hargrepa

First I'd like to apologize, I'm sure this question has been before but I'm darned if I can find my exact circumstance.
I'm 55 next month. I live and work in USA with a healthy 401k. I've two pensions in the UK. I would like to cash in and transfer money to my personal bank account in the US. I do not want reinvest etc. I understand I'll be taxed 25% in the UK.
There are scores of companies that want to take my money from the UK and USA and reinvest the lot.
I spoke with Jaguar Landrover in the UK who hold the largest pension and they were no help whatsoever...they are just administrators and I'm going to need 'cross border transfer specialist'. Well I search for this and all I get are companies want to transfer my money into their acct so they can invest for me.
Could someone advise me? Point me in the right direction?...

Pulaski

So you want to cash in your pensions, and transfer the money?

So why don't you just cash in your pensions, paying the tax, which you already know about (you might need to claim it back in the UK and pay in the US if (i ) you are tax resident in the US , and (ii) either of the pensions are classified as "government pensions" (you earned the entitlement while working for a government body, whether national or local) and transfer the money? You don't necessarily need any skilled professional adviser to any of that.

Or am I missing something in your question?

hargrepa

I had a telephone interview with Jaguar Landrover, pension administrators, which I believe is a government requirement. They went through their official questionnaire after which I told them what I want to do, cash in, lump sum, pay taxes and transfer to USA., the lady said she must consult with colleagues, she returned and said she can't help and that I need a regulated cross border transfer specialist to proceed further......wth? Yeah I didn't think it would be easy but I am missing something?...I tried looking for such a specialist no such luck. I am tax resident in US and do not told UK bank account

MidAtlantic

That pension administrator appears to have misunderstood. If you are just cashing out then there are no cross border issues. You receive your cash and do what you like with it.

Your problem will be that you do not have a UK bank account to receive it. One possibility in this situation is to open a Transferwise Borderless Account to receive it and transfer it to your US account.

Pulaski

OK, so that is a complicating factor. Mid-Atlantic above suggested one alternative, or perhaps an account in the Isle of Man or Channel Islands might circumvent the problem as banks in those jurisdictions operate as if they were domestic British banks, but cater to an international clientele.

hargrepa

part of the confusion maybe with the word ‘transfer’

chawkins99

I cashed out a small pension a couple of years ago.

I called them, told them I wanted to cash it out and they sent me a form to complete. The complication was that they were asking for a UK bank account to pay it in to. After a couple of more calls, they agreed to pay it directly into my US bank account.

I paid the tax and declared it on my US tax return. The following year, I received a full refund of the tax paid in the UK. The tax refund was more trouble as they also required a UK bank. I had it paid to my brother who then sent it over using Transferwise.

KReed

I am a US citizen, moving back to the US after 5 years in the UK and I am not even sure what to do with my pension. I am only 48 at this point, so if I were to cash it out, I assume there are taxes/penalties? I am wondering if it would be worth it to take the hit now and save myself potential issues later.

Pulaski

With a British private pension (similar to a 401K) I am not even sure that you can "cash it out", British pensions are extremely well protected e.g. you can't be forced to liquidate them if you are declared bankrupt (unless you used the pension to fraudulently hide assets from creditors), so you are likely stuck with it, although you can transfer it to another fund manager. You might want to look at a fund manager that you are familiar with such as Fidelity, and you might need to make the initial request while you are still in the UK, as UK financial institutions are usually reluctant to deal with anyone who is US resident, although the actual transfer probably can't happen until after you have left your job in the UK., just like making a 401k transfer in the US.

Your state pension contributions are an entirely different matter. [1] they are inaccessible to you at the moment, period. [2] if you have less than 10 years they are insufficient to ever generate a pension, and so would be "lost", therefore [3] I would recommend looking at making future voluntary contributions*, for at least 5 additional years (to reach the aggregate minimum of 10 years to generate a state pension). The contributions will be either around £150/yr (Class 2) or around £715 year (Class 3), and you should request Class 2 and will have to provide employment details for review and approval. I recommend this course of action as the return on your additional invest is very good on Class 3 contributions (takes only about 5 years of retirement to "get your investment back", but is truly extraordinary on Class 2 contributions, as the increase in state pension leads to you getting your investment back after about 18 months, and of course carries on paying for the rest of your life. When the time comes to draw your UK state pension you can get it credited directly your bank account in the US at a favorable exchange rate.

* For the benefit of anyone else reading this, you can only make additional voluntary contributions if you have already contributed to the state pension for a minimum of three years.

Clarets

If you cash out your final salary pension as a US resident is the first 25% available to you tax free?
What is the UK tax rate for the balance or does that depend on your personal circumstances?

circusplaza

Pulaski - I will be interested to know more about the public pension. I worked 6 years in the UK and have my private pension there (not thinking to transfer it so far), but the day I moved to the US I thought I lost any possibility for a public one... This is interesting as I would like to add voluntarily a few more years to be able to secure some (I guess minimal) pension from the state. I do not plan to live in the UK anymore (just visiting) but never know.
Do you have any links handy to ilustrate me? What is the difference between class 2 and 3? how to sign up and make these voluntary contribution?

Cheers!!

Pulaski

For every year of contributions you get 1/35 of a standard state pension. So long as you have already made 3 years of contributions you are eligible to make addtional contributions. Typically you can also make six years of contributions in arrears; sometimes people are allowed to make more than six years but I am not sure why, although one exception was made when the number of years for a full pension was increased from 30 years to 35 years..

Class 2 costs about £155/yr at the moment, Class 3 somewhere around £725/yr the maths works out that if you pay for one year at Class 2 rates you will receive an increase in your pension that pays that much back in just six months of retirement, so the return on investment is almost unbelievably good. At Class 3 rates the payback is about 2½ years, which is still extremely good. ..... Take a look at the hyperlink in my signature below - the Guardian article is actually quoting a post I made here on BE a few years ago.

You will need to speak to someone at the International department of the Pension administration office in Newcastle. Tell them you live overseas and want to make additional voluntary contributions. Also tell them you want to apply to make Class 2 contributions, and they will send you an application form.

circusplaza

Lovely!! Thanks for the info and happy weekend you all!

Pulaski

Ur welcome .... and you too!

circusplaza

Bothering you guys again here... let's see if I can close the topic and call on Monday and apologies as this has nothing to do with USA.

I have worked in the EU (continent) a few years before working in the UK, so I do have like 3-4 years in a EU county... do you guys know if there is a way to pass them to the UK fund? is it at all possible?
Just thinking I will lose them if not,I do not think I am entitled by any pension there...