Moving UK pension to the US is not a direct transfer process; your pension usually stays in the UK and becomes subject to US tax and reporting rules once you are a US tax resident.
This creates planning challenges around taxation, access, and long-term retirement income that many expats underestimate.
This article covers:
- What are the rules for pension in the UK?
- How many types of pension are there in the UK?
- What happens to my UK pension contributions if I move abroad?
- Can I get my UK state pension in the USA?
- What are the risks of transferring UK pension?
Key Takeaways:
- Most UK pensions remain in the UK; direct transfers to US accounts are not possible.
- UK State Pension can be paid in the US with annual increases under the UK–US agreement.
- US tax rules often override UK pension tax advantages.
- Unauthorized transfers can trigger significant tax and compliance risks.
My contact details are hello@adamfayed.com and WhatsApp +44-7393-450-837 if you have any questions.
The information in this article is for general guidance only. It does not constitute financial, legal, or tax advice, and is not a recommendation or solicitation to invest. Some facts may have changed since the time of writing.
What is the pension system in the UK?
The UK pension system provides retirement income through three main categories: State, workplace, and personal pensions.
Some of these, such as private and certain workplace pensions, may be eligible for overseas transfers under strict rules.
What are the different types of pensions in the UK?
The main types of pensions in the UK are State, workplace, and personal pensions.
- State Pension:
- Government-provided retirement income based on National Insurance contributions.
- Eligible for payments abroad, including the US, with annual increases depending on residency.
- Cannot be transferred to US retirement accounts.
- Workplace Pensions (Occupational Pensions):
- Provided by employers, either as defined benefit (guaranteed income) or defined contribution (investment-based).
- Defined contribution pensions may be eligible for transfer to certain overseas schemes (QROPS) before moving abroad.
- Personal Pensions:
- Privately arranged, self-funded pensions, often as stakeholder plans or SIPPs.
- May be eligible for QROPS transfers, subject to HMRC rules.
Understanding which type of pension you hold and its transfer eligibility is essential before planning any cross-border pension move.
What to do with UK pension when moving to USA?
When moving to the US, the most practical approach is usually to leave your UK pension in the UK.
However, if you want more flexibility or access before retirement, here are some alternatives:
- Claim your UK State Pension in the US:
- Payments can be made directly to a US bank account.
- Annual increases apply under the UK-US social security agreement.
- Plan withdrawals around US tax rules to minimize exposure.
- Partial drawdown before moving:
- Some expats take small withdrawals while still UK-resident.
- Helps manage future US tax liability on larger sums.
- Limited by scheme rules and age restrictions.
- Specialist pre-move restructuring (rare, high-net-worth option):
- Transfers to a QROPS or third-country wrapper before US residency.
- Provides distribution flexibility and estate planning benefits.
- Requires expert UK-US cross-border advice and is not suitable for most expats.
What happens to my UK pension if I move to the US?
If you move to the US, your UK pension usually stays in the UK, continues under its existing rules, and does not need to be transferred or withdrawn.
Under the UK-US social security agreement, your State Pension can be paid in the US and will receive annual increases, just as it would in the UK, provided you meet residency conditions.
Most UK pensions can remain in place indefinitely, continuing to grow under UK regulations.
Defined contribution pensions can stay invested, while defined benefit pensions remain payable at the scheme’s normal retirement age.
Relocating to the US does not force a transfer or early access.
However, once you become a US tax resident, how your UK pension is taxed, reported, and potentially penalized changes significantly.
In practice, US tax treatment often becomes the decisive factor in whether keeping the pension in the UK makes sense.
Is UK pension frozen in the USA?
UK private and workplace pensions are not frozen simply because you live in the US; they remain invested and continue to operate under their existing rules regardless of where you live.
Private UK pensions generally remain fully operational, and investment growth continues as normal because pension providers do not treat residency alone as a reason to freeze the pension itself.
However, access, servicing, and reporting obligations can be affected by cross‑border logistics and provider policies.
The idea of pensions being frozen is often confused with UK State Pension uprating rules.
The UK State Pension is paid worldwide, but it is only increased each year (in line with the triple lock) where there is a legal requirement for uprating, such as in the US under the UK–US social security agreement.
Pension uprating is not automatic everywhere, and many countries with no reciprocal agreement (like Canada, Australia, and New Zealand) do not receive increases.
For private and workplace pensions, the key issue once you become a US tax resident is taxation and reporting under US rules, which often overrides UK tax advantages and can significantly affect net outcomes.
Can I withdraw my UK State Pension if I leave the country?
You can still claim your UK State Pension even if you leave the UK. Eligibility is based on National Insurance contributions, not residency.
Once you reach State Pension age, payments can be made to a non-UK bank account, including accounts in the US.
The main issue is not access, but whether increases continue over time.
Can I claim both a US and UK pension?
Yes, it is possible to claim both a US and UK pension, provided you meet the eligibility requirements for each system.
UK pensions are based on National Insurance contributions, while US Social Security benefits depend on work credits earned in the US.
The UK and US have a totalization agreement that helps prevent gaps in coverage, allowing periods of work in one country to count toward eligibility in the other.
However, benefit calculations remain separate, and taxation can differ for each income stream.
Can you transfer your pension from one country to another?
In theory, pensions can be transferred between countries, but in practice, options are limited.
UK pensions can only be transferred to certain overseas schemes that meet HMRC requirements.
These are known as Qualifying Recognized Overseas Pension Schemes.
The US does not generally offer pension vehicles that qualify under these rules, which means direct transfers are usually not permitted.
How is a UK pension taxed in the US?
Once you are a US tax resident, your UK pension typically falls under US taxation rules.
Contributions, growth, and withdrawals may all be treated differently than under UK law.
In many cases, the US does not recognize the tax-deferred status of UK pensions in the same way.
Withdrawals are often treated as ordinary income, and annual reporting requirements can apply even if no distributions are taken.
The UK-US tax treaty may provide relief from double taxation, but it does not eliminate complexity or compliance risk.
Is it worth moving my UK pension to the US?
For most expats, transferring a UK pension to a US retirement account is not possible, and attempting complex workarounds is usually impractical due to tax, compliance, and cost issues.
Retaining your pension in the UK and coordinating withdrawals with US tax planning is generally the most efficient approach.
High-net-worth individuals may explore rare pre-move restructuring options, but these are complex and require specialist cross-border advice.
What are the risks of transferring UK pension to the US?
The risks of moving UK pension to the US include punitive tax treatment, loss of UK protections, currency risk, and regulatory uncertainty.
Incorrect transfers can trigger unauthorized payment charges, early access penalties, or unexpected US income tax bills.
There is also the risk of losing inflation protection, survivor benefits, or scheme guarantees that would have remained intact if the pension stayed in the UK.
Conclusion
For most expats, the most practical approach is to keep UK pensions in the UK and carefully coordinate withdrawals and reporting once living in the US.
While rare restructuring options exist for high-net-worth individuals, these are complex, costly, and carry significant compliance risks.
Understanding your pension type, eligibility for transfers, and the interplay of UK and US tax rules is essential to preserve retirement income and avoid costly mistakes.
Strategic retirement planning and professional advice remain the key to making informed decisions when relocating with a UK pension.
FAQs
What is the 10 year rule for QROPS?
The 10 year rule for QROPS refers to the period during which transferred funds remain subject to certain UK tax rules.
If you transfer a UK pension to a QROPS and become non-UK resident, HMRC can still apply UK tax charges for up to ten tax years after departure.
This rule adds complexity and long-term compliance obligations, particularly for expats who later move again or return to the UK.
How to avoid paying tax on your UK pension?
Completely avoiding tax is rarely possible, but careful timing of withdrawals, use of treaty provisions, and coordinated residency planning can reduce overall tax exposure.
How can I avoid double taxation in the UK and the US?
Avoiding double taxation in the UK and the US typically involves relying on the UK-US tax treaty, claiming foreign tax credits, and ensuring income is reported correctly in both jurisdictions.
Which countries freeze UK pensions?
UK State Pension increases are frozen in countries such as Canada, Australia, New Zealand, and South Africa, where payments do not rise once paid abroad.
By contrast, pensions increase annually for residents of the UK, EU and EEA countries, and certain countries with qualifying social security agreements, including the US, Israel, Jamaica, and the Philippines.
Pained by financial indecision?
Adam is an internationally recognised author on financial matters with over 830million answer views on Quora, a widely sold book on Amazon, and a contributor on Forbes.
