Maximise your pension when you move to the USA
To ensure you effectively manage your pension and maximise your savings, you will need to consider your pension options prior to moving to the US.
If you are planning a permanent relocation to the US, it could prove beneficial for you to move your pension into a different scheme, such as a Qualifying Recognised Overseas Pension Scheme (QROPS), or a Self-invested Personal Pension (SIPP). As conditions apply to these schemes, you will need to check first whether you qualify. If you do, plans of this type can give you greater control over your pension, and can significantly reduce your tax bill.
If you are planning a permanent relocation to the US, it could prove beneficial for you to move your pension into a different scheme.
Qualifying Recognised Overseas Pension Scheme (QROPS)
A QROPS is popular with British expats as it offers a number of tax advantages, whilst also meeting criteria outlined by HMRC. Advantages include:
- You can transfer a UK pension into a QROPS without being subjected to charges
- As long as you remain resident outside of the UK, you can avoid UK taxation on your pension
- You can transfer a QROPS into the name of an appointed beneficiary in the event of your death
In order to have an account of this nature, you will need to:
- Be living abroad, or about to be living abroad
- Intend to stay abroad for good
As it takes around 10 years of being non-resident for the benefits of a QROPS to be realised, it’s important to consider whether this is the best type of account for your pension.
It’s really important to make sure you are making the best of your pension and other assets when you move overseas.
Self-Invested Personal Pension (SIPP)
A SIPP is another UK government-approved pension scheme that affords the investor greater power when managing a range of investments, including:
- Overseas property
- Stocks and shares on a recognised exchange
- Futures and options traded on recognised future exchanges
- Authorised UK unit trusts
- Unlisted shares
- Investment trusts, subject to Financial Conduct Authority (FCA) regulation
- Commercial property
- Ground rents
- Residential property
- Gold bullion
- Tangible moveable property with a market value of less than £6,000
- Exotic assets like vintage cars, wine, stamps and art
PLEASE NOTE: Some of these may be subject to tax charges.
We recommend speaking with our advised authorised tax and financial advisory firm.
There are four different types of SIPP:
- Deferred: A Personal Pension Plan where assets are held in insured pension funds. Self-investment withdrawal is delayed/deferred until a later date.
- Hybrid: Some assets must be held in conventional insured pension funds, but the rest can be ‘self-invested’.
- Pure/Full: Offers unrestricted access to many acceptable investment asset classes.
- SIPP Lite/Single Investment: This is a much more recent trend, and involves placing all funds in one main asset with much lower fees.
To establish whether a QROPS or a SIPP would work under your circumstances and prove beneficial to you, we recommend speaking with our advised authorised tax and financial advisory firm.
Transferring your existing UK pension to the USA
If you decide that you want to keep your pension plan where it is, and just manage monthly transfers, it’s vital that you understand the effect that currency exchange rates will have on these monthly payments. Constantly fluctuating exchange rates mean that the value of your sterling in dollars is changing every second. Smart Currency Exchange can help you to manage these regular transfers to ensure you get the most from your pension. You can take advantage of their Regular Payments Plan to automate your payments every month, as well as a number of other tools to maximise your pension and minimise any risk in transferring overseas.