QROPS Underperforming: What Are My Options?

If your QROPS has been underperforming for years you have more options than wait and hope. Here's a clear-eyed look at what you can do — and what it costs to act.

It is one of the most common conversations we have with returning UAE expats. They have been paying into a QROPS for years. The statements arrive showing modest returns. The charges seem high but the documents are opaque. The adviser who set the arrangement up is either unreachable or no longer relevant to their life. And the question sits there, unresolved: is this pension actually working for me?

For many people the honest answer is no. Here is how to assess your position and what you can do about it.

How to tell if your QROPS is underperforming

Pension performance cannot be assessed in isolation. The question is not whether your QROPS has grown — most investment portfolios have grown over the past decade in a broadly rising market — but whether it has grown by an appropriate amount relative to the risk you are taking and the charges you are paying.

There are three benchmarks worth applying.

Benchmark one — cost. What are you paying in total annual charges? This includes platform charges, investment management charges, adviser charges if ongoing advice is being provided and scheme administration charges. Add them all up. If the total exceeds 1.5% per year you are in territory where the cost of the arrangement is a meaningful drag on your long-term returns. If it exceeds 2% you are paying materially more than a well-structured UK pension would cost.

Benchmark two — returns relative to comparable funds. Your QROPS annual statement should show the performance of your investments over one, three and five years. Compare those figures against a relevant benchmark — typically the performance of a comparable diversified investment portfolio or a major market index weighted appropriately to your investment mix. If your returns are consistently trailing comparable benchmarks by more than one to two percentage points per year the investment selection may be costing you significantly.

Benchmark three — the combined effect. The combined drag of high charges and underperformance compounds significantly over time. A pension that underperforms by 1.5% per year due to charges and poor investment selection will be worth approximately 15% less after ten years than an equivalent arrangement with appropriate costs and performance. On a £300,000 pension that is £45,000 less in retirement income.

Why QROPS often underperform

There are structural reasons why many QROPS arrangements sold to UAE-based British expats have delivered disappointing returns.

Commission-driven product selection. Until relatively recently — and in some offshore jurisdictions still — financial advisers in the UAE were remunerated primarily through upfront and ongoing commission paid by product providers. This created a structural incentive to select products that paid the highest commission rather than those most likely to deliver the best outcomes for clients. High-commission products typically have higher charges and in many cases more complex and less transparent structures.

Lack of ongoing oversight. Many QROPS were set up and then left to run without meaningful ongoing review. The investment strategy established at outset may have been appropriate at the time but markets, tax rules and personal circumstances change. An investment portfolio that is never reviewed is rarely optimised.

High-cost fund selection. Actively managed funds with high annual management charges are disproportionately represented in many offshore pension portfolios. In most cases these funds have failed to outperform lower-cost passive alternatives over any meaningful time period while charging significantly more for the privilege.

Opaque charging structures. Offshore pension arrangements frequently involve multiple layers of charges that are individually disclosed but rarely presented clearly in aggregate. Platform charges, fund charges, scheme charges and adviser charges stack up in ways that are not always apparent from reading any single document.

Your options if your QROPS is underperforming

Option one — restructure the investments within the existing QROPS. If the QROPS structure itself is sound but the investment selection is poor it may be possible to change the underlying investments without transferring the scheme. This avoids exit charges and transfer costs but retains you within the existing fee structure. It is the right option where the QROPS charges are reasonable and the investment selection is the primary problem.

Option two — transfer to a UK SIPP. For returning UAE expats this is frequently the most compelling option. A transfer to a UK SIPP typically reduces ongoing charges significantly, improves investment flexibility and brings the pension into a fully UK-regulated framework. The cost of the transfer is typically recovered through reduced ongoing charges within two to three years. The April 2027 inheritance tax changes add a further dimension to this analysis — restructuring before the deadline gives access to planning options that will not be available after it.

Option three — transfer to a different QROPS. If you are not yet returning to the UK and wish to remain in an offshore structure it may be possible to transfer to a more cost-effective QROPS arrangement in a different jurisdiction. This requires careful analysis of the receiving jurisdiction's tax treatment and regulatory framework.

Option four — execution-only restructuring. For clients who have already identified the problem and know what they want to do — who want to transfer to a specific UK SIPP without paying for advice on whether to do so — an execution-only service is available. The transfer is carried out by a regulated firm without personal advice. Full details are on our fiduciary model page.

What does acting cost compared to doing nothing?

The cost of acting — the transfer charges, the initial advice fee, the administrative friction of moving a pension — is visible and immediate. The cost of doing nothing is invisible and gradual. But it is frequently larger.

A QROPS with total annual charges of 2% transferred to a UK SIPP with total annual charges of 0.5% saves 1.5% per year on the fund value. On a £250,000 pension that is £3,750 per year. Over ten years — compounded within the pension — the difference in fund value is approximately £40,000 to £50,000 depending on investment returns. Full breakdown: QROPS transfer costs.

The initial cost of a transfer — typically £1,500 to £3,000 in combined charges — is recovered within the first year of lower ongoing costs in most cases.

The question is not whether you can afford to act. The question is whether you can afford not to.

The first step

Before making any decision about a potentially underperforming QROPS the starting point is a clear picture of what you actually have. That means knowing the total charges you are paying, the performance your investments have delivered net of those charges, any guaranteed benefits that would be lost on transfer, and the inheritance tax exposure your current structure creates.

That picture can be established quickly and without commitment. Everything that follows flows from that foundation.

Frequently Asked Questions

How do I find out what charges I am actually paying on my QROPS?

Your QROPS provider is required to disclose all charges. Request a total expense ratio or a complete breakdown of all annual charges including platform, fund, adviser and scheme administration charges. If your provider cannot or will not provide this clearly that is itself a useful signal about the quality of the arrangement.

Can I switch investments within my QROPS without transferring?

In most cases yes — subject to the investment options available on your existing platform. Switching to lower-cost passive funds within the existing structure can reduce the charge drag significantly without the cost and complexity of a full transfer. Whether this is sufficient or whether a full transfer is warranted depends on the overall charge level and the quality of the available investment options.

What if my QROPS has lost money — can I still transfer it?

Yes. A transfer can be initiated regardless of whether the fund has grown or declined in value. The transfer value is whatever the fund is worth at the date of transfer. A pension that has lost value is not locked into the arrangement that caused the losses.

Will I get compensation if my QROPS was mis-sold?

If your QROPS was recommended by an FCA-regulated adviser in circumstances where the recommendation was unsuitable you may have a claim for compensation. The process for pursuing such a claim depends on the regulatory status of the adviser and the jurisdiction in which the advice was given. We can provide guidance on the appropriate route for your specific circumstances.