UK Pensions For US Residents
LEARNING OBJECTIVES
We provide high quality, relevant and up-to-date retirement advice to British Expats in the USA.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
How your UK pensions work in the US
Questions to ask your UK pension provider as a non-UK resident
Whether or not a pension transfer is worth consideration
Best practise when taking regulated financial advice
As a British Expat in the US, you may be wondering what your retirement options may look like, with both UK and US assets involved in your overall financial plan.
The USA has its own retirement accounts, most commonly Individual Retirement Accounts (IRAs) and 401k accounts.
In the UK, most private pensions are 'defined contribution' schemes i.e invested into the markets that fluctuate in value. The other type of UK pension is a ‘final salary scheme’, which provide a guaranteed income upon reaching retirement age.
Note, the United Kingdom and the US have different retirement rules and legislation in place, and as such they cannot be transferred or consolidated together as like-for-like pension pots.
Therefore, it's important to view your UK pension plans in isolation of your US retirement accounts as you navigate life abroad in the States.
How Do My UK Pensions Work In The US?
Upon relocating to the US, your UK pensions will stay exactly as they are.
The investments will continue to be invested, and your pension provider will continue to look after your pot.
However, it is important to note that if you were receiving financial advice in the UK, your UK regulated financial adviser will no longer legally be able to service you as a UK resident. In this instance, you would need to speak with an SEC regulated advice firm, such as ourselves.
If you are approaching retirement age, or need ongoing management of your UK pensions as a US resident, you may need to consider your transfer options.
UK pension providers are built for UK residents. The main providers (Scottish Widows, Aegon, Aviva, Standard Life, Zurich etc) will have various restrictions in place for non-UK residents and you may not have all the usual retirement options available.
Most commonly, you may not be able to access full flexible access draw-down abroad. This means you cannot access your pension money as and when you want, and instead will be restricted to larger lump sum payments.
These are typically undesirable as they can trigger large tax events in the US.
Other potential restrictions include, but are not limited to:
No ongoing management or portfolio re-balances
No multi-currency options
Restricted investment options and lack of mutual funds
No option to be paid out to an international, or US bank account
No online access or draw-down options
Automatically taxed in the UK
The SIPP For US Residents
In the event of any of the above restrictions, we would strongly suggest considering seeking professional advice and transferring your UK pensions to a type of scheme specifically designed for people who do not live in the UK.
A SIPP stands for a self-invested personal pension, and is a very common retirement vehicle for those who reside in the UK.
The UK SIPP for non-UK residents, or International SIPP, is one of the best overseas pensions available. This type of SIPP is tailored to international retirees, and gives you access to full pension benefits as you navigate life abroad.
Most importantly, by consolidating your personal pensions and transferring to an International SIPP, you gain access to the following:
Full flexible access draw-down
Multi-currency investment options (USD, EUR, GBP)
Wide range of investments
No UK tax deducted on payments, through the use of an NT Code
Professional ongoing management
Taking My UK Pension In The US | Best Practise
If your existing UK pension provider is prepared to give you all the benefits listed above, then there may be no need to change anything at all.
You can continue investing in your UK pot, and take benefits form your retirement plans as and when required.
However, if restrictions are imposed on your account due to your country of residence, we encourage you to consider your transfer options to provide greater peace of mind as you enter the retirement phase.
The Wealth Genesis and it's network of professional expat financial advisers are regulated by the SEC to provide retirement and investment advice to British Expats.
We charge a flat-fee for all our advice, regardless of the value of pensions in question. We also charge an industry leading annual management fee to ensure your assets continue to perform over the long-term.
To get started with us, follow the button below to schedule an initial consultation.
FAQs
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We currently recommend the Novia Global SIPP for our US resident clients, as it's the lowest cost SIPP available on the market with the best investment platform offering.
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The Novia Global SIPP costs £216 per annum, and the platform and custodian fee costs 0.34% per annum.
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The whole process typically takes between 1-3 months to complete.
