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-   -   UK Final salary pension transfer (https://britishexpats.com/forum/usa-57/uk-final-salary-pension-transfer-932342/)

hitenr Apr 23rd 2020 12:59 am

UK Final salary pension transfer
 
Hello,

My wife has received a great quotation on transferring her final salary pension to a defined contribution plan.

The company that approached us about looking into doing this isn't regulated and is quoting a high charge so we are probably not going to go with them.

So we are planning on who to use; what to do etc.

We need to decide:
1. Which financial advisor to use - any recommendations welcome! Most appear to charge a % of the pot to transfer; would be great to get someone charging a (low) flat fee
2. Whether we keep the pension in the UK or overseas (in a QROPS - Qualified Recognized Overseas Pension Scheme).

Has anyone here looked into any of this before?

Thank you in advance friends!

Owen778 Apr 23rd 2020 5:20 pm

Re: UK Final salary pension transfer
 
Your best bet is to do a search on the USA forum here for QROPS. It's been too long for me to remember the details, but the usual advice is to never transfer. It makes plenty of money for the company doing the transfer, but is always a bad idea.

hitenr Apr 23rd 2020 5:28 pm

Re: UK Final salary pension transfer
 
Thanks - yes it does look like QROPS might not be the best way forwards. But to take the final salary pension transfer value (which is now 53x the annual amount!) and convert to a money purchase scheme seems like a sensible move. Wondering whether anyone has done this before and if so whom with?

Pulaski Apr 23rd 2020 5:33 pm

Re: UK Final salary pension transfer
 

Originally Posted by Owen778 (Post 12843200)
Your best bet is to do a search on the USA forum here for QROPS. It's been too long for me to remember the details, but the usual advice is to never transfer. It makes plenty of money for the company doing the transfer, but is always a bad idea.

This! :nod:

There are no QROPS in the US for UK pension savings, and not many outside the US that are acceptable under US securities laws and IRS regulations. That said, in fact there are few if any pension regulatory regimes around the world where your pension is better protected than in the UK, and IMO it would be an act of sheer folly to voluntarily* remove your pension nest egg from the pension fortress in the UK and move it elsewhere.

Also, be aware, there are some pension "advisor" sharks out there, spreading misinformation and fear, about punitive taxes in the US on pension funds held in the UK. That, to be polite, is nonsense, and to be blunt is utter 8011o¢k$.

Originally Posted by hitenr (Post 12843204)
Thanks - yes it does look like QROPS might not be the best way forwards. But to take the final salary pension transfer value (which is now 53x the annual amount!) and convert to a money purchase scheme seems like a sensible move. Wondering whether anyone has done this before and if so whom with?

If you're still in the UK, or can persuade an adviser in the UK to talk with you (your wife) then I would do so there, in the UK.

Also, take care that taking the buy-out doesn't trigger a tax charge in the US if you are already subject ton US income taxes.

* There are some countries (maybe Australia and NZ?) where there are punitive taxes if you leave your pension in the UK (outside the country you immigrated to).

hitenr Apr 23rd 2020 5:38 pm

Re: UK Final salary pension transfer
 
Agreed - yes as per above, still would like to keep in US but switch from final salary to money purchase given the high multiple I'm getting...

Glasgow Girl Apr 23rd 2020 11:18 pm

Re: UK Final salary pension transfer
 
Although it is usually the case that you should stick with a final salary pension, a transfer value of 53x the annual amount does change that advice, and you will likely be significantly better off transferring out. With that said and assuming you live in the USA now and for the foreseeable future then probably your only realistic option is to transfer to a UK based SIPP. Assuming the transfer value is more than 30,000 GBP you are required to take documented financial advice from a certified UK IFA. That alone will run about 2,000 GBP regardless of the size of your transfer value, more if it is a very large pot. The cost of the advice is high but is largely related to the insurance they have to pay to issue that advice not the time required to do so. The output will be a report that will clearly indicate the pros and cons of transferring. Then assuming you want to go ahead, you have to pay commission to the IFA on the transfer itself, probably in the 3% range. There is no getting around that. You must use a UK certified IFA and almost all of them will have nothing to do with anyone who lives in the USA, the reason being that they have to carry insurance to be an approved advisor and no insurer will let them deal with anyone based in the USA because of the risk of being sued in the US courts for giving bad advice. Therefore you need a specialized service. There are quite a few scam artists out there that will “manage” this on your behalf, and the few that are legitimate are not cheap as stated previously.

