What to do with your UK pensions when you move to the US
by Alexander Beard, on May 15, 2014 10:36:01 AM
The question of what to do with your UK pension when you move to the US can be a very difficult one. Pension transfer arrangements can be complicated or lead to large tax penalties and the US has always blocked direct moves of your fund into the territory. If you’ve already begun researching your pension options then, like many people before you, you may be finding it frustrating to find the right information.
There have previously only been two options for you when considering what to do with your pensions. Both can have significant costs attached to them:
- - Leave your pension in the UK - this is the easiest option and one many people, frustrated with the process, fall back on. The problem with taking this route is that the US tax authorities have recently announced plans to pursue residents with overseas savings and investments. If you have a pension back in the UK, this means you! If the US decides that your pension or investment is non-compliant, the penalties can be severe.
- - Move your pension to a ‘USA friendly’ territory using a Qualifying Recognised Overseas Pension Scheme (QROPS) - this involves taking advantage of other territory’s tax arrangements with the US and moving your pension here before taking it into the US. The problem with such arrangements is that the transfer outside of the UK would be considered a taxable event for a US resident. It also can often include both significant fees and significant risks, dependent on the scheme selected.
Because we’ve worked for many years with clients experiencing the exact same worry and frustration as you, we came up with a plan to help make moving to the US simpler and easier. It’s called AMVEST and it allows you to keep the benefits of your UK pension, whilst mitigating the risks of US tax implications.
AMVEST sees your pension stay under UK rules but the funds are invested in US dollars, managed by a leading US fund manager and administered by our US office, who also help you with investment advice.
When the time comes to take your pension, you benefit from the UK tax free lump sum, but can take this and other payments in US dollars. Income can be drawn in-line with UK drawdown rules or you can use the rest of your pension to purchase a US dollar annuity.
It’s a simple solution to the previously complicated world of US pension transfer!
If you’re moving to the US or have already emigrated and are interested in talking to us about AMVEST, then visit our website at www.abg.net, or call our UK or US offices on 0844 678 0078 or +1 888 282 3344.