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Considering a UK Pension Transfer To USA?

If you hold a UK pension and are living in the US, a UK pension transfer is one option that you must consider.  Using a SIPP or QROPS when transferring your UK pension to the USA can present many tax efficient benefits.

BY FAILING TO TAKE ACTION AND REVIEW YOUR UK PENSION TRANSFER TO THE USA OPTIONS, YOU RISK LOSING A SIGNIFICANT AMOUNT OF YOUR UK PENSION POT.

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A UK pension transfer to the USA isn’t a new choice, it is however, an option that is often not discussed between client and adviser. However, with UK pension transfer values continuing to increase, many international workers with a UK pension are now considering this option in the search for greater investment freedom.

What are my options when transferring my UK pension to the US?

How long does it take to transfer my UK pension?

Does it cost money to transfer a UK pension to the US?

Can I transfer my UK pension to another person?

Who can transfer their UK pension?

How Can Skybound Wealth Management Help?

At Skybound Wealth Management we know that making a decision on whether a UK pension transfer to the US can be daunting, which is why our team of experienced UK pension transfer advisors are on hand to help you answer the questions most British internationals in the US are asking.

All our advisors our US licensed Advisory Representatives, meaning they are well placed to advise in all areas of personal financial planning including UK pension transfers to the US.

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Which Option To Take?

Leave Your Pension In The UK

If you are looking for a low risk, guaranteed lifetime income and your existing pension will provide this, then rather than transferring your UK pension to the US, you may be better staying with your ¬final salary scheme. It may also be the case that a UK Pension Transfer would see a substantial reduction in the value of your benefits.

Take Control Of Your UK Pension

If you have concerns over the solvency of your existing UK pension fund, want greater control over your investments and would benefit from the extra capital an increased CETV could bring, a UK pension transfer to the US away from your existing scheme could be the right choice for you. If you choose this path, the two main options to consider are a SIPP or QROPS.

Leave Your UK Pension Invested In Your Existing Plan In The UK.

If you leave your pension invested in the UK, you should be able to start taking benefits from it from the age of 55, but there are tax implications.

If you live in the USA, but you're classed as a UK resident for tax purposes, you may have to pay UK tax on your UK pension. We can help establish if this is the case for you or not.

If you're not a UK resident, you don't usually pay UK tax on your UK pension, but you may have to pay tax in the country you're living in – and if you live in a country that doesn't have a Double Tax Treaty with the UK, you may even have to pay tax in both countries. The USA does have a Double Tax Treaty with the UK but if you're considering retiring in a different country this may not be the case.

Some defined benefit UK pension plans and some older personal pension plans and money purchase/defined contribution UK pension plans may not be written under the new Flexible Access Drawdown rules and therefore may restrict how much and when you can take any benefits. Some pension plans may even only offer the purchase of a lifetime annuity as the pension benefit.

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Leaving Your Pension In The UK

UK Final Salary schemes do remain a great benefit for some people to hold. If any of the following points apply to you, transferring your UK pension to the US might not be the best option for you.

If your employer has stated that transferring your UK pension to the US will result in a substantial reduction in the valuation of your benefits.

If you aren’t confident that opting for a different investment strategy would result in inflation beating returns due to the critical yield needed being too high.

If your pension pot exceeds the current Lifetime Allowance limit (£1,073,100) then you could be hit with a tax penalty.

What Is A SIPP?

A Self-Invested Personal-Pension (SIPP) is a straightforward UK based pension which, with the help of your financial adviser allows you to take greater control of your pension fund. Through increased investment choice and greater flexibility over income options at retirement, you can tailor a retirement plan to suit your individual needs.

Through increased investment choice and greater flexibility over income options at retirement, you can tailor a retirement plan to suit your individual needs. A SIPP works in the same way as other private pensions which you may be familiar with, however there tends to be greater flexibility in terms of investment choice and retirement options. It is estimated that one million people hold a SIPP, and as platform efficiencies have allowed lower cost solutions to be reached by more investors, SIPPs are becoming more attractive and increasingly popular for those looking to transfer their existing UK pension to make the most out of their retirement provision.

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How Does An International SIPP Work?

