Gezza

An expat of some 15 years, I have been approached by a Boston company asking if I would like to take my private pension funds out of UK. Unfortunately, my profession is removed from finance and I have little knowledge to judge whether this maybe a good or bad idea. Has anyne else done this? What are the presumed gains in doing this?. I would be grateful for any pointers,,. Thanks, Gezza

john in oz

I specialise in UK to OZ but the same principles apply when making a decision. These include what benefits the USA system offers you from a providing a pension, tax on pensions of the UK component brought over, what investment returns you will gte and how the currency rates stand up to name a few.

If you are nearing retirement then the type of UK Pension fund is a consideration as well - ie if the fund is a large balance and a defined benefit scheme you may wish to simply draw down a known pension form it in the near future.

The other issue is one of death taxes on a UK pension fund currently at 55% proposed to reducing to 40 % from April 2015.

There are a number of changes proposed from April 2015 and there is a topic on this above.

You will need to have an understanding of the above and I would suggest speaking with a professional in the USA on the pros and cons of such a move to the USA - ensure they have a through understanding of both tax laws in the UK and USA.

I hope this starts to point you in the right direction - others may add more information and there are some previous posts on usa/uk here as well.

Cheers

nun

You cannot move a UK pension to the US...the IRS won't allow it. Run a mile!!!!! What is the name of the Boston company?

Gezza

They are called:
ACSI | Senior Investment Advisory Office
****** USA Inc.New York

Sounded very nice. And asked me to send them signed access authorization documents. Could this be a bad idea?

Gezza

#$#de__Vere#$__USA_Ink

nun

Ah those guys. Don't answer them or send them anything. In fact never reply to any unsolicited contact. They will most likely be trying to sell you a US QROPS where your UK pension money is moved to somewhere like Malta. This will be expensive and might well have serious US tax consequences.

If you are worried about your UK pension the first thing is to understand exactly what you have; is it final salary, what are the fees, is it an annuity, how is it invested etc. Until you can answer all those questions....and more...you are in no position to make an informed decision. IMHO most people with UK pensions will be best served by looking for better pension terms within the UK rather than moving them offshore.

DO NOT SEND ANYONE ANYTHING!!!!!!!

john in oz

Nun is right - never ever sign authority forms when you have not made contact with them and requested their services. There are some funds in the USA that can accept UK pension funds but you need to be fully informed of the benefits to you and the rules in the USA as well as what the consequences are of exiting a Defined benefit Scheme.

nun

I disagree. The IRS will not allow the transfer of UK pension funds into a US qualified plan.

john in oz

Thanks Nun - whether or not IRS will allow is a separate issue - I just stated that there are a number of funds that do accept UK Transfers. On the current HMRC list of funds there are 4.

As per my post and as Nun has stated there are issues that you need to check out including whether or not the IRS will allow. Nun has indicated that the IRS will not allow transfers and you should check on this.

Thanks Nun for the extra info here.

nun

QROPS have no meaning to the IRS, they are an HMRC construct. Numerous rulings have disallowed the transfer of money from a non-qualified US plan ie any organized under laws other than US, to a US qualified plan. So the 14 "US QROPS" cannot accept money from a UK plan....or any non-US qualified plan.

The plans that HMRC recognizes as QROPS in the US are all private company plans and only accessible if you work for the particular company. I assume that the companies have set them up as QROPS to make the taxes and retirement planning of US employees that work in the UK for some time a bit easier. They'll be some internal administrative or tax advantage.

john in oz

Thanks Nun for that - the 4 on the HMRC list appear to be private company funds as well... which is why promoters of transfers of Uk pensions would not be offering to transfer to the USA but presumably another offshore account in Malta or other countries etc as indicated by you above.

As Nun and I stated do not sign anything and seek advice on your options.

bakedbean

Sorry if this is a bonkers question, but what exactly does this mean?
What is a death tax on a UK pension fund?

john in oz

https://www.gov.uk/tax-on-pension-death-benefits

bakedbean

Oh I see.... it's tax paid on an inherited pension. Gotcha. thanks John.

Otto The Squid

If you are US resident, it is likely that the IRS will not tax a defined pension benefit scheme as it defers to retirement.

However if, for example, you move it to Malta, then the IRS may look through the trust and tax the funds.

My advice is to get a US tax specialist in the relevant US state of residence to give an opinion ( which might be costly ), before moving a UK pension to a QROPS. It is a minefield.