1. Leave your pot in the UK and take your money from abroad
2. Move your pension pot into the United States
3. A combination of these two things
If you decide to leave your pension in the UK, you can receive income from it either by making ad hoc bank transfers from the UK or by asking your provider to pay your pension directly into your nominated US account.
For those considering option two, wealth management advice is essential. However, if you are non resident alien (NRA), you may be able to pursue the following possibilities:
- An International Pension Plan (IPPs): Regular Contributions and Single Contribution. “Toxic” assets held in PFICs can be transferred into an IPP, removing them from the additional “Toxic” tax charges and allowing tax-free growth.
- Bespoke US Self-Invested Personal Pension (SIPP): May be available if you are an NRA and have deferred pension benefits in the UK.
QROPS
Up until March 2017 a QROPS transfer might have been the strategy of choice for a Non Resident Alien. However, since this date, these transfers have been subject to a 25% charge by the UK government for people living outside of the European Economic Area (EEA).
How could Your Income be Affected by Fluctuation in Exchange Rates
Before you decide what to do with your UK pension in the US, you should consider the impact of currency fluctuation on exchange rates and how this will impact upon your finances – any depreciation in the value of Sterling has the potential to greatly limit your spending potential.
For example, when Sterling was at the height of its value in October 2008 it was worth 2.019 USD; in February 2019 it was worth around 1.29 USD. If you are exchanging currency each month, such depreciation can hit your plans fast and hard. For example, if your pension paid you £2,000 a month, in October 2008 this would have been worth $4,038, in February 2019 this figure is just £2,580. There is an obvious and considerable difference in spending power between these two figures, so getting your pension planning right is essential if you are to make your UK pension work for you while you live in the United States.
One way to plan is to set up a regular payments service that can lessen fees and in some cases even fix exchange rates for 12 month periods, it pays to shop around for the most favourable exchange rates – although this process can be time consuming and may still leave you with considerable fees, not to mention tax on your foreign income.
Blacktower in the United States
Blacktower can help you understand your financial obligations and options when you move to the United States so that you can make the most of every financial and retirement opportunity that works towards achieving your goals.
Blacktower in the US can help you effectively manage your wealth and retirement planning in the US, including the future of your UK pension in the US and whether a UK pension transfer would be right for your individual circumstances. Contact us today for more information.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
Investment advice and investment advisory services offered and provided through Blacktower Financial Management US, LLC. This communication is for informational purposes only based on our understanding of current legislation and practices which are subject to change and are not intended to constitute, and should not be construed as, investment advice, tax advice, tax recommendations, investment recommendations or investment research. You should seek advice from a professional before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.