Article Summary

Understanding pensions

The UK government gives residents a great deal of flexibility in selecting a pension scheme that best suits their circumstances. This level of flexibility allows clients to choose from a variety of regulated pension schemes, such as money purchase, final salary, defined contribution, SIPP, along with several overseas pensions which have other benefits and rules slightly different to those of standard UK pension schemes.

**We ran a deep dig on QROPS USA here.


Many people in the United Kingdom still hold a final salary pension scheme. After reaching their Scheme’s normal retirement age, which is typically 60 or 65 (or earlier if they opt for early retirement) their scheme will pay out a fixed amount of income for life, which will increase based on the specific rules of the scheme – such as inflation or a fixed percentage. However, in recent years, people have been given the potential to exchange their last salary pension for a more flexible pension arrangement which provides a different set of benefits, although the FCA typically prefers individuals to remain in their DB schemes.

A final salary pension transfer is a decision to exchange the benefit of a defined benefit (DB) pension for cash value and transfer it to a flexible access pension arrangement, like a DC or SIPP. Essentially, a transfer into a scheme like this would give you more control over the pension pot, whilst simultaneously losing the right to a guaranteed income for life. Some people want to manage their pension scheme in order to try and achieve higher benefits than the current DB pension (usually by taking a higher level of risk), but most want to transfer as a guaranteed annual income, paid in regular intervals, does not suit their retirement requirements. As such, they share the belief that more value will be provided to them in a more flexible pension. This is also a key consideration for those with health conditions.

A major benefit of a private or personal pension scheme is the ability to control where your pension money is invested and how you access it, and you have the ability to decide how you pass it on to your beneficiaries.

Some employees in the United Kingdom may have switched from a defined benefit pension scheme (DB) to a defined contribution pension scheme (DC). However, many individuals may be unhappy with their present scheme or their previous/current financial adviser. Another reason is that they are planning to relocate to another country and need to set up an international/internationally geared pension scheme because they will be leaving the UK and retiring elsewhere. For example, many traditional UK DC Pension Schemes do not allow payments to non-UK Bank Accounts.

Transferring Defined Benefits to a SIPP

If you are considering transferring your Defined Benefit (DB) pension scheme to an International SIPP, first, the trustee, via the scheme actuaries, will convert the benefits you have accrued into a single monetary value, known as a CETV (Cash Equivalent Transfer Value). A CETV effectively takes the value of your benefits, and using all sorts of complex actuarial variables generates a value that essentially tells you how much your predicted DB income streams are worth, in today’s money i.e. accounting for inflation and potential investment returns, among other factors.

You then (if your pot is over £30,000) will need formal FCA Regulated Advice from a specialist adviser, known as a Pension Transfer Specialist, who will assess your current situation in great detail and advise on whether you should keep (“Retain”) your DB, or whether you should transfer your DB to another arrangement. If they advise a transfer, then they will also advise on the new pension to receive the transfer, and any advice on whether ongoing advice should be provided, as well as any other useful information.

It is a complex and intricate area of financial planning and wealth management, and it would be advisable to seek the help and guidance of a specialist.  Our team at Cameron James has in-depth knowledge of this matter, having dealt with hundreds of Final Salary pension transfers and being qualified to PTS level, and you can find more on our DB Transfer Page, linked above.

Is a QROPS Suited for US Residents?

Non-UK residents can transfer their pension schemes to a Qualifying Recognised Overseas Pension Scheme (QROPS) or an International Self-Invested Personal Pension (iSIPP). However, an EEA QROPS scheme is subject to a 25% penalty charge (OTC) on transfers for non-EEA residents.

There are a few circumstances in which this 25% Overseas Transfer Charge (OTC) is not applicable. A client who resides in a country that has locally regulated QROPS can transfer to one of those QROPS without paying the 25% OTC charge. Find out more about the Overseas Transfer Charges here.


For a US Resident, a QROPS is not advised, as there are none registered in the US, so a US Resident would be subject to a 25% OTC, and the IRS places extra scrutiny on jurisdictions like Malta, which is home to the vast majority of QROPS. The UK also has special IRS treatment of its pensions, which is rather unique, and would be lost on transfer outside the UK.

As such, a QROPS for a US Resident is a complete non-starter, and an International SIPP is always the advisable option.

International SIPPs are one of the possible alternative personal retirement scheme options if you plan to move to the United States or if you already live there and want to easily access and manage your UK pension scheme while living in the United States.

A SIPP and an International SIPP are very similar, but with a few key differences. The structure of both schemes is exactly the same in that they are both HMRC-regulated schemes, but their purposes differ.


