British Expats Living in the US: UK Pension Planning

British expats living in the US should review each UK pension before leaving it untouched, transferring it, consolidating it, drawing from it or changing the investment strategy.

A UK pension review for a US resident should usually consider:

• what type of UK pension it is
• whether it is defined contribution or defined benefit
• whether valuable guarantees apply
• whether safeguarded benefits exist
• whether transfer advice is required
• whether the pension can accept further contributions
• whether the current provider can support a US resident
• whether investment options remain suitable
• whether the pension holds funds that create US tax issues
• whether a SIPP is appropriate
• whether consolidation is useful
• whether pension withdrawals may be needed
• how the pension may be taxed in the US
• how the pension may be taxed in the UK
• whether the US-UK treaty is relevant
• whether currency risk is being managed
• whether beneficiaries are up to date
• whether the client expects to retire in the US, UK or elsewhere
• how the pension fits with 401(k), IRA, Roth IRA and Social Security planning

A UK pension can remain valuable after moving to the United States.

But the planning changes.

Once you are US resident, pension decisions should be reviewed through both UK pension rules and US tax-aware financial planning.

If you still lived in the UK, a UK pension review would usually focus on UK pension rules, investment choice, charges, retirement income and tax.

Once you live in the United States, the review becomes more complex.

You may need to consider:

• US tax residence
• US citizenship or green card status
• US-UK treaty treatment
• UK pension rules
• pension provider restrictions
• whether the pension holds US-problematic investments
• whether a SIPP provider can work with a US resident
• whether a pension transfer is possible or advisable
• whether defined benefit guarantees should be preserved
• whether pension income will be drawn in pounds or dollars
• how the pension interacts with 401(k), IRA and Roth IRA accounts
• how the pension interacts with Social Security
• whether you may return to the UK later
• whether beneficiaries live in the US, UK or elsewhere

This is why the right answer is rarely simply:

• leave it where it is
• transfer everything
• move everything to a SIPP
• draw it all now
• wait until retirement

Each option may be right in some circumstances and wrong in others.

The planning needs to start with the pension details, then connect them to your US tax position, retirement goals, currency needs, investment strategy and family situation.

This page is for general information only and does not constitute personalised financial, tax, legal, investment, pension transfer, retirement, estate planning, immigration, UK pension, US tax, UK tax, treaty or currency advice.

UK pensions, SIPPs, defined contribution pensions, defined benefit pensions, safeguarded benefits, pension transfers, consolidation, drawdown, UK State Pension, US tax, UK tax, treaty treatment, reporting, investment options, charges, beneficiaries, currency and future residence depend on personal circumstances and may change.

Pension transfer advice, where required, should be taken from a suitably authorised pension transfer specialist. US tax advice should be taken from a suitably qualified US tax adviser or CPA. UK tax and legal advice should also be taken where relevant.

Financial planning should be coordinated with legal, tax, pension, investment and estate planning advice where appropriate.

Investing involves risk. Pension, retirement account and investment values can fall as well as rise, and you may get back less than you invest.

Currency movements can affect the value of pensions, transfers, withdrawals and income.