UK/US dual citizen fatca pension nightmare

SWsmith

I'm a dual national UK/US (two passports - born in USA). I've lived in the UK for over 30 years and have no US ties or US accounts/property/assets. My whole life is in the UK. I have a flexible personal pension plan with Aegon Scottish Equitable (salary sacrifice). However, I'm starting to think about income drawdown or taking UPFLS in a few years time. In order to do this I need to transfer to a different plan. Aegon have updated their terms and conditions and do not accept US 'persons' or US 'citizens' for their drawdown plans or SIPPs. These FATCA changes are all fairly recent - what are dual citizens or Accidental Americans supposed to do with their UK pension plans when they want to go from accumulation to decumlation? Are there any UK pension providers I can transfer to who will accept 'US persons' - or don't ask? Even a stakeholder plan that allows withdrawals? This is a huge injustice - blatant discrimination. Any advice would be greatly appreciated. Thank you!

DairyQueen

Gobsmacked to read this.

I was a whisker away from dual UK/US citizenship a few years ago (UK born/US resident for several years). I hope someone can explain what superficially appears to be rather bizarre discrimination.

SWsmith

Thanks. I really hope someone somewhere can guide me in the right direction. I honestly don;t know what to do. It's bizarre. I can't believe it.

Keep_pedalling

Time to give up your US citizenship perhaps. It is nothing to do with discrimination, and all to do with the US hitting non US institutions with massive fines if the do not act as spies for the IRS. It is far simpler and cheaper just not to have US citizens as clients.

dunstonh

It isnt just FATCA. it is also liability. US citizens retain the right to use US courts.

A lot of advisers have a restriction in their PI insurance that prevents them from giving advice to US citizens.

This is a huge injustice - blatant discrimination.

Blame the US then. It is both your tax system, Government and legal system.

Its not discrimination as you can change your status if you dont like it.

xylophone

Had you tried Hargreaves Lansdown?

SWsmith

Thanks for the replies but what I'm really looking for is some advice on which pension providers or what pension plan would work for me? I want to renounce my US passport but my mother is in ill health (she lives in the US). so I am reluctant to do this at the moment. I need to figure out the best way to access my pension funds in the future. I have a few years to go ...but I'm planning.

SWsmith

HL do not accept 'US persons' for their SIPPS.

xylophone

This is from three years ago but their attitude may still be the same?

https://www.telegraph.co.uk/finance/personalfinance/investing/isas/11634040/Isa-providers-refuse-to-open-accounts-for-British-Americans.html

Bigger brokers, including Hargreaves Lansdown and Barclays Stockbrokers, said their doors remain open to US citizens.

http://www.hl.co.uk/funds/terms


What is a U.S. Person?
Regulation S of the U.S. Securities Act 1933 defines a U.S. Person as:

Any natural person residing in the U.S. (regardless of whether they have US citizenship).
Any partnership or corporation organized or incorporated under US laws. Non-US partnerships and corporations formed by US persons principally to invest in unregistered securities are also US persons unless organized and owned by accredited investors who are not natural persons, estates or trusts.

Any agency or branch of a foreign entity located in the U.S.

Any non-discretionary account held by a dealer or other fiduciary for the benefit or account of a U.S. Person.

Any discretionary account held by a dealer or other fiduciary organized, incorporated or resident in the U.S.

Is the OP a "US person" in terms of the above?

It might be worth giving HL a ring about a transfer to their SIPP?

Keep_pedalling

SWsmith wrote: »

Thanks for the replies but what I'm really looking for is some advice on which pension providers or what pension plan would work for me? I want to renounce my US passport but my mother is in ill health (she lives in the US). so I am reluctant to do this at the moment. I need to figure out the best way to access my pension funds in the future. I have a few years to go ...but I'm planning.

As this is some years away I don’t think anyone can advise you of what options will available in the future. Rules will almost certainly change and there is no guarantee that what an organisation will do today, they will still do at some year in the future.

I would leave it until closer to retirement, to make these important decisions.

DairyQueen

Bit harsh dunstan. It's hardly the OP's fault that the US legal and tax system has such a far reach. It wouldn't have occurred to me to forego US citizenship for this (or any other) financial reason.

OP: HL (as suggested) looks like an option.

From their site:
What is a U.S. Person?
Regulation S of the U.S. Securities Act 1933 defines a U.S. Person as:

Any natural person residing in the U.S. (regardless of whether they have US citizenship).
Any partnership or corporation organized or incorporated under US laws. Non-US partnerships and corporations formed by US persons principally to invest in unregistered securities are also US persons unless organized and owned by accredited investors who are not natural persons, estates or trusts.
Any agency or branch of a foreign entity located in the U.S.
Any non-discretionary account held by a dealer or other fiduciary for the benefit or account of a U.S. Person.
Any discretionary account held by a dealer or other fiduciary organized, incorporated or resident in the U.S.

Looks like you (a private UK resident) don't fit their definition of 'US Person'. Suggest you call them.