Income drawdown for US resident

Ormicron

I have a pension with Royal London and want to take it as income drawdown, problem is I am a US resident. They will not provide their retirement account to me only an annuity. What do I do?

dunstonh

Find a provider that will offer services to US residents. My gut feeling is that will be difficult as UK firms dont like dealing with US residents as they are high risk (US law allows you to take legal action against UK firms in the US and that has silly compensation amounts).

EdSwippet

As dunstonh notes, post-FATCA it is hard to find UK firms that are willing to deal with US residents or citizens.

However, Youinvest claim they only disallow ISAs and trading accounts for US persons, which at least leaves open the possibility of a SIPP. And I have seen at least one anecdotal report suggestive of success in transferring a SIPP to Interactive Brokers, a US based brokerage that touts its international credentials (so probably not cheap). There may be other willing brokers that I'm not aware of.

Ormicron

Thank you, My problem is I want to take the pension not re invest it. If I where a UK resident I could transfer the pension pot into Royal London's retirement account and draw of it as required. Can I set up a UK account and link that to the RL Account, like a proxy? Can I set up an account in the UK as a US resident? I am a UK citizen and really regret closing my UK accounts when I moved to the states 25 years ago. The pensions where accrued in the UK.

EdSwippet

Ormicron wrote: »

My problem is I want to take the pension not re invest it.

Understood. It seems, though, that RL won't let you take withdrawals from the pension, but only allow an annuity.

The standard way around this is to transfer the pension intact -- that is, as a pension, and the US term here is 'rollover' -- into another provider who will let you take withdrawals in the way you want. Probably a SIPP or other personal pension. If your RL pension is a group or other personal pension there ought not be any issue getting them to allow the transfer out. If it is a final salary pension then a transfer will be more difficult.

Ormicron wrote: »

Can I set up an account in the UK as a US resident?

This is where you are likely to run into problems. As a result of overbearing US regulation, many (if not all) UK providers have started to shun 'US persons'. This group includes not just US residents like yourself, but also US citizens living and working full time in the UK, and who may have lived here for decades (and perhaps have never even set foot in the US -- born in the UK to a US citizen parent, for example). Your non-UK residency is a much lesser problem than your US residency.

If you hunt hard enough you may find someone willing to take on your pension; there are a few companies in the UK that specialize in the difficult task of providing financial services to US persons. But it is unlikely that any of the normal UK platforms will. By all means start with these, but be prepared to look to specialist or 'boutique' (another way of saying 'expensive') brokers if, as seems likely, you don't find anything in a regular search.

At its core this refusal of US persons can be seen as discrimination. But since it is being upheld by the UK govt in the form of the US/UK FATCA intergovernmental agreement, an individual can do little or nothing in practical terms to counter it. If you are also a US citizen by now you could call your congresscritter to complain. But expect to be told it is for your own good and that you should shut up and go away. That's been the response to others who have tried this route.