How can I get at my UK pension now that I'm leaving the country?

July 13, 2009 8:40 AM

I moved to the UK in January of 2008 from the US. I've been paying into a pension since I started and there's now £10,000 in there. I (foolishly) assumed that it was like a 401k and now that I'm leaving the UK, I could take the money out. Wrong. Apparently I can't touch it until I'm 55. Please tell me that I haven't pissed away £10k and there's some way to get this money.
posted by cubedweller to work & money (7 comments total)

You really need to speak to your company's pension adviser, but broadly speaking, some pensions can be 'cashed out', albeit at a fraction of the total pot value (for instance, I had a pension pot of around £2500, and the cash out value was about £700). Other pension plans cannot, by law, be cashed out. Without knowing what kind of pension you have, there's no way for us to know that.

You may be able to transfer some or all of the value of this pension pot to a US 401K or similar, but I know nothing about that. Consult an Independent Financial Adviser, or whoever administers your pension scheme if it's a company one.
posted by Happy Dave at 8:49 AM on July 13

My pension (from a group of pretty Scottish women who are always in mourning) can't be cashed out, but it can be transferred from one fund to another one.

You need to talk to a financial adviser to see if you can transfer, and if so, where to.
posted by twine42 at 8:55 AM on July 13

Also, see this thread on transferring a UK pension to a US provider. There's lots more similar questions if you do a google.
posted by Happy Dave at 8:59 AM on July 13

And here's the HMRC list of Qualified Recognised Overseas Pension Schemes (QROPS).
posted by Happy Dave at 9:00 AM on July 13

The magic term you are looking for is QROPS: Qualifying Recognised Overseas Pension Schemes

You can transfer your pension value into a qualfying scheme, of which there are some schemes in the US listed in this pdf. Note that other schemes may also qualify: it's not an exhaustive list.

See this page in the pension manual from the IR. You'll need to talk to whoever manages your pension in order to carry out the transfer.

You will probably also need to talk to a pensions expert in the US as to whether such a transfer would be permitted & if so into which sorts of funds.

Have fun!
posted by pharm at 9:04 AM on July 13

First of all, what do you mean by 'pension'?
You say that you've "paid in" and give an amount, so I assume that this is a Defined Contribution plan of some sort.

Is is run by your employer or is it a Private Pension Scheme (PPS)?
If it is a SIPP (Self Invested Private Pension), then it is somewhat like a 401K, but there are important differences.

I thought that what you are looking for basically is a Qualifying Recognised Overseas Pension Scheme (QROPS), you can transfer UK pension funds into a QROPS, but the fund must report payments to the HM Revenue. It won't be taxed automatically, but the QROPS scheme can't allow you to do things forbidden by UK tax law on pensions (you can't take out more than - I think - 25% in a lump sum, can't access the money before 50).

But I now see that apparently American law doesn't allow this!
From here

UK scheme administrators and members should be aware that a transfer may not be permissible even though an overseas pension scheme is a QROPS. QROPS status has significance for UK tax purposes only. Whether or not a transfer to a QROPS can be made will depend also on the scheme being able to accept a transfer under the legislation of the country in which it is established. In particular, it is PSS’ understanding that transfers to US “qualified” retirement plans, including individual retirement arrangements (IRAs), cannot be made as such plans are not permitted to accept a transfer of funds from a UK registered pension scheme. UK scheme administrators and members should contact the relevant overseas authority for confirmation, not PSS

Really what you need to do is to speak to a professional, one experienced in dealing with American expatriates. Note that the HMRC has a list of QROPS that include American schemes, so it's not a problem on the UK side, but the IRS doesn't recognise British schemes, so you will run into tax problems in the US.
posted by atrazine at 9:18 AM on July 13

I note you've been in the UK for less than two years: depending on the scheme rules, if you've been in a company pension for less than two years you may be able to recover the full value of what you paid in.
posted by Electric Dragon at 9:29 AM on July 13