How does a SIPP work?

A SIPP works in the same way as other private pensions which you may be familiar with, however there tends to be greater flexibility in terms of investment choice and retirement options. The pension freedoms which were introduced by the UK Government in April 2015 have increased the demand for private pensions, and this is changing the way in which people plan their retirement and access their pension fund.

Can I transfer other UK pensions into a SIPP?

Yes you can transfer existing UK pensions into a SIPP. This allows you to move your money away from previous employer schemes or personal pensions, and to consolidate your plans under one arrangement. Each pension scheme has a different structure, in terms of charges, retirement options and investment choice, therefore it is important to compare the schemes before making any arrangements to transfer your pension.

What can I invest in with a SIPP?

A SIPP allows you to invest across a number of assets, such as collective investment funds, individual company shares and bonds. The wide investment choice allows you to diversify your pension across a number of geographical areas and sectors, and this can be tailored to match your attitude to risk.

What happens to my SIPP when I pass away?

When you open a SIPP, you nominate a beneficiary to receive your pension fund following your death. This could be, amongst others; your spouse, or a family member. This nomination can be changed at any time should your wishes or circumstances change, simply by completing a new nomination form.  Upon death, the pension is passed onto your dependants or nominees, usually free of inheritance tax. This has made personal pensions a valuable tool to pass wealth through generations of your family.

  • If you are under 75 when you die, the beneficiary can withdraw an income or lump sum from the pension free of income tax.
  • If you are over 75 when you die, any withdrawals by the beneficiary will be taxed at their marginal rate of income tax (0%, 20%, 40% or 45%).

What Is A QROPS?

A Qualifying Recognised Overseas Pension Scheme is an international pension plan, recognised by HMRC. As an international plan, it can benefit from local taxation and adapt to your changing circumstances - particularly of use for those retiring offshore where residency and taxation are a key component of long-term income planning.  When you transfer your UK pension into a QROPS, it is no longer subject to the ever-changing UK pension legislation, can benefit from improved tax efficiency for those resident outside of the UK for at least ten years, and does not carry a pension lifetime allowance when tested on transfer from the UK.

A QROPS has to meet certain criteria. It must be:

  • Established outside of the UK
  • Recognised for tax purposes in the country where it's located
  • Regulated in the country where it's established.
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How Does A QROPS Work?

Can I Transfer My UK Pension To A QROPS?

Members of most UK final salary schemes can transfer to another scheme There are two instances when a UK final salary transfer is not possible. 1) Public sector unfunded defined benefit scheme members are prohibited from transferring and, 2) where an employee is within one year of their retirement age, it is left to the discretion of the trustees of the scheme

Is A QROPS Suitable For Me?

Transferring your UK pension into a QROPS can be advantageous if you are what is known as a deferred member. This means you are no longer employed by the company sponsoring the scheme and are yet to draw any benefits from their pension.  However, it’s important to consider the merits of all options available as often the best course of advice is to do nothing.

Is A QROPS Subject To UK Inheritance Tax?

There are a number of tax benefits when transferring your UK pension to a QROPS in the US.Pension funds can be passed down to family members free of UK Inheritance Tax (IHT) and scheme charges on death at any age.

Does The Lifetime Allowance Apply To A QROPS?

When you transfer your UK pension to a QROPS, this triggers a Benefit Crystallisation Event and under current rules once the transfer has occurred, your funds are able to grow without being subject to Lifetime Allowance limits.

Get Our Complete Guide On UK Pension Transfers To The USA.

Our free guide has lots of information about your options, what they mean and what you should take into consideration before making any decision.

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Let’s Start A Conversation

Don’t you hate it when you spend ten minutes trying to navigate an automated menu before giving up after forgetting why you picked up the phone in the first place? US TOO!

Whether you are contacting your regional Skybound office, or our International Client Services team, rest assured you will be greeted by an actual human being.

Talk To An Adviser

You can reach us directly by calling us between the hours of 8:30am and 5pm at each of our respective offices and we will immediately assist you.

Request A Call Back

Thank you!
Your call back request has been received and we will arrange for a member of our team to call you at your desired time.
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