchange rate on the day your pension is transferred determines the starting value in the overseas currency. A weak GBP on transfer day permanently reduces the value of your fund.
• Ongoing drawdown risk: If your pension is in GBP and your living costs are in a local currency, every income payment involves a currency conversion — and the rate varies every time.
• Many QROPS can hold GBP assets: Particularly in Malta and Gibraltar, QROPS can hold sterling-denominated investments, keeping the fund in GBP even though the scheme is technically overseas.
• International SIPPs avoid transfer-day risk: No conversion happens at the point of transfer, though drawdown-to-local-currency risk still exists.
• Planning matters: Timing transfers, using multi-currency SIPP or QROPS facilities, and using currency specialists can all reduce currency risk meaningfully.

Understanding Currency Risk in Pension Planning

Currency risk in the context of QROPS and international pensions takes several distinct forms:

1. Transfer-Day Conversion Risk

When you transfer a UK pension (denominated in GBP) to a QROPS in a different currency — for example, a Malta scheme denominated in EUR — the transfer value is converted from GBP to EUR at the spot exchange rate on the day the transfer settles. This is a one-time, irreversible event.

If GBP/EUR is at 1.15 when you transfer £500,000, you receive €575,000. If GBP were at 1.25, you would have received €625,000. The difference — €50,000 in this example — is the cost of transferring at an unfavourable rate. There is no going back once the transfer has settled.

This risk is significant because QROPS transfers can take months to complete from instruction to settlement. During that period, exchange rates can move substantially — GBP has historically been one of the more volatile major currencies, with significant movements linked to political events (Brexit, elections, budget announcements).

2. Ongoing Income Conversion Risk

Even if you have transferred successfully, if your pension income is paid in a currency different from your country of residence's currency, you face recurring conversion costs throughout retirement. For example:

• A UK expat in Japan drawing from a GBP-denominated SIPP must convert to JPY each month
• The GBP/JPY rate has ranged from 150 to 200 in recent years — a 33% difference in purchasing power at the same sterling income level

This is not a one-time risk but a permanent feature of drawing a pension in a different currency from your living costs. Over 20 years of retirement, adverse currency movements can reduce effective purchasing power by tens of thousands of pounds compared with a scenario where pension and living costs are in the same currency.

3. Sequence of Returns and Currency Interaction

For those in drawdown (drawing down a pension portfolio rather than taking a fixed annuity), poor investment returns combined with unfavourable currency movements in the same period can have a disproportionate impact on the long-term value of the fund. This is a compounding risk that financial planners refer to as "sequence of returns risk" — selling assets at low prices to fund income needs, combined with currency losses, can deplete a portfolio faster than either risk alone.

How QROPS Can Manage Currency Risk

GBP-Denominated Holdings Within a QROPS

Many well-designed QROPS — particularly in Malta and Gibraltar — allow the underlying investments within the scheme to be held in sterling, even though the scheme is registered and administered overseas. This means:

• The transfer-day conversion risk may be mitigated (if the scheme accepts GBP assets directly)
• The ongoing portfolio value is in GBP, avoiding the need to convert the fund itself
• Income can be distributed in GBP, with conversion happening at the recipient's end

Before transferring to any QROPS, confirm with the scheme administrator: (a) which currencies the scheme can hold investments in; (b) whether the transfer can be received in GBP; and (c) in which currencies income can be paid.

Multi-Currency QROPS

Some QROPS offer multi-currency capabilities — holding different segments of the portfolio in different currencies (GBP, EUR, USD, for example) and paying income in the currency of the member's choice. This is particularly useful for highly mobile expats who may change country of residence during retirement.

Using a Currency Specialist for the Transfer

The actual movement of funds from a UK scheme to an overseas QROPS involves a foreign exchange transaction. Rather than accepting the bank's default exchange rate (which typically includes a significant spread), using a specialist currency broker for the transfer can save 1%–2% on the conversion — a meaningful sum on a transfer of £200,000 or more. Your regulated adviser should be able to facilitate this.

Forward contracts (locking in an exchange rate for future delivery) can also be used to manage the risk of exchange rate movements between the date you instruct the transfer and the date it settles.

International SIPP and Currency Risk

An International SIPP remains a UK-registered scheme. No currency conversion occurs at the point of transfer — the fund simply moves from one UK pension scheme to another, remaining in GBP. This eliminates transfer-day conversion risk entirely.

However, if you live outside the UK and your living costs are in a local currency, you still face the ongoing conversion risk every time you draw income. The difference is:

• You choose when and how to convert — you can time conversions to more favourable rate windows
• Some multi-currency International SIPPs hold assets in your local currency, partially replicating the QROPS approach
• You retain the option to draw in GBP and hold locally if your country's currency is particularly weak

For expats who prioritise avoiding transfer-day risk and prefer to manage currency exposure themselves, the International SIPP's GBP base can be an advantage. Our QROPS vs International SIPP guide and International SIPP investment options guide cover the investment and currency considerations in more detail.

Practical Currency Planning Checklist

Before making any pension transfer decision involving currency, work through the following:

1. What currency will I need in retirement? If you are permanently settled in Spain (EUR), France (EUR), or another eurozone country, a EUR-based QROPS may reduce ongoing conversion costs.

2. What is the current GBP exchange rate? Avoid transferring large sums when GBP is at a multi-year low. If possible, time the transfer when GBP is at a relatively strong level.

3. Can the QROPS hold GBP assets? Confirm explicitly — do not assume.

4. What are the scheme's income payment currency options? Can income be paid in GBP, local currency, or both?

5. Will I use a currency specialist? For transfers above £50,000, the saving from a specialist broker versus a bank exchange rate can be material.

6. What is my 10–20 year currency outlook? No one can predict currency movements with certainty, but considering the long-term direction of your local currency versus GBP is a sensible part of the planning process.

7. Is the QROPS benefit enough to overcome currency risk? If the projected tax saving from a QROPS over 20 years is £20,000 but the potential currency downside is £30,000, the economics may not stack up.

For expats who want a currency specialist's perspective on QROPS transfers, our expert interview with a currency specialist provides practical insight from a practitioner.