SIPPs are designed for UK residents, whilst International SIPPs are mainly designed for Non-UK Residents, including US Residents. They allow you to effectively manage your UK retirement scheme by maintaining the assets within an efficient tax wrapper in the UK but managing them overseas as a non-UK resident. Cameron James can assist you in gaining a thorough understanding of an International SIPP, including their advantages and disadvantages.


UK Pension in the USA

The most significant issue with administering your current UK pension scheme while living in the US is that the DB or DC UK pension scheme is designed with a UK scheme membership in mind, and lots of the unique variables that apply to a non-UK Resident are not fully catered for.

Along with the aforementioned concerns, tax is one of the most common issues you may encounter while administering your current UK pension scheme in the US. 

International SIPPs are a possible alternative if you intend to move to the United States, or if you already live there and want to explore options for your UK pension schemes.

It is our understanding, that according to the US/UK DTA, any payment of UK retirement benefits to US residents is solely subject to US taxation. But we recommend you consult a tax adviser to confirm this.

Is the UK 25% Pension Commencement Lump Sum tax-free in the USA?

Despite numerous financial advisers in the USA inferring to their clients that the UK 25% PCLS is tax-free in the US, there is a large raft of information that is contrary to this. While it would be easier to tell clients that it is tax-free as this will likely increase the eagerness to complete a transfer with Cameron James, we prefer to be transparent. However, different regulations may apply in the United States. Your 25% lump sum will very likely be taxed in the United States. In fact, just about every jurisdiction in the world will reserve the right to fully subject the 25% PCLS to income tax, and treat it for all intents and purposes like local pension scheme income, for tax purposes.

Can I transfer a SIPP to the US?

It is not possible for a US person with a UK pension to transfer their UK pensions (Final Salary, Defined Benefit, Defined Contribution or SIPP) to the US or a US pension product like a 401k.
To clarify again, UK employees who live in the US cannot consolidate their pension and transfer a UK pension to 401k or any US equivalent scheme. We have had many clients ask this question about UK pension to 401k transfers.

While we agree that it would be ideal, the US and UK government does not allow pensions to be consolidated or mixed for obvious tax reasons. As such, your UK pension assets cannot be transferred and held on the typical US platforms (TD Ameritrade, Interactive Brokers, Charles Schwab, and so on), as they do not accept UK pension assets.

Advantages of an International SIPP

International SIPPs give you the freedom to choose and manage your own investments. Although they have some similarities to defined contribution pension schemes, International SIPPs provide the client with greater flexibility and a tax-efficient way to hold and invest their retirement savings.

1. Security

SIPPs were first introduced in the UK Parliament’s 1989 Budget. The Financial Conduct Authority (FCA) in the United Kingdom regulates SIPPs to protect individuals in the United Kingdom who are saving for retirement. 

2. Currency flexibility

There are numerous key features of International SIPPs that provide you with a full range of investment options, including the ability to invest in a variety of currencies including the big three of USD, GBP, and EUR. This currency flexibility allows US-resident clients to hold some or all of their UK pension assets in USD, to match their pension currency with their retirement expenditure currency. 

3. Wider Range Of Investments

Typically, the standard UK retirement benefits offer a limited pre-packaged, restricted range of fund options. Not only are UK pension schemes often limited, they are also often expensive and provide poor value for money, especially older legacy schemes.

For example, a UK pension scheme may create an in-house XYZ Balanced Fund for you to purchase for 0.5%-0.75% pa (per annum). While this may not sound expensive, particularly with equities markets often achieving 5-10% growth pa, the reality is that this in-house fund is made up of a range of underlying funds from companies such as BlackRock, Vanguard and Fidelity, which can cost as little as 0.07% pa. As such, UK pension funds are often charging clients extra without realising, as they are marking up the price of these funds which they sell onto you and your employer.

This is unlike an International SIPP, where there is direct access to those very same funds, but without the mark-up. We feel this is the fairest and most transparent way to create our clients’ portfolios.

International SIPPs offers a wide range of investment including stock exchange-listed investment trusts, gilts and bonds, stocks and shares, investment trusts, FCA-recognised Open-Ended Investment Companies (OEICs), bank deposit accounts, exchange-traded funds (ETFs), and real estate investment trusts.

The reality, though, is that very few clients will utilise this full range of asset classes, and there are a few extra limitations with US clients. We will typically advise our clients to hold a combination of 70-75% passive funds, and 25-30% active funds, split between globally diversified low cost equities and bonds.

