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Anyone successfully executed pension portability from UK Civil Service to a US Plan?

Anyone successfully executed pension portability from UK Civil Service to a US Plan?

Old Aug 27th 2014, 4:40 pm
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Default Anyone successfully executed pension portability from UK Civil Service to a US Plan?

Hello!

First time reader and first posting!

I came here wondering if anyone has successfully executed "pension portability" from UK Civil Service to a US Plan? I have a PCSPS (Principal Civil Service Pension Scheme) balance. I've lived in the US for many decades and am now a citizen with no plans to return. I'd like to move the PCSPS defined benefit balance from the UK to a US defined contribution plan like a pre-tax IRA Rollover account or similar.

Any advice?

Thanks!

PS I did search here a elsewhere and found UK State Pension Info : British Expat Wiki , but what I want to do is move the balance in its entirity before the pay-out date.
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Old Aug 27th 2014, 4:54 pm
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Default Re: Anyone successfully executed pension portability from UK Civil Service to a US Pl

Can't be done.
As far as I know

Question comes up regularly.

Last edited by Hotscot; Aug 27th 2014 at 5:02 pm.
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Old Aug 27th 2014, 5:04 pm
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Default Re: Anyone successfully executed pension portability from UK Civil Service to a US Pl

Originally Posted by Hotscot View Post
Can't be done.
Agreed, and that's a good thing because, .....

..... Anyone who wants to swap a defined benefit plan for a defined contribution plan should have their head examined. Sorry, no offence intended, but no competent professional advisor would ever recommend that as a sensible course of action.
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Old Aug 27th 2014, 5:05 pm
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Default Re: Anyone successfully executed pension portability from UK Civil Service to a US Pl

Originally Posted by Pulaski View Post
Agreed, and that's a good thing because, .....

..... Anyone who wants to swap a defined benefit plan for a defined contribution plan should have their head examined. Sorry, no offence intended, but no competent professional advisor would ever recommend that as a sensible course of action.
Maybe there's not enough risk/excitement in his life?
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Old Aug 27th 2014, 5:19 pm
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Default Re: Anyone successfully executed pension portability from UK Civil Service to a US Pl

Originally Posted by Pulaski View Post
Agreed, and that's a good thing because, .....

..... Anyone who wants to swap a defined benefit plan for a defined contribution plan should have their head examined. Sorry, no offence intended, but no competent professional advisor would ever recommend that as a sensible course of action.
Have to agree with this. Even if it was possible, it would be a terrible thing to do.
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Old Aug 27th 2014, 6:11 pm
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Default Re: Anyone successfully executed pension portability from UK Civil Service to a US Pl

Originally Posted by Pulaski View Post
Agreed, and that's a good thing because, .....

..... Anyone who wants to swap a defined benefit plan for a defined contribution plan should have their head examined. Sorry, no offence intended, but no competent professional advisor would ever recommend that as a sensible course of action.
Originally Posted by sir_eccles View Post
Have to agree with this. Even if it was possible, it would be a terrible thing to do.
Generally that's true, but as I understand it there are one or two specific scenarios where it might be a reasonable choice. EG someone with a very reduced life expectancy, or perhaps someone with no dependants.
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Old Aug 27th 2014, 6:11 pm
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Default Re: Anyone successfully executed pension portability from UK Civil Service to a US Pl

That depends.

$10 a week and with a family that dies early and they offer a big cash sum?

I did have a smallish pension and the lump sum did look attractive but I could not take it.

It is down to mathematics and how long you think you will live and how that corresponds to their actuarial basis.
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Old Aug 27th 2014, 8:46 pm
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Default Re: Anyone successfully executed pension portability from UK Civil Service to a US Pl

Thanks!

I would have naively thought that, if the cash-out value of a DB plan was equal to its true actuarial value, then DB versus DC would be a wash since one could use the DC to buy an (again, fairly priced) USD-denominated annuity of equal value as the original DB... but in any case, the point is moot because it seems such a transfer is in any case impossible...

Soooo, my follow up question takes a different tack, namely:

If I have an non-portable DB pension in the UK and no UK bank account, is it possible to instruct the payer (UK Govt Pay and Personnel Agency pensions in this case) to deposit the monthly payments (once due) in pounds sterling to a US bank (via a SWIFT code or whatever) and to have my bank do the currency conversion? Do I have to swallow the terrible conversion spread that banks sting you with? Any way to get a lower spread?

In other words, what options have folks used in my case?

Last edited by colin_w; Aug 27th 2014 at 8:51 pm. Reason: clarify
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Old Aug 27th 2014, 9:07 pm
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Default Re: Anyone successfully executed pension portability from UK Civil Service to a US Pl

Originally Posted by colin_w View Post
Thanks!

I would have naively thought that, if the cash-out value of a DB plan was equal to its true actuarial value, then DB versus DC would be a wash since one could use the DC to buy an (again, fairly priced) USD-denominated annuity of equal value as the original DB... but in any case, the point is moot because it seems such a transfer is in any case impossible...