Transferring to a SIPP comes with pros and cons that you will have to research for yourself. But in short you can either manage the investments yourself or let the IFA manage them for you for a fee of about 1% a year (on top of the fund managers fees). You will also have to decide for yourself whether you want to declare it as a trust on your tax return. Some people are adamant that you have to do this but just as many state that you do not and you can just declare on your FBAR and tax return as a normal foreign investment but either way you have to declare it and any income taken or you will get into real trouble. Both are doable you just need to put some time aside to learn how to do it (or pay for yet more expensive advice). With a SIPP you can drawdown the money as you want to and there may be significant tax advantages to the timing of your withdrawals versus the regular payment that the final salary scheme requires.

I was in the same position as you with an excellent transfer value that made the decision a no brainer. I am currently in the process of transferring a final salary scheme to a SIPP. It should be completed in about 5 or 6 weeks. I researched the heck out of the advisors and followed up references etc. The cash transfers from the final salary scheme directly to a UK authorized and regulated SIPP so the advisor never gets to handle the money itself which is an excellent safeguard. If all goes well I will be happy to PM you and share the details of the advisors I used but I do not want to do so until everything has been completed successfully.




hitenr Apr 24th 2020 12:13 am

Re: UK Final salary pension transfer
 
Excellent ty - this is really incredibly great info!! Just what I was looking for...

Wirksworth Apr 24th 2020 2:16 pm

Re: UK Final salary pension transfer
 
Hi,
I went through the transfer out decision process a couple of times but made the decision to do this for several reasons:
I had moved to the USA and got Married
My DB pension was with a previously very strong company but one now on much harder times ( even before Covid) and the value of my pension meant that the UK pension protection scheme would be of limited value
The revised Cash transfer value was much improved - +20% difference in 2 years
DB pension payments would be in £ and now all my expenses are in $ - Using a SIPP I can invest more of my fund into $ based assets ( assuming the £ recovers some time) thereby giving me better currency risk management .
The inheritance benefits of a SIPP are better than for a DB particularly if you die before taking any DB benefits.
I already had a UK SIPP - although this was with HL and they will not take a transfer in if you are a USA resident as they require a positive recommendation to transfer in (see below) also there advisors will not do the transfer review due to liability issues and insurance for USA residents .

I used a small UK advisor firm who would give the required advice certificate but would not provide a positive recommendation again due to insurance issues. As I previously had had a comprehensive IFA review recommending transfer when the cash value was lower I was fine with this. I paid the IFA £1500 only. My DB provider only wanted the advice certificate as did AJBell who I moved to. They are not as slick from an admin and platform perspective but their platform does the job,

I found there were USA based firms who would offer the required advice but at a much higher cost plus they really want to have you manage your money. In general, as others have said there are plenty of sharks circling in this space.

I too took advice re Grantor Trust reporting of one's SIPP - 50% said you should report including one of the big Four UK firms and 50% said you do not need to. I took the cautious approach and have just reported for the first time. The forms are not easy to decipher but having seen them filled in I could do these going forward. As others have again said the FBAR etc is required the grey area being the Grantor Trust forms.

Another grey area is the 25% Tax free Lump sum with advisors split 50-50 as to if it is taxable in the USA . I have read though that someone on this forum who had paid US tax on the lump sum successfully got a refund.

Finally for those in the Lifetime allowance cap area there is one firm saying that the Life Time allowance Tax is allowable as an offset against other USA tax liabilities- I haven't looked in to this in detail and I am sure they charge chinky amounts for their advice.

I recall reading that there is a stop on DB pensions doing transfers out at the moment due to the uncertainty but as I had done mine I haven't followed this in any detail

Good luck !




hitenr Apr 29th 2020 12:15 pm

Re: UK Final salary pension transfer
 
Thank you!

freerskier May 5th 2020 3:09 pm

Re: UK Final salary pension transfer
 
Great advice from your in progress real life situation Glasgow Girl - I was looking for something else in the forum and noticed this thread and your detailed response. Very pertinent to my situation so bookmarked for the future. Cheers.

