Citizenship & UK Pension Change
 

Couple of things, I recently attended my citizenship interview. It was brief, about 15 mins max and told to expect a letter within six weeks to attend an Oath Ceremony.

Second, I received a PDF version of the August 2014 Budget update. There are a number of changes to the pension rules. This one below is the one that affects me right now, 65 next year. Assuming I understand it correctly I will be able to take my entire stakeholder pension as a lump sum UK tax free as a US resident/citizen. Of course subject to US tax rules.

Moving pensions or pension funds to the US has been problematical to date. This rule change appears to give us the freedom to now do so at 55 or over. Again if i have understood it correctly, we will be able to bring the entire lump sum over to the US to do with as I please. This is a major change for us.

I received this PDF direct from my UK broker but if you search the UK gov web sites I'm sure it will be there somewhere.

CHANGE 1: Flexible access to pensions from age 55
What is changing: From April 2015 pension investors aged at least 55 will have total freedom over how they take an income from their pension. They could even take the whole fund as a lump sum if they so wish. They will then be able to spend, invest or save it as they prefer.

The first 25% will be tax free. The rest will be subject to income tax at your highest marginal rate. So if you are a basic-rate (20%) taxpayer, any income you draw from your pension will be added to any other income you receive (e.g. your salary) and this could push you into the higher (40%) or even top-rate (45%) income tax bracket.

You can choose to take the pension out in stages, rather than in one go, which could help you manage your tax liability. It should also be possible to take the tax-free cash straightaway and the taxable income at a later date.

Who will be affected: Anybody with a defined contribution pension – e.g. individual or group personal or stakeholder pensions, Self Invested Personal Pensions (SIPPs), some Additional Voluntary Contribution (AVC) schemes, etc. – could benefit.

Investors aged 55 or over in April 2015 should be able to take advantage of the increased flexibility straightaway. When this is happening: April 2015



This was just the part that interested me, there's much more detail to the changes.

Re: Citizenship & UK Pension Change
 

Interesting, but it's not really an immigration-related issue. Perhaps a moderator will move this to the general USA forum.

Ian

Re: Citizenship & UK Pension Change
 

"I recently attended my citizenship interview. It was brief, about 15 mins max and told to expect a letter within six weeks to attend an Oath Ceremony."


Really? perhaps the moderator can move this part of my message back to "US Immigration, Citizenship and Visas"

Re: Citizenship & UK Pension Change
 

I actually wish we had a finance section...

Re: Citizenship & UK Pension Change
 

I've been saying that for years, not just US vs. UK finance issues but UK-expat finance issues. It seems to come up a heck of a lot in individual forums.

Re: Citizenship & UK Pension Change
 

Erm......there's a sub-forum called 'Expat Finance' for that very purpose......!

It's not very well frequented though, because people tend to post their questions in their usual country forum, but it's there for people to use if they wish.

HTH.

Re: Citizenship & UK Pension Change
 

That was news to me ... it looks like a partner forum (for external businesses) ... is that correct?

I see it was created earlier this year so I am glad someone was listening. ;)

It might be worthwhile advertising it more actively. I know in the past when sub-forums were created, there'd be a sticky or alert thread for a while alerting people to the reason for a sub-forum restructure, or the existence of a new sub-forum.

I don't think most users of BE log in and then say "I wonder if a new forum has been created for finance" ... I would place bets that most long-term users don't realise it is there.

Re: Citizenship & UK Pension Change
 

I'm a bit dubious about those partner forums - there's not really any clear info on who is paying to post there or have a presence there or whatnot.

I think a proper finance sub forum ought to be in the general section where 'The Lab' is situated.

Re: Citizenship & UK Pension Change
 

I agree. :nod:

Re: Citizenship & UK Pension Change
 

If you have a question about the oath ceremony, go ahead and create a new thread in that forum. It doesn't look like you have anything for discussion, though.

On the pension issue - yes, I think it's general knowledge for most, but maybe not all, of the people here that this change is coming. However, as you correctly point out, the big issue for US residents is the US tax laws. The opinion of most of the financially knowledgeable posters here is that the IRS treats the lump sum as income, but allows beneficial tax treatment under the dual tax treaty for regular pension pay-outs. It therefore rarely makes sense to take the lump sum. However, I've seen opinions elsewhere that the lump sum can be counted under the pension provisions of the dual tax treaty. I'm afraid if you want details I'm not the one to provide them. I'm hoping that things will be clearer when I retire in twenty years' time.