Planning on retiring in the USA? It is common to find individuals in the USA with UK pensions. This may be from US citizens spending a significant amount of time working in the UK before returning home. Alternatively, it might be from Brits who have decided to make a new life for themselves in the US.

When approaching retirement there are always key considerations, but when planning on retiring in the USA as a UK pension holder, it is worth understanding the key factors further.

UK State Pension

If you have been employed in the UK, you most likely have been paying National Insurance contributions during that period. If you have at least 10 years’ worth of contributions, then you will have a proportionate entitlement to the UK State Pension. You will have a full entitlement if your contributions are at least 35 years.

At the time of writing, the full New State Pension is £203.85 per week, per person. Therefore, when working out your retirement income requirements, it is well worth checking out what your UK State Pension Entitlement is.

You can find out how much entitlement you have on the government website, by clicking on the link here and following the instructions.

Will a UK Personal/Workplace or Self-Invested Personal Pension (SIPP) continue to grow tax-free when living in the US?

Yes – a UK personal pension or SIPP will continue to grow tax-free, even when you are a US tax resident.

It is, however, always worth checking with your tax adviser that your UK pension assets are being filed correctly.

 

Will my UK Personal/Workplace or Self-Invested Personal Pension Provider pay out to a US Resident?

When making preparations for retirement it is always useful to see what access options are available.

It may be the case that a pension provider is unable to offer flexi-access drawdown. They may not be able to offer access to your 25% tax-free Pension Commencement Lump Sum  (PCLS).

Should your existing scheme not offer flexible pension access, it may be the case that a provider move would be required.

This can sometimes cause the following issues:

1. Finding a provider that can provide flexible access and be willing to take on a US resident as a client.
2. Upon finding a provider who is willing to take on a US resident; ensuring that they can facilitate payments to an international bank account.

There are a limited number of providers who are able to address the two previous points. However, at Cross Border Financial Planning UK we ensure that we maintain relationships with providers who are able to offer such a service and address these needs.

Can I invest in currencies other than Pound Sterling within my pension?

 Yes – you are able to invest in foreign currencies within a UK pension.

There are investment solutions out there which allow an individual to invest in a foreign currency within their pension.

This is not a solution for everybody as it can carry additional risks, therefore, it is recommended that an individual receives appropriate financial advice before implementing such a strategy.

 

Investments can rise and fall, and you may get back less than what you started with. This article is for guidance only and does not constitute individual financial advice. The Financial Conduct Authority does not regulate tax planning. Cross Border Financial Planning are not tax advisers and we do not offer tax advice.

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Author: Mike McGregor 

Role: Cross Border Financial Planner @ Cross Border Financial Planning 

Contact Author: Here