Soooo, my follow up question takes a different tack, namely:

If I have an non-portable DB pension in the UK and no UK bank account, is it possible to instruct the payer (UK Govt Pay and Personnel Agency pensions in this case) to deposit the monthly payments (once due) in pounds sterling to a US bank (via a SWIFT code or whatever) and to have my bank do the currency conversion? Do I have to swallow the terrible conversion spread that banks sting you with? Any way to get a lower spread?

In other words, what options have folks used in my case?
They will transfer the pension in dollars at the market rate, so you will get no transaction charges, if fact they are required by law to do that.
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Old Aug 27th 2014, 10:07 pm
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Default Re: Anyone successfully executed pension portability from UK Civil Service to a US Pl

Originally Posted by colin_w View Post
Thanks!

I would have naively thought that, if the cash-out value of a DB plan was equal to its true actuarial value, then DB versus DC would be a wash since one could use the DC to buy an (again, fairly priced) USD-denominated annuity of equal value as the original DB... but in any case, the point is moot because it seems such a transfer is in any case impossible...
You cannot transfer a UK retirement account into a US one. The issue you would have in the scenario you propose is taxation, there would be no way to maintain tax deferral.

Soooo, my follow up question takes a different tack, namely:

If I have an non-portable DB pension in the UK and no UK bank account, is it possible to instruct the payer (UK Govt Pay and Personnel Agency pensions in this case) to deposit the monthly payments (once due) in pounds sterling to a US bank (via a SWIFT code or whatever) and to have my bank do the currency conversion? Do I have to swallow the terrible conversion spread that banks sting you with? Any way to get a lower spread?

In other words, what options have folks used in my case?
Yes, you can get UK government and UK old age pensions paid into a US bank account in US dollars. Submit a US-Individual 2002 so that no UK tax is withheld at source on the pensions. You will have to pay US tax on the pensions and enter them on line 16 of your 1040

Last edited by nun; Aug 27th 2014 at 10:15 pm.
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Old Aug 27th 2014, 10:29 pm
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Default Re: Anyone successfully executed pension portability from UK Civil Service to a US Pl

Thanks! Does the UK payer require that I send them an IRS 6601 Residency Certificate every year in order to avoid being taxed at source? Or is the certification a one-time deal?
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Old Aug 27th 2014, 10:51 pm
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Default Re: Anyone successfully executed pension portability from UK Civil Service to a US Pl

Originally Posted by colin_w View Post
..... is it possible to instruct the payer (UK Govt Pay and Personnel Agency pensions in this case) to deposit the monthly payments (once due) in pounds sterling to a US bank .....
Notwithstanding the good advice above, US banks don't offer GBP accounts, other than offshore (with fees accordingly), and in fact were prohibited from offering non-USD a/cs in the US until a couple of years ago. To the best of my knowledge no US bank yet offers GBP a/cs in the US, and I doubt many ever will, given the costs of implementing a system for foreign currencies for what would be a niche service. In short, you couldn't receive a sum denominated in GBP in the US even if you wanted to.

Last edited by Pulaski; Aug 27th 2014 at 11:14 pm.
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Old Aug 27th 2014, 10:52 pm
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Default Re: Anyone successfully executed pension portability from UK Civil Service to a US Pl

Originally Posted by colin_w View Post
Thanks! Does the UK payer require that I send them an IRS 6601 Residency Certificate every year in order to avoid being taxed at source? Or is the certification a one-time deal?
you need to include an 8802 residency certificate. You should only need to apply once as this will change your HMRC tax code to NT.
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Old Aug 27th 2014, 11:08 pm
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Default Re: Anyone successfully executed pension portability from UK Civil Service to a US Pl

Originally Posted by nun View Post
you need to include an 8802 residency certificate. You should only need to apply once as this will change your HMRC tax code to NT.
Yes, once issued and your final UK tax code becomes "NT" it remains in effect and you need do nothing further in subsequent years - unless your circumstances should change.

See here for more info regarding the procedure:

Form 6166 - Certification of U.S. Tax Residency
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Old Aug 27th 2014, 11:51 pm
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Default Re: Anyone successfully executed pension portability from UK Civil Service to a US Pl

Originally Posted by Pulaski View Post
Notwithstanding the good advice above, US banks don't offer GBP accounts, other than offshore (with fees accordingly), and in fact were prohibited from offering non-USD a/cs in the US until a couple of years ago. To the best of my knowledge no US bank yet offers GBP a/cs in the US, and I doubt many ever will, given the costs of implementing a system for foreign currencies for what would be a niche service. In short, you couldn't receive a sum denominated in GBP in the US even if you wanted to.
Hmmm... My account is a regular USD denominated one. If they were to receive Sterling funds, wouldn't they just convert them to dollars and deposit those? Anyone cracked this problem?
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