ProfYaffel Jul 22nd 2020 3:21 pm

Re: UK Final salary pension transfer
 
Hi

Would you mind letting me know who you used for the financial advice ? I'm looking at transferring my pension and my pension holder requires the financial advice before the transfer process

Glasgow Girl Jul 22nd 2020 4:24 pm

Re: UK Final salary pension transfer
 
PM me, I don’t want to make details public without getting his permission first.

paul45 Jul 22nd 2020 9:31 pm

Re: UK Final salary pension transfer
 

Originally Posted by Glasgow Girl (Post 12843317)
Although it is usually the case that you should stick with a final salary pension, a transfer value of 53x the annual amount does change that advice, and you will likely be significantly better off transferring out. With that said and assuming you live in the USA now and for the foreseeable future then probably your only realistic option is to transfer to a UK based SIPP. Assuming the transfer value is more than 30,000 GBP you are required to take documented financial advice from a certified UK IFA. That alone will run about 2,000 GBP regardless of the size of your transfer value, more if it is a very large pot. The cost of the advice is high but is largely related to the insurance they have to pay to issue that advice not the time required to do so. The output will be a report that will clearly indicate the pros and cons of transferring. Then assuming you want to go ahead, you have to pay commission to the IFA on the transfer itself, probably in the 3% range. There is no getting around that. You must use a UK certified IFA and almost all of them will have nothing to do with anyone who lives in the USA, the reason being that they have to carry insurance to be an approved advisor and no insurer will let them deal with anyone based in the USA because of the risk of being sued in the US courts for giving bad advice. Therefore you need a specialized service. There are quite a few scam artists out there that will “manage” this on your behalf, and the few that are legitimate are not cheap as stated previously..

There are a number of factors in the decision of whether to stick with a final salary pension -
1- Rate of return embedded in the lump sum versus final salary (time value of money calculation, looking at various time ranges from receipt of benefits to death)
2- Quality of the company backing the scheme (you are effectively an unsecured creditor)
3- Lifestyle, spending, other sources of income in retirement - the final salary is not adjusted for inflation every year but your expenses certainly will be

So it's not so simple to say "you should stick with a final salary pension" OR "value of 53x the annual amount does change that advice." In my view, neither is correct and it requires deeper analysis to make a recommendation.

Next, "your only realistic option is to transfer to a UK based SIPP" is also not correct. There are international SIPP providers which work with IFA/RIAs that can provide access to US-based (if that's your preference) investments.


SquirrelRat Jul 22nd 2020 10:51 pm

Re: UK Final salary pension transfer
 

Originally Posted by paul45 (Post 12885880)


3- Lifestyle, spending, other sources of income in retirement - the final salary is not adjusted for inflation every year but your expenses certainly will be



I thought company pensions were adjusted for inflation. Mine, from a university, certainly goes up every April.

ProfYaffel Jul 22nd 2020 10:53 pm

Re: UK Final salary pension transfer
 

Originally Posted by SquirrelRat (Post 12885916)
I thought company pensions were adjusted for inflation. Mine, from a university, certainly goes up every April.

Mine is too, with an oil company

Glasgow Girl Jul 23rd 2020 1:04 am

Re: UK Final salary pension transfer
 

Originally Posted by paul45 (Post 12885880)
There are a number of factors in the decision of whether to stick with a final salary pension -
1- Rate of return embedded in the lump sum versus final salary (time value of money calculation, looking at various time ranges from receipt of benefits to death)
2- Quality of the company backing the scheme (you are effectively an unsecured creditor)
3- Lifestyle, spending, other sources of income in retirement - the final salary is not adjusted for inflation every year but your expenses certainly will be

So it's not so simple to say "you should stick with a final salary pension" OR "value of 53x the annual amount does change that advice." In my view, neither is correct and it requires deeper analysis to make a recommendation.

Next, "your only realistic option is to transfer to a UK based SIPP" is also not correct. There are international SIPP providers which work with IFA/RIAs that can provide access to US-based (if that's your preference) investments.

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.

durham_lad Jul 23rd 2020 12:24 pm

Re: UK Final salary pension transfer
 

Originally Posted by SquirrelRat (Post 12885916)
I thought company pensions were adjusted for inflation. Mine, from a university, certainly goes up every April.


Originally Posted by ProfYaffel (Post 12885918)
Mine is too, with an oil company

I have 2 UK private pensions and one US private pension. One of my UK private pensions is adjusted for inflation the other 2 pensions are fixed. The US pension is over 4 times larger than the other 2 combined and it is fixed, and has been since I retired over 10 years ago. Fortunately inflation has been low this last 10 years and we are now both coming up to OAP and SS age.

paul45 Jul 23rd 2020 11:24 pm


Originally Posted by ProfYaffel (Post 12885918)
Mine is too, with an oil company

I should rephrase "the final salary is not always adjusted for inflation". That said, what matters is your lifestyle and spending. If inflation is 2% per year but your spending is increasing by a greater amount (think healthcare costs in the US), even if just a portion, this could present a challenge.


