Royal London SIPP and Workplace Pension Transfer for US Residents

What Is Royal London, and Who Uses Its Pensions?

Royal London operates through The Royal London Mutual Insurance Society Limited, a UK-regulated insurer. As a mutual it has no external shareholders. It is owned by, and exists to serve, its members, and it distributes surplus to eligible members through its ProfitShare scheme. That structure has allowed a long-term view on product development, pricing and service, and it is part of why the brand commands genuine loyalty among UK advisers and policyholders.

Its pension products include individual SIPPs, personal pensions and group personal pension schemes. The group personal pension range has been particularly popular with small and medium-sized UK employers as an auto-enrolment vehicle, which is why Royal London pensions turn up across a wide range of employment sectors and career histories. Many people hold a Royal London pension they contributed to during an earlier chapter of their working life, often without realizing quite how significant that pot has become.

The typical Royal London pension holder who contacts us is either a US citizen who worked in the UK for a period, or a British national who has since become a US resident or Green Card holder, and who joined a group personal pension arranged by a UK employer before retaining the plan after leaving the UK.

Royal London Governed Portfolios: What They Are, and Why They Matter for US Residents

One of the most distinctive features of the Royal London proposition is the Governed Portfolios range, a set of risk-graded, centrally managed multi-asset portfolios that sit at the heart of most Royal London pension arrangements and serve as the default investment in many workplace schemes. They are reviewed by an investment committee, rebalanced to target allocations, and designed to deliver risk-adjusted returns appropriate to each stated risk level. They are also calibrated to UK investor behaviour, UK tax considerations and sterling exposure.

For a US resident that calibration is the problem. A centrally managed portfolio built for a UK-resident audience cannot be adjusted to reflect your income needs in US dollars, your federal and state marginal rate, or the interaction between UK pension withdrawals and US tax law. There is also a compliance dimension. Some of the underlying pooled funds are UK-domiciled collectives. Held inside the pension wrapper they do not raise PFIC reporting, but confirming that they are in fact held inside the wrapper, and not alongside it, is part of any competent review. This is not a criticism of the portfolios. They do the job they were designed for. That job is not your job.

How a Royal London Pension Works for US Residents: The Core Limitations

Residency and new business restrictions

In our client-facing experience, Royal London does not generally accept new SIPP or personal pension applications from US residents. Existing members may be permitted to retain a plan, but the platform was not designed to serve US clients on an ongoing basis, which creates friction across contributions, investment choice, payments, tax reporting and death benefits. We have not located a published Royal London policy statement to that effect, so treat this as our experience of live cases rather than a quoted rule, and confirm your own position in writing.

Cross-border payments and currency

The standard payment infrastructure is designed for UK bank accounts. Paying pension income directly to a US bank account, in US dollars, together with the documentation needed for a claim under the US and UK Double Taxation Convention, can be cumbersome and in some cases is not fully supported. Obtaining an NT code from HMRC adds a further administrative layer, and responsibility for that process largely falls on the member. We cover the NT code process in this guide.

Investment range limitations

The Governed Portfolios and managed fund range suit UK-resident clients well. For a US resident, the default selection may include holdings that are not structured with US tax compliance in mind, and the available options do not reflect the currency requirements of an American household. The open architecture universe available through an International SIPP, covering globally diversified ETFs, multi-currency funds and US dollar strategies, is not available within the Royal London framework.

The US-Resident Beneficiary Problem: Why This Matters Most

This is the issue that most clearly distinguishes a standard UK SIPP or group personal pension from an International SIPP when it comes to cross-border estate planning, and it is worth setting out carefully rather than dramatically.

Under current UK rules, a nominated beneficiary who inherits an unused drawdown fund can elect for beneficiary drawdown. The money stays inside the pension wrapper, remains invested, income can be drawn over time, and whatever is unused can pass on again. For a US-resident beneficiary, most UK providers do not hold the authorizations required to service an account for a resident of the United States on an ongoing basis, and the practical result across the market is that the drawdown option is not offered. Where that applies, the only route available may be a lump sum encashment.

On the specific position at Royal London, we want to be straight with you about the evidence. Unlike some providers, we have not found a published Royal London document stating that beneficiary drawdown is unavailable to a US-resident beneficiary. What we have is consistent client-facing experience, and the general market pattern described above. That is enough to make this a question you must ask, and not enough for anyone to tell you the answer in advance. Put it to Royal London in writing, name the country your beneficiaries live in, and keep the reply.

Why forced encashment is a problem for a US-resident beneficiary

• A large one-off payment generally has to be treated as ordinary income for US purposes in the year it is received, and where no UK tax was paid there is no foreign tax credit to offset it, which can push the beneficiary into a materially higher bracket than a series of smaller annual withdrawals would.
• Once a lump sum is paid out, the ability to cascade the remainder to a second generation inside a tax-advantaged wrapper is lost entirely.
• Receiving a large foreign pension lump sum can raise new FBAR and Form 8938 questions for the beneficiary in the year of receipt.

There is a second reason to review nominations now. Finance Act 2026 received Royal Assent on 18 March 2026 and, for deaths on or after 6 April 2027, most unused pension funds and pension death benefits will be brought within the estate of the deceased person for UK inheritance tax. HMRC has published a technical note. This applies to UK registered pensions generally, whether held with Royal London or in an International SIPP, so it is not a reason to transfer in itself. It is a reason to model the position, including how UK inheritance tax interacts with US federal estate tax and with the residence-based rules that replaced domicile from 6 April 2025, well before it takes effect.

An International SIPP is designed to serve US-resident members and their beneficiaries. A US-resident beneficiary can elect for beneficiary drawdown, keep the funds invested inside the wrapper, and continue to receive advice from an adviser authorized to work with US clients.

British Expats in the US With a Royal London Pension

A large share of the Royal London pensions we review for US-resident clients belong to British expats rather than to Americans who happened to work in the UK. If that is you, you arrived at this problem from the opposite direction. The pension was an ordinary UK workplace or personal plan while you were in the UK, and nothing about it was a cross-border issue until the day your US tax residence began. Nothing changed inside the pension. What changed was who has the right to tax it and who is willing to administer it for you.

What drives the analysis is US tax residence, not nationality. A British national who holds a Green Card, or who meets the substantial presence test, faces the same platform limitations, the same cross-border payment friction and the same beneficiary encashment problem set out above, and the same US reporting obligations on the pension. There are also questions that British expats ask and US citizens usually do not: whether contributions can continue once UK relevant earnings stop, whether an NT tax code should be