To learn more about this, please read our dedicated articles explaining Passive Funds and Active Funds and why we use a combination of the two, at Cameron James inside your International SIPP and indeed all the investment pots we manage and advise on for our clients.

4. Cost Efficiency

Each of your UK pension schemes will have its own set of fees and charges. These may be fixed administration charges or percentage-based charges. Our clients can in many cases achieve lower annual expenses by transferring and consolidating their DC pensions into SIPPs. Having a lower fund charge may increase the fund value you have available at retirement.

Additionally, many UK pensions schemes, particularly older employee-based DC schemes, can have high fees or even bid-offer spreads (1-4%) on the purchase of the underlying funds. At Cameron James, we have a 0% bid-offer spread on all assets we purchase for our clients.

5. Early Access

You have control over when and how much you withdraw from your pension pot once you reach the age of 55. On paper, the client can withdraw the entire pension pot in their first year of retirement; however, there are some disadvantages with doing this. The client may have to live the rest of their retirement with insufficient funds, and the tax paid will be substantial.

Pension providers will not allow you to withdraw funds before the age of 55. If you withdraw your funds before the age limit, you will be charged a hefty fine. The HMRC will levy a 55% tax on UK SIPP distribution before age 55, you may be subjected to exit penalty charges.

Kindly note from 2028, it is the Government’s intention for this normal retirement age to rise from 55 to 57. As such, if you are currently in your early 50s, this is a key area that you need to understand.

You can learn more about this in our dedicated page – Normal Retirement Age To Rise from 55 to 57.

6. Pension Commencement Lump Sum

Pension commencement lump sum (PCLS) is also known as Tax-Free Cash, and is the lump-sum payment you can receive when you access your benefits from your UK pension retirement funds. The UK government allows you to take a tax-free lump sum of 25% of your DC pension fund.

The remaining 75% of the fund will be treated as taxable income, as and when you access it. You can still decide how to draw the fund; as a lump-sum, multiple lump sums, setting up income streams or obtaining an annuity from a Life Assurance Company.

However, withdrawals of funds will be subject to the laws of the country in which you reside. If you reside in the United States, you will not be taxed twice on your withdrawal, you will only be taxed in the United States due to the Dual-Taxation Agreement. However, in order to avoid being taxed in the UK, you need to apply for an NT Tax Code from the HMRC, otherwise taxes will apply at source, and then you must claim them back in a self-assessment return with the HMRC.

However, as mentioned previously, it is not wise to assume that the 25% PCLS will also be tax-free in the US. We would encourage you to read further on this topic through our article  Is the UK 25% Pension Commencement Lump Sum tax-free in the USA?

7. FCA Protection

Your International SIPP is fully FCA regulated and protected by the UK regulator, regardless of where you live. This policy is critical for expats who no longer reside in the UK or live in less-regulated countries, but still want to be protected by the FCA.

It is important to note that, in our professional opinion, the FCA is quite possibly the most robust and regulated Financial Authority in the world, and pensions are highly secured and protected by the UK government. It is unlikely that you would be afforded the same degree of care and due diligence from other Regulatory Bodies, even the SEC.

8. Death Benefits

You can also access death benefits through an International SIPP. Death benefits are usually exempt from Inheritance Tax in the United Kingdom and the United States; however, different rules may apply in some cases. The benefit can also be passed down to designated death beneficiaries.

In the event of the death before the age of 75, the whole of your SIPP benefit will be paid out as a lump sum or as an income stream without any UK tax on the benefits paid to beneficiaries. On the contrary, in the event of death after the age of 75, the beneficiary will pay their marginal rate of income tax on any benefits they receive, but not IHT.

The goal of this legislation from the UK is to stop people from putting all their assets into a SIPP and passing onto their beneficiaries tax-free, i.e. like a pure tax avoidance scheme.

Find out more about tax treaties in our in-depth analysis.

How to claim tax that was applied on your SIPP withdrawal from a UK tax return?

If you are a US resident and wish to take advantage of the extra tax reduction on your International SIPP payments, you must do so through self-assessment tax returns. Completing the process of a self-assessment tax returns can be difficult; thus, it is important to prepare important details such as:

  1. 10 Digit of your Unique Taxpayer Reference (UTR)
  1. National Insurance number
  1. Details of any expenses relating to your self-employment
  1. Details of any contribution to your SIPP that might be eligible for tax relief
  1. P60 form

If you have any complications while completing your assessment, please contact your financial adviser for assistance.

What is inheritance tax?