Originally Posted by Glasgow Girl (Post 12885958)
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.

All the factors I described are calculable, not subjective - it's a time value of money calculation incorporating income (whether from final salary or investing a lump sum with investment return assumption), expenditure and inflation expectations on various components of expenditure. You could also discount the final salary to some extent to account for credit quality of the pension provider. You compare the two cashflow streams and whichever comes out higher should be the direction you go.

ProfYaffel Jul 24th 2020 5:41 pm

Re: UK Final salary pension transfer
 
Hi
I need to take documented financial advice from a certified UK IFA before I can think about transferring my DB pension into a SIPP. Anyone have recommendations ?
P.S I dont have enought posts to be able to read PMs

Thank you

SquirrelRat Jul 24th 2020 9:23 pm

Re: UK Final salary pension transfer
 

Originally Posted by durham_lad (Post 12886131)
I have 2 UK private pensions and one US private pension. One of my UK private pensions is adjusted for inflation the other 2 pensions are fixed. The US pension is over 4 times larger than the other 2 combined and it is fixed, and has been since I retired over 10 years ago. Fortunately inflation has been low this last 10 years and we are now both coming up to OAP and SS age.

I think the inflationary increases are more likely with UK public sector pensions than private company pensions.
Lack of these pay rises can be problematic. Just ask any Brit living in Canada for the last 10 years watching their old age pension from the UK government dwindle. Fortunately I don't think it applies for US-based pensioners. There was a campaign to get the anomaly corrected. Although I think it is based on bilateral agreements between the UK and the other countries.

Otto The Squid Aug 26th 2020 11:46 am

Re: UK Final salary pension transfer
 

Originally Posted by paul45 (Post 12885880)
There are a number of factors in the decision of whether to stick with a final salary pension -
1- Rate of return embedded in the lump sum versus final salary (time value of money calculation, looking at various time ranges from receipt of benefits to death)
2- Quality of the company backing the scheme (you are effectively an unsecured creditor)
3- Lifestyle, spending, other sources of income in retirement - the final salary is not adjusted for inflation every year but your expenses certainly will be

So it's not so simple to say "you should stick with a final salary pension" OR "value of 53x the annual amount does change that advice." In my view, neither is correct and it requires deeper analysis to make a recommendation.

Next, "your only realistic option is to transfer to a UK based SIPP" is also not correct. There are international SIPP providers which work with IFA/RIAs that can provide access to US-based (if that's your preference) investments.

You are aware that so-called International SIPPs are actually UK registered pensions.By definition, they are UK based.

Clarets Sep 14th 2020 9:03 pm

Re: UK Final salary pension transfer
 
Great info in this thread.
I am in the process of transferring 2 final salary pensions to a UK SIPP that will accept the transfer from myself as a US resident.
Has anyone found an adviser based in the UK that can handle this?

dvalentine Sep 14th 2020 11:38 pm

Re: UK Final salary pension transfer
 
I ultimately decided to keep my pension (I'm just too nervous about the future of the markets so like the idea of a guarantee), but I used Taylor & Taylor to go through the pensions review process and I felt very comfortable with them. They are US based but have Brits who keep certified in the UK so they may be able to help.

Otto The Squid Oct 6th 2020 4:31 am

Re: UK Final salary pension transfer
 
I saw the text of that deleted post.

A fundamental lack of understanding of the pension trsnsfer rules and misleading.

California1967 Feb 1st 2021 2:12 pm

Re: UK Final salary pension transfer
 
UK born and bred but USA resident since 1999. I opened an AJ Bell SIPP Feb 2020 and transferred in a defined contribution scheme. Transfer was easy, quick, took about 5 days start to finish.
In June I requested a CETV for my Defined Benefit which I received on October 1st.
I used an IFA found through a recommendation but checked his company out on vouched for UK. I paid a fixed IFA fee for advice of 2000 pounds. Others have quoted 1500 but i was happy with the fee.
I got other quotes which varied from 10k-18k based on a % of the CETV. So shop around
Within a month I had the transfer review completed. November 1
(My primary goal was estate management motivated by COVID. If I died early due to COVID or anything else before my DB pension was in payment my benefit amounted to a refund of contributions to my estate)
Finally after slow progress between the administrators and AJ Bell the pension was transferred in January.

