Moving UK Pension To USA
LEARNING OBJECTIVES
We’re passionate about providing high quality, relevant and up-to-date financial information to British Expats in the US.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
Your UK pension options in the US
Which accounts are most appropriate and cost-effective
Important questions to ask your UK pension provider
Whether a UK pension transfer is worth consideration
This article is intended for US residents with UK pension accounts.
With over 700,000 British Expats currently residing in the USA, a common concern they face is what happens to their UK pension pots?
Can these be moved to the USA, and if so what are the best options available?
In this guide, we'll answer the key questions related to relocation and retiring in the US.
Can I Transfer My UK Pension To The US?
The most common question from Expats abroad is whether or not they can transfer their UK pension fund directly into the US system.
Whilst you can transfer your UK pensions to a SIPP for US residents, or QROPS scheme, you cannot transfer your UK pension pots directly to a US 401K or IRA.
The UK and the US have different retirement accounts available, and they follow different rules and laws when it comes to drawing down the money, as well as the tax treatment of benefits.
For this reason, it's important to understand that they are not like-for-like, and will have to be treated and managed separately.
Moving A Pension From UK To USA | Your Options
As per the above, there are 2 options for US residents who require ongoing management and access to their UK provisions.
01 The International SIPP For US Residents
The best vehicle for Expats in the US is the International SIPP, or self-invested personal pension plan. This is a UK domiciled pension, specifically built for US individuals. You can see an in-depth review of the International SIPP here.
In short, it has various benefits that are tailored to a US resident. These include, but are not limited to:
Full flexible access draw-down for US residents. This means you can access your pension when you want, with any amount, providing you are over the age of 55.
Ability to have your PCLS payment (25% tax-free cash) paid to your US bank account. Note, this payment is tax-free in the UK. It is not necessarily tax-free in the US depending on your state, so we would encourage all clients to seek local tax advice on this matter.
Hold and manage your investments in USD, mitigating future currency risk associated with GBP investments.
Access to low-cost ETFs and Mutual Funds, from providers such as Vanguard, Fidelity, Blackrock etc, allowing you to manage your investments in line with your objectives and purchase US equities in your pension account.
Fully compliant with US taxation laws, including PFIC requirements, thus ensuring no unnecessary tax-charges.
02 QROPS Pension Transfer For US Residents
The alternative options is to use overseas pensions, or a qualifying recognised overseas pension scheme QROPS, which is no longer a recommended solution for clients.
There are currently no QROPS providers available in the US. This means any QROPS transfer will incur the Overseas Transfer Charge which is a significant tax-charge on the transfer.
Furthermore, generally speaking, QROPS pensions are far more expensive than International SIPP accounts, and are very rarely considered for clients for the above tax consequences.
Should I Transfer My UK Pension To The US?
Now that we've covered the pension transfer options for US residents, let's understand whether a transfer is worthwhile.
Unfortunately, the vast majority of UK pension providers no longer offer key benefits to US residents. Below is a list of key questions to ask your existing pension provider in order to assess the suitability of a transfer:
Can I access my pension fund as and when I want as a US resident?
Can I manage my investments?
Do I have the option to invest in USD?
As a US resident, do I still have the option to have my 25% tax-free cash paid to my US account?
Are all the investment funds PFIC compliant?
Does Moving To The USA Affect My UK State Pension?
In short, no. You do not lose your state pension entitlements when you move abroad. As long as you have sufficient contributions, you will have access to the UK state pension when you reach retirement age.
You can check your contributions using the government gateway login. If you are missing years of contributions, you can make voluntary class 2 national insurance payments to make up for the missing amounts.
Financial Advice For British Expats In The USA
The Wealth Genesis is fully regulated by the SEC to provide expert financial advice to Expats in the USA.
All our US advisers are dual-qualified, holding Series 65 exams in the US and Level 4 planning certificates in the UK, ensuring you receive the best financial advice possible.
We charge an industry leading flat-fee for all our UK pension transfers, regardless of the size of the pension pots or your circumstances.
We charge 0.85 per annum, which pays for ensuring your portfolios perform in line with your objectives. To understand more about our service, see our reviews here.
To get started with us, follow the button below to schedule an initial consultation.
FAQs
-
We charge a flat-fee of £3,000 for the transfer service. We charge 0.85% per annum for the account management. For self-managed accounts, this falls to 0.50%.
-
Typically these are completed within 3 months of submitting all the necessary paperwork.
-
If your provider is able to offer full-flexible access, and allow you to manage your account as a non-UK resident, then there is no pressing need to transfer your pensions.