Inheritance tax is a tax that a beneficiary must pay on the estates they inherit, including property, funds, and possessions, in the event of the decedent’s death. In the UK, when an estate exceeds £325,000 (£650,000 for a married couple), the standard Inheritance Tax (IHT) rate of 40%. Inheritance Tax (IHT) is taxed on both UK or US residents.

There is a significant distinction between being a UK resident and being a UK ‘domiciled’ person. Unless you have residentship, you may be a UK domiciled person if you were born in the UK, one or both of your parents were born in the UK, or you were raised in the UK. The rules for domicile are vague, and broad, meaning IHT may still apply even if you feel there are no formal and official ties to the UK anymore.

This could have implications for the estates of people who retire and leave the UK, and it will be critical for the beneficiaries. Many of our clients tell us they have not been in the UK for many years and have no IHT obligations in the UK, this is often not the case due to the level of technicalities in this subject matter..

It is critical to seek advice from a reputable financial adviser. You can learn more here to fully understand your IHT obligations for UK and US related to UK pension.

Disadvantages of an International SIPP

Transferring UK pensions into an International SIPP has both potential benefits and risks. International SIPPs provide you with greater flexibility in managing investment risk, more control over your pension investment, and the potential for lower management costs when compared to other UK pensions.

On the other hand, transferring a DB pension into an International SIPP, carries additional risks, including increased investment risks, and the loss of safeguarded pension scheme benefits.

1. Administration issues

The most significant issue that may arise when deciding on an International SIPP is the administration. After working in the UK, your UK pensions may be fragmented in that they are held with numerous providers.

UK pension schemes are often understaffed and extremely inefficient at processing requests. Simply requests for information can take up 10-20 working days, and we have even seen 45 working days during the CV19 pandemic.

As such, patience is required, and as part of our service, we will complete as much of the administration for you as possible. Given our level of experience in dealing with scheme administrators on a daily basis, we ensure the administration of your pension is a highly efficient process from start to finish.

2. Potential loss of existing benefits

If you have no other backup options for achieving your retirement goal, a transfer of your DB pension may not be appropriate for you. Outside ill health, a transfer is most likely to be suitable for you if you will not rely on your DB scheme for your retirement income and have other sources of income, such as other pensions and investments.

Typically, a PTS will look at other forms of “guaranteed” or secure income to meet your expenditure, such as annuities, property income, and other DB schemes.

Once the DB transfer is made, you cannot return to the UK DB scheme. If you decide to transfer into a SIPP, your existing safeguard benefits will be lost. Previous DB or DC scheme benefits may be more valuable in some cases than international SIPPs.

3. Costs

Whilst many old UK DC Schemes have high chances, some do not, and moving your old pensions into an International SIPP, whilst providing you with a lot of benefits, may increase the charges you are paying.

4. Scam Risks

Scams can begin with an unwelcome phone call from fraudsters. It is essential to only accept calls from your trusted adviser. Keep an eye out for any calls that may arrive before or after transfers. You may become a victim of a scam as a result of the transfer. Fraudsters are becoming increasingly smart and finding new ways to access people’s hard-earned money and pension pots. According to the FCA, nearly hundreds of millions of pounds have been defrauded from unsuspecting pension holders.

You should pay close attention to unregulated, alternative, and esoteric investment opportunities. Such an investment is at the heart of all investment frauds. It is extremely crucial to only invest in regulated investments that will protect you from scams. Check the adviser’s credentials, track record, and experience. Only a qualified and trustworthy adviser should provide pension advice.

5. Investment Risk

The value of your investment may rise and fall within a DC Scheme. As a result, you may receive less than you invested, or not achieve as much growth as you anticipated or planned for.

How to transfer into an International SIPP?

A pension transfer requires you to submit a written legal application to the scheme administrator and pension provider, requesting any necessary details and informing the regulator and pension provider of your decision to transfer from one scheme to another.

If you are a member of a DB pension and the fund exceeds £30,000, the FCA requires you to seek professional FCA DB Advice, which we can help you obtain at Cameron James.

Before making any decisions on any pension, even a DC Pension, the FCA recommends that you seek professional advice from a qualified financial adviser.

Whether transferring a DB pension scheme or a DC pension scheme into an international SIPP, you will complete the advice process with a qualified financial adviser at Cameron James, who will recommend the most suitable International SIPP and portfolio allocation.

The International SIPP DC transfer process is incredibly transparent. We will analyse your profile and your adviser will then provide a clear and comprehensive understanding of your current situation and the investments that are most suitable for your needs.

