UK Expat Pension Advisors - Claiming Your UK Pension Abroad

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. 

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. 

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 summarized 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 Recognized 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.