Easiest part Opening the AJ Bell SIPP
Slowest part Waiting for the CETV to be issued due to "COVID speed"
Most comprehensive part, The IFA review which did recommend transfer based on my criteria.

I have been following the forum for years reading about ROPS/QROPS/Malta options but the fees were high and ongoing fees always seemed vague.
The new UK SIPP and paying for IFA advice is more transparent
Just sharing for everyones benefit

MidAtlantic Feb 1st 2021 3:14 pm

Re: UK Final salary pension transfer
 

Originally Posted by California1967 (Post 12966842)
UK born and bred but USA resident since 1999. I opened an AJ Bell SIPP Feb 2020 and transferred in a defined contribution scheme. Transfer was easy, quick, took about 5 days start to finish.
In June I requested a CETV for my Defined Benefit which I received on October 1st.
I used an IFA found through a recommendation but checked his company out on vouched for UK. I paid a fixed IFA fee for advice of 2000 pounds. Others have quoted 1500 but i was happy with the fee.
I got other quotes which varied from 10k-18k based on a % of the CETV. So shop around
Within a month I had the transfer review completed. November 1
(My primary goal was estate management motivated by COVID. If I died early due to COVID or anything else before my DB pension was in payment my benefit amounted to a refund of contributions to my estate)
Finally after slow progress between the administrators and AJ Bell the pension was transferred in January.

Easiest part Opening the AJ Bell SIPP
Slowest part Waiting for the CETV to be issued due to "COVID speed"
Most comprehensive part, The IFA review which did recommend transfer based on my criteria.

I have been following the forum for years reading about ROPS/QROPS/Malta options but the fees were high and ongoing fees always seemed vague.
The new UK SIPP and paying for IFA advice is more transparent
Just sharing for everyones benefit

Interesting to hear your experience. As a UK/US dual resident I transferred a Hargreaves Lansdown SIPP and two defined contribution personal pensions to AJ Bell a few years ago. My motivation was to consolidate them and reduce fees. My experience of AJ Bell has been excellent.

California1967 Feb 1st 2021 3:41 pm

Re: UK Final salary pension transfer
 
AJ Bell. I found them easy to deal with and telephone answering is prompt. On the platform I have been able to invest in a range of international funds operated by Fidelity and others as well as AJ Bell.

California1967 Feb 1st 2021 8:29 pm

Re: UK Final salary pension transfer
 
The adviser I used was Gary Day from AXG asset management. I didn't put his name up until he replied to my email confirming that was OK. You can check him out on vouched for. I have no personal relationship with this person but it took me a while to track an IFA down so just paying it forward.

reltub Feb 11th 2021 6:13 pm

Re: UK Final salary pension transfer
 
What is the tax position here in the US for a transfer of a defined contribution scheme into a SIPP (and left in the UK) ? I see that both California1967 and Mid Atlantic have undertaken this so perhaps you know the situation? Is tax payable at the time of the transfer or only down the line if money is transferred to the US?

Glasgow Girl Feb 11th 2021 7:32 pm

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.

MidAtlantic Feb 11th 2021 7:41 pm

Re: UK Final salary pension transfer
 

Originally Posted by Glasgow Girl (Post 12970779)
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.

I take exactly the same approach.

ncameron99 Feb 25th 2021 7:44 pm

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...

Glasgow Girl Feb 25th 2021 10:07 pm

Re: UK Final salary pension transfer
 
@ncameron99, Sent you a PM

geak Feb 27th 2021 8:48 pm

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.

nun Feb 27th 2021 9:22 pm

Re: UK Final salary pension transfer
 

Originally Posted by geak (Post 12978190)
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.

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

geak Feb 28th 2021 3:43 pm

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.

Otto The Squid Feb 28th 2021 4:07 pm

Re: UK Final salary pension transfer
 

Originally Posted by geak (Post 12978346)
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.

DB trustees should deal with a transfer request within 6 months.
As far as regulation is concerned, ideally use a UK FCA regd adviser (with DB permissions) that also has an SEC licence.


MidAtlantic Mar 1st 2021 11:40 am

Re: UK Final salary pension transfer
 

Originally Posted by nun (Post 12978199)
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

Many UK SIPP providers will not open accounts for US citizens or residents. As a dual US/UK citizen I transferred several small pensions (none of them defined benefit) into a SIPP with AJ Bell some years ago. I do not know if they continue to handle such transfers. My reason was to consolidate them into one account and substantially reduce fees. I had no problems with the transfer which went very smoothly.

reltub Mar 1st 2021 2:59 pm

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.


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