UK Final salary pension transfer
Feb 11th 2021, 7:41 pm
#31
BE Forum Addict
Joined: Aug 2013
Location: Athens GA
Posts: 2,134
Re: UK Final salary pension transfer
Tax is due when withdrawn from the SIPP, not upon transfer to a SIPP. It is due upon withdrawal regardless of whether you then transfer the funds to the US. You should continue to declare on FBARs. Some say you also should declare It as a foreign trust, some say you don’t have to do that. I, personally do not declare my SIPP as a foreign trust but do declare it on Form 8938 because it is a lot simpler and there is no definitive guidance on the foreign trust requirement.
Feb 25th 2021, 7:44 pm
#32
Just Joined
Joined: Feb 2021
Posts: 1
Re: UK Final salary pension transfer
Glasgow Girl
I would also like the details of a trustworthy independent pension adviser for those with UK-based pensions who have moved to the UK. I've spent two years talking to two different advisers in turn, and narrowly got taken to the cleaners by one lot - based in the Caribbean. My current guy I believe to be honest, but I'm not sure he knows what he so doing. It's so difficult to find any adviser who will even speak to me, as they are terrified of being taken to task by the FSA in the UK.
I would have DM'd you, but I'm not allowed as I only joined today. If you are happy to pass the information on maybe you could DM me...
I would also like the details of a trustworthy independent pension adviser for those with UK-based pensions who have moved to the UK. I've spent two years talking to two different advisers in turn, and narrowly got taken to the cleaners by one lot - based in the Caribbean. My current guy I believe to be honest, but I'm not sure he knows what he so doing. It's so difficult to find any adviser who will even speak to me, as they are terrified of being taken to task by the FSA in the UK.
I would have DM'd you, but I'm not allowed as I only joined today. If you are happy to pass the information on maybe you could DM me...
Feb 25th 2021, 10:07 pm
#33
Furby
Joined: Apr 2016
Location: St. Louis, MO.
Posts: 874
Re: UK Final salary pension transfer
@ncameron99, Sent you a PM
Feb 27th 2021, 8:48 pm
#34
Just Joined
Joined: Nov 2013
Location: Illinois
Posts: 7
Re: UK Final salary pension transfer
I completed transferring into SIPP late last year. I live in US since 1999 and had 4 pensions in the UK, one of which was defined benefit.
When it came close to retirement age, I received four invitations to take distribution. It should be simple for UK resident and citizen, but a lot of more work and new learnings for US resident and citizen. I deferred all of them for a year.
Started to work with US financial advisors for UK pension consolidation after the wake up call. Interactions with the first one was intermittent. He was adamant that defined benefit cannot be transferred and only the other three can. At that time, I started to work with the second advisor. It is a team and things started to move - meetings, emails, phone calls, phone interviews and discharge forms with pension schemes one by one.
UK regulated advise was required to move defined benefit pension for a fee. UK advisor was so meticulous and questioned all retirement expenses from Christmas gifts to annual TV license fee which the US does not have. The outcome was a beautifully plotted 2K GBP worth of curve showing I was far better off by transferring out of the defined benefit system which is like a mini social security.
A recommendation was made and transfer to SIPP completed. It took about a year to complete through the pandemic. SIPP is UK based with SEC regulated US intermediate. A sense of relief dealing with one consolidated account and one US tax reporting.
When it came close to retirement age, I received four invitations to take distribution. It should be simple for UK resident and citizen, but a lot of more work and new learnings for US resident and citizen. I deferred all of them for a year.
Started to work with US financial advisors for UK pension consolidation after the wake up call. Interactions with the first one was intermittent. He was adamant that defined benefit cannot be transferred and only the other three can. At that time, I started to work with the second advisor. It is a team and things started to move - meetings, emails, phone calls, phone interviews and discharge forms with pension schemes one by one.
UK regulated advise was required to move defined benefit pension for a fee. UK advisor was so meticulous and questioned all retirement expenses from Christmas gifts to annual TV license fee which the US does not have. The outcome was a beautifully plotted 2K GBP worth of curve showing I was far better off by transferring out of the defined benefit system which is like a mini social security.
A recommendation was made and transfer to SIPP completed. It took about a year to complete through the pandemic. SIPP is UK based with SEC regulated US intermediate. A sense of relief dealing with one consolidated account and one US tax reporting.
Feb 27th 2021, 9:22 pm
#35
BE Forum Addict
Joined: Aug 2004
Posts: 4,754
Re: UK Final salary pension transfer
I completed transferring into SIPP late last year. I live in US since 1999 and had 4 pensions in the UK, one of which was defined benefit.
