UK Expat Pension Advisors - Claiming Your UK Pension Abroad

Leaving your pension scheme occurs when, for example you leave your employer, if you decide to opt out or stop making contributions. If you leave your pension scheme, the benefits you’ve built up still belong to you.  As you move from job to job, you may find that you have one pension per stint of employment meaning you have multiple small pensions.  You normally have the option to leave them where they are or to transfer them to another pension scheme.

If you leave your pension scheme, you do not lose the benefits you have built up. They continue to belong to you and you have several options for what to do with them. However, as an Expat your options can be limited.  Some main pension providers will have issues in holding a pension for a US resident.  Many will have issues in allowing you to swap your investment funds or to deal on your account and some will have issues in paying out your pension in a flexible manner!

Most schemes will allow you to transfer your pension pot to another pension scheme, for Expats this normally means a Qualified Recognised Overseas Pension Scheme (QROPS) or a Self Invested Personal Pension (SIPP) depending on where you are in the world.

You don't have to decide straight away – you can generally transfer at any time up to the point where you are expected to start drawing retirement benefits. In some cases, it's also possible to transfer to a new pension provider after you have started to draw retirement benefits.

Many UK pension providers have a very limited range of investment funds, normally they have a range of their own branded funds and tend to offer a few hundred options at a stretch.

The easiest way to find the best pension income options whilst living abroad


Complete UK Pension transfer review.

It is our aim at Financial Freedom Capital Management to offer our client a holistic and comprehensive review of their existing UK pension plans.

We will conduct full analysis on the benefits to hand, versus the benefits available to you should you decide to amalgamate / transfer your pensions.

We have created a free guide which should cover the questions most people ask when considering what to do next.

Download Now >

UK Pension options as a US resident

The answer to this question mainly depends on what type of pension you have in the UK and whether or not the pension provider has an appetite for US resident policyholders. There are a multitude of different pension types however the vast majority fit into one of two categories the Defined contribution and the Defined Benefit.

Defined Contribution (DC)

These are your standard personal pension style policies, they normally allow for 25% PCLS (pension Commencement Lump Sum) also known as tax free cash and the balance can be used to provide an income whether via simple draw down or an annuity. Some Defined Contribution pensions can happily remain where they are as the pension provider will be malleable in dealing with US residents and some will offer a fairly flexible approach to income, however the vast majority are painful to deal with mainly as a US resident and a handful will pay out your PCLS but prefer you to move the balance to another product that will accept US residents.

Defined Benefit (DB)

Also attributed as the final salary pension, these pensions offer a guaranteed income based on your salary position throughout your time of employment with your company.   DB pensions are notoriously expensive to operate many of them were set up in the 60s and 70s when life expectancy was much lower than it is today factor that in with very low interest and guilt rates for many years these schemes tend to be vastly in deficit. DB pensions have an inherit value normally calculated to around 30 times the annual income on offer. This “value” can be transferred out into some alternative options allowing you to gain access to the full amount compared to the guaranteed annual income that is on offer.

Now that we have summarised the two many types of pension lets focus on the options available. Initially the two main options available to US residents who have DC or DB pensions were the Qualified Recognised Overseas Pension Scheme (QROPS) and the Self Invested Personal Pension (SIPP). The tax rules surrounding QROPS were changed in March 2017 meaning that for anyone living outside of Europe (as a brief summary) would have a 25% tax levied on their pension at the time of transfer. For US residents this fundamentally made QROPS obsolete.


There is a solution for every pension

A simple form and a follow up call is all it takes to discuss your options and allow you to decide the future.

Let us help you make a decisionOn how to structure your retirement

What is the difference between a QROPS and a SIPP?

Recent changes to UK pensions, such as removing the need to purchase an annuity and the abolition of the 55% "pension death tax", have meant QROPS may have lost some of their appeal compared to a SIPP or other pensions. In truth, a QROPS and a SIPP are now more similar than ever.

As mentioned above, QROPS policies are fundamentally obsolete for US residents owing to the 25% tax applied upon transfer.  The only realistic option is the SIPP.  Finding a SIPP policy that allows the underlying beneficially owner (that's you) who lives in the US is difficult as there aren't many options.

Finally, all US residents MUST seek independent advice from a US qualified and regulated financial or investment advisor, regardless of the fact that the policy is in the UK.  Any non US advisor giving advice to a US resident is deemed unregulated and if anything were to go wrong the SEC will not be able to assist you.

If you have been getting conflicting information on pension options then look no further.  The following table outlines the key differences in the two transfer options:

The Three Main Transfer Options

For the majority of clients

What are the benefits of moving my pension?

  • Without bordering on giving you any advice at this stage we will summarise the benefits of a SIPP in the interests of being holistic.
  • Pensions were created to help us save for retirement. But most traditional pensions don’t give you the flexibility to invest where you want to. And it’s not always easy to see or understand what’s happening with your money.
  • A self-invested personal pension, or SIPP, is a type of pension that opens the doors, so you or your advisor can choose your investments from a large selection.  In fact with most SIPP products you can choose from tens of thousands of mutual funds and exchange traded funds (ETFs), equities, commodities, in fact literally anything that is market tradable can be utilised.
  • SIPPs also make it easy for you to manage your pension. You can see how it’s doing online at any time, making changes whenever you like. That way you can breathe life into your pension and ultimately determine how you enjoy your retirement.
  • Traditional personal pensions tend to offer between a dozen and several hundred funds. But their charges can often be hefty, particularly on older plans. Stakeholder pensions have lower charges, but tend to offer a more limited choice of funds.
  • The wide investment choice in SIPPs can make a significant difference to your pension. That’s because how your investments perform can have a large impact on the size of your pension pot and eventually your retirement.
  • When you reach your 55th birthday (or your 57th from 2028), you’re free to start withdrawing money from your SIPP, even if you’re still working. You can usually take up to 25% of your pot tax free. The rest of your withdrawals will be taxed as income.  Withdrawals can be as frequent or infrequent as you wish subject to any policy minimums withdrawal limits.  If you wish to you can leave your pension invested for life and pass it on to your beneficiaries in full, out with IHT should you wish to.
  • Each client is completely different and each has their own wants and reasons for transferring.  Let’s schedule a call to discuss your pension in full and the options available.