Considering a UK Pension Transfer? This is for You
by Richard Taylor on Nov 29, 2019
Reading Time: c.3 mins
Taylor & Taylor is primarily a financial planning business, but because we specialize in working with British expatriates we inevitably do a lot of UK pension work.
We get asked about UK pension transfers frequently. As a result, we have written a series of blogs aimed at bringing some clarity to the process and what British expatriates living in America can expect and should be looking out for.
When considering a pension transfer, there are essentially three separate questions that need answering:
- Should I transfer away from my existing arrangement(s)?
- If I do leave my current pension scheme(s), what will I transfer to?
- What will the ongoing advice/service look like?
Let’s deal with each one in turn:
1. Should I transfer away from my existing arrangement(s)?
The answer to this question will differ dramatically depending upon the type of UK pension(s) you hold.
There are two types of UK pension – Defined Contribution (also known as “Money Purchase”) and Defined Benefit (also known as “Final Salary”).
Analysing whether to transfer out of a Defined Contribution / Money Purchase pension is relatively straightforward. Moving a pot of money from one UK pension wrapper to a different UK pension wrapper should not be taken lightly – and there are certain things to look out for (charges, surrender penalties, guaranteed annuity rates etc.) - but it is not a complicated or particularly onerous process to analyze, determine and, if appropriate, implement.
Considering a transfer away from a Defined Benefit / Final Salary pension is a completely different beast. You can watch a webinar we recorded on the options for US Residents here - UK Defined Benefit Pension Options for US Residents
Furthermore, the FCA (UK regulatory body) requires you to obtain formal UK advice on whether the transfer is in your best interest.
You can read more about getting UK advice and transferring a Defined Benefit pension here:
Once you have considered whether a transfer away from your current arrangement might be best for you, the next part of the equation is:
2. If I do leave my current pension scheme(s), what will I transfer to?
In general, we find that the most appropriate solution for British expats living in America with UK pensions is an “International SIPP”. A SIPP is the UK equivalent to an IRA in the US.
If you want to understand more about International SIPPs and what it might look like for you, we have another blog on that topic:
And finally, you’ve decided a transfer away from your current arrangement(s) might be best, you are comfortable with the SIPP arrangement that will likely result, the final piece of the jigsaw is:
3. What will the ongoing advice/service look like?
This will really depend on the investment advisor you decide to work with, as the breadth, depth and even type of services offered varies enormously between firms.
At T&T, our goal is to meet the specific planning needs and expectations of British expatriates. This includes UK pension transfer advice and ongoing investment management. But it also includes a lot more than that. We are first and foremost comprehensive financial planners and it is this, alongside our British expatriate focus and specialism, that we believe sets us apart.
In fact, and I’m sure this won’t come as a surprise to you at this point, we’ve written a blog post that hopefully bring some light on what we call the “3 Pillars” of our total proposition:
We have developed our client process to be aligned with the UK and aligned with our duty as a fiduciary in the US (i.e. our duty to put our clients’ interests before our own).
Our DB Advice facilitation process and our SIPP set up is, in our opinion, professional, transparent, sophisticated, fairly priced and designed to arrive at an outcome that is clearly in our clients’ best interests.
You may ask, what if I want to make a change? First, as a client of T&T you will have regular agenda-led meetings with your advisor to check-in, review your investments and update your financial plan. In that regard, we are always ready to help you make a change to your investments and/or your plan.
Second, it’s possible that you determine that T&T is no longer a good fit. If that’s the case, we will assist you in that transition in whatever way we can. Moreover, there are no penalty or surrender charges if you decide to move your SIPP to another adviser or platform. At no time are you locked into T&T and prevented from making a change. Our goal is to provide you value on an ongoing basis so that we continue to earn your business.
If you’d like to know more, please do get in touch: +1 646 201 6865 and/or email@example.com
TRANSFERRING OUT OF A FINAL SALARY SCHEME IS UNLIKELY TO BE IN THE BEST INTERESTS OF MOST PEOPLE.
Taylor & Taylor Financial Services USA LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.