When it came close to retirement age, I received four invitations to take distribution. It should be simple for UK resident and citizen, but a lot of more work and new learnings for US resident and citizen. I deferred all of them for a year.
Started to work with US financial advisors for UK pension consolidation after the wake up call. Interactions with the first one was intermittent. He was adamant that defined benefit cannot be transferred and only the other three can. At that time, I started to work with the second advisor. It is a team and things started to move - meetings, emails, phone calls, phone interviews and discharge forms with pension schemes one by one.
UK regulated advise was required to move defined benefit pension for a fee. UK advisor was so meticulous and questioned all retirement expenses from Christmas gifts to annual TV license fee which the US does not have. The outcome was a beautifully plotted 2K GBP worth of curve showing I was far better off by transferring out of the defined benefit system which is like a mini social security.
A recommendation was made and transfer to SIPP completed. It took about a year to complete through the pandemic. SIPP is UK based with SEC regulated US intermediate. A sense of relief dealing with one consolidated account and one US tax reporting.
When it came close to retirement age, I received four invitations to take distribution. It should be simple for UK resident and citizen, but a lot of more work and new learnings for US resident and citizen. I deferred all of them for a year.
Started to work with US financial advisors for UK pension consolidation after the wake up call. Interactions with the first one was intermittent. He was adamant that defined benefit cannot be transferred and only the other three can. At that time, I started to work with the second advisor. It is a team and things started to move - meetings, emails, phone calls, phone interviews and discharge forms with pension schemes one by one.
UK regulated advise was required to move defined benefit pension for a fee. UK advisor was so meticulous and questioned all retirement expenses from Christmas gifts to annual TV license fee which the US does not have. The outcome was a beautifully plotted 2K GBP worth of curve showing I was far better off by transferring out of the defined benefit system which is like a mini social security.
A recommendation was made and transfer to SIPP completed. It took about a year to complete through the pandemic. SIPP is UK based with SEC regulated US intermediate. A sense of relief dealing with one consolidated account and one US tax reporting.
Last edited by nun; Feb 27th 2021 at 9:42 pm.
Feb 28th 2021, 3:43 pm
#36
Just Joined
Joined: Nov 2013
Location: Illinois
Posts: 7
Re: UK Final salary pension transfer
The delay came from UK pension administrators. It is all in rear view mirror now. Alignment with the appropriate regulatory structures is part of the service from the receiving scheme. It is all new to me. Some friends here have been there and have more knowledge.
Feb 28th 2021, 4:07 pm
#37
Forum Regular
Joined: Dec 2011
Posts: 193
Re: UK Final salary pension transfer
As far as regulation is concerned, ideally use a UK FCA regd adviser (with DB permissions) that also has an SEC licence.
Mar 1st 2021, 11:40 am
#38
BE Forum Addict
Joined: Aug 2013
Location: Athens GA
Posts: 2,134
Re: UK Final salary pension transfer
Did you have any difficulty transferring to the SIPP because of you rUS tax status and the potential reporting issues for the UK institution? Or has that died down now? Also is there any IRS or otherwise official acknowledgement of the SIPP structure being recognized as a pension in the DTA? Having a SIPP as a US citizen or tax resident will require some extra reporting and the cross boarder tax simplicity and guaranteed income of a final salary pension should be seriously considered. A final salary pension can be an excellent component of a diversified retirement income portfolio and essentially replace a bond/fixed income component so you can ramp up the equity allocation in your IRA's, 401ks, or UK based work pensions etc
Mar 1st 2021, 2:59 pm
#39
Just Joined
Joined: Feb 2016
Location: Boston, MA
Posts: 28
Re: UK Final salary pension transfer
Otto, is there a way to identify UK FCA registered advisers, with DB permissions and also an SEC license? Information on that seems scarce.
Jul 4th 2021, 1:04 pm
#40
Forum Regular
Joined: May 2011
Posts: 72
Re: UK Final salary pension transfer
Of course every situation has its own specific details but as rule of thumb you should stick with a final salary scheme unless you are offered a very high multiple of your annual earnings and are comfortable making major financial decisions independently. Anyone in the latter category will be well aware of that and will be more than capable of figuring out their own specific circumstances. Anyone in the former category is almost certainly going to be advised not to transfer. Nearly 80% of all analysis performed under the new regulations result in a No Transfer recommendation. Take into account that many people undergoing the required analysis fit into the latter category and that tells you that most people in the former category will get the No Transfer recommendation. Although there will be a few exceptions to the rule, this can help folks think twice before undertaking a very expensive analysis.
The UK based SIPPS provide access to funds in almost every major exchange and currency. In fact as an expat you are limited to specific international funds but retain the UK regulator protection which is priceless. Of course you could transfer to a non UK regulated SIPP but I would think more than twice about that one.
The UK based SIPPS provide access to funds in almost every major exchange and currency. In fact as an expat you are limited to specific international funds but retain the UK regulator protection which is priceless. Of course you could transfer to a non UK regulated SIPP but I would think more than twice about that one.
Jul 4th 2021, 2:20 pm
#41
Forum Regular
Joined: Dec 2011
Posts: 193
Re: UK Final salary pension transfer
I would not bother. Firstly, there is no such thing as a non-regulated SIPP. All SIPPs are UK personal pensions, regsitered with HMRC and subject to FCA regulation. Expats do not have restrictions on regulated funds offered by a SIPP, compared to UK investors.
Jul 4th 2021, 4:50 pm
#42
Just Joined
Joined: Nov 2013
Location: Illinois
Posts: 7
Re: UK Final salary pension transfer
There are so many funds available. Their performances can be tracked from major financial phone apps in US. Symbols with .L suffix. I don't think one can get non regulated SIPPs.
Aug 26th 2021, 10:18 am
#43
Forum Regular
Joined: May 2011
Posts: 72
Re: UK Final salary pension transfer
Of course every situation has its own specific details but as rule of thumb you should stick with a final salary scheme unless you are offered a very high multiple of your annual earnings and are comfortable making major financial decisions independently. Anyone in the latter category will be well aware of that and will be more than capable of figuring out their own specific circumstances. Anyone in the former category is almost certainly going to be advised not to transfer. Nearly 80% of all analysis performed under the new regulations result in a No Transfer recommendation. Take into account that many people undergoing the required analysis fit into the latter category and that tells you that most people in the former category will get the No Transfer recommendation. Although there will be a few exceptions to the rule, this can help folks think twice before undertaking a very expensive analysis.
The UK based SIPPS provide access to funds in almost every major exchange and currency. In fact as an expat you are limited to specific international funds but retain the UK regulator protection which is priceless. Of course you could transfer to a non UK regulated SIPP but I would think more than twice about that one.
The UK based SIPPS provide access to funds in almost every major exchange and currency. In fact as an expat you are limited to specific international funds but retain the UK regulator protection which is priceless. Of course you could transfer to a non UK regulated SIPP but I would think more than twice about that one.
thank you
Aug 26th 2021, 11:15 am
#44
Furby
Joined: Apr 2016
Location: St. Louis, MO.
Posts: 874
Re: UK Final salary pension transfer
I have invested directly in specific shares, but in any case my understanding is that SIPPs are exempt from the PFIC taxation and reporting rules, although you must report the overall SIPP value on your FBAR and Form 8938 if applicable. (Some believe you have to treat a SIPP as a Foreign Grantor Trust on Form 3520 but opinions vary on that and many people, myself included, go the FBAR and Form 8938 route because it is much less time consuming).
The reason SIPPS are exempt from PFIC taxation is that the US/UK tax treaty allows for all funds within a recognized UK pension plan to be tax free until income is distributed (cash) and the PFIC taxation rules allow for taxation to be applied at the point of sale. In short, the PFICs are sold while in the protective wrapper of the UK pension plan and when cash is distributed it is subject to taxation as ordinary income. In this respect a SIPP is no different than any other type of UK pension plan.
EDIT: To clarify, the international SIPPs limit you to international funds, but if you transfer out of an international SIPP to A J BELL you can invest in anything on the A J Bell platform.
The reason SIPPS are exempt from PFIC taxation is that the US/UK tax treaty allows for all funds within a recognized UK pension plan to be tax free until income is distributed (cash) and the PFIC taxation rules allow for taxation to be applied at the point of sale. In short, the PFICs are sold while in the protective wrapper of the UK pension plan and when cash is distributed it is subject to taxation as ordinary income. In this respect a SIPP is no different than any other type of UK pension plan.
EDIT: To clarify, the international SIPPs limit you to international funds, but if you transfer out of an international SIPP to A J BELL you can invest in anything on the A J Bell platform.
Last edited by Glasgow Girl; Aug 26th 2021 at 11:21 am.
Aug 26th 2021, 2:29 pm
#45
BE Forum Addict
Joined: Aug 2004
Posts: 4,754
Re: UK Final salary pension transfer
If a SIPP qualifies as a pension fund under the DT Treaty then there are no PFIC issues as the tax wrapper protects the funds inside from US taxation until income is taken and then only income tax is imposed. PFIC is an issue for everything else like UK ISAs and general investment accounts. The bottom line on PFIC is that any mutual fund, investment trust etc. that is not domiciled in the USA should be avoided if you are a US citizen or US tax resident.