The adviser will complete a Letter of Authority with you during the Fact Finding process. This document gives the adviser the authority to officially correspond with the member’s pension provider via mail or email, to gather the relevant information (e.g., transfer value, cost, charges, etc). The LOA, however, does not grant the adviser the authority to transfer the pension nor make any decisions on the clients’ behalf.

Following the selection of the appropriate International SIPPs option, we will complete your transfer paperwork, and our ongoing planning service will commence. Transferring into SIPPs allows you to access and review all of your investments online 24 hours a day, seven days a week (Even if that is likely not advisable!). Your financial adviser will provide an accurate projection of their pension income at retirement, and will work with you via cash flow modelling to help you plan and manage your retirement.

Best International SIPP & Investment Platform

When it comes to charges, transferring into an International SIPP is not just about keeping your costs as low as possible, but also having a platform that is robust, regulated, and which can meet your objectives. The Financial Times highlighted the fees to consider when transferring to an International SIPP, and this may be a factor in your decision to choose a suitable SIPP provider.

Please keep in mind that the prices may vary depending on the company’s updates.

Annual costs SIPP closure Fee Exit charges to UK scheme Exit charges to overseas scheme

Novia Global UK SIPP Any amount £180 £0 £0 £0

Sovereign International SIPP Any amount £500 £0 £250 £400

iPensions USA SIPP Under £1m £500 £0 £500 £1,000

iPensions USA SIPP £1m to £1.5m £1,500 £0 £500 £1,000

*These fees are excluding VAT if applicable.

However, a SIPP is just a tax-free wrapper, and in order to invest you must utilise either an Investment Platform or Offshore Investment bond within the SIPP.

At Cameron James, we prefer to use platforms, given their low fees, transparency and up-to-date technological capabilities.

For our US Clients, we typically use the Novia Global General Investment Account (GIA), regardless of which SIPP is utilised.

Of course, if pricing changes or service drops then, as an Independent firm, we would utilise the lower cost/better servicing competitor option.

We do occasionally use an Offshore Bond from RL 360, for larger clients, as they have a slightly lower cost structure. But given the reputation of bonds, the fact that even with the “clean” charging version they are a commission based product, and the loss of FCA protections (as not regulated in the UK) we very rarely utilise them, and will advise the Novia GIA in 99% of cases.

Why choose Cameron James?

At Cameron James, we have built a stellar reputation as being incredibly knowledgeable on the UK Pension industry, and how it interacts with US Residents. With over 10 years of experience in transferring pensions, Cameron James is now servicing clients in 23 countries.

We have the qualifications and technical knowledge required to help you transfer to an international SIPP, both as an expat and as a US resident. Our mission is to bring regulated and transparent advice to our clients. Our clients know how much their advice will cost in advance, with no hidden fees.

We are also holistic financial planners, who will provide you with cash flow modelling and full financial planning, including retirement strategies and investment management. We are not a “once a year catch-up for a chin-wag about your portfolio” adviser, and provide a comprehensive ongoing service, which is above and beyond the service levels of most advisers in the UK, let alone advisers in the US servicing UK Expats.  Our senior management team has well over a decade of experience serving expats and is committed to continuing to serve the requirements of expats for decades to come.

Transferring a DB or DC pension into an International SIPP scheme for expats is not a simple decision. Before making a decision, many details and procedures must be thoroughly understood.

Meet our dedicated adviser to find out a comprehensive understanding of International SIPP.

There is no one size fits all answer

Our job would be easier if there were a one size fits all solution. It will depend on your situation and requirements. Everyone’s needs are different. For example, what may be the best advice for your colleague of a similar age may not be the best advice for you. Where you live, where you intend to retire, the value of your pensions and your attitude to risk are all determining factors. With a constantly evolving UK pension landscape, with its complex rules ever-changing, and guidance always being revised, what might have been the correct advice 2 or 3 years ago, will be very different from the current reality. Thus, it is incredibly important to seek advice from a regulated and qualified adviser, who specialises in this niche.

Your pensions are likely your most significant asset after your home, so taking advice from an experienced professional who specialises in this area is vital and likely the best course of action. Our IFA’s look forward to working with you and helping you achieve your retirement goals.


Our Founder & CEO -
Dominic James Murray

I have been in the UK Pension Transfer industry for over 11 years, and have witnessed seismic changes in the UK Pension rules over the course of that decade. Most to the benefit of the UK Chancellor or to Chequer!

My 5 years as CEO of Cameron James, have certainly been the most rewarding. My goal, has been a simple one. Provide clients with transparent financial advice on a low-cost basis, for them to make informed decisions to protect their families best interests.


Our Clients Love Working With Us!

We have worked hard for our reputation and we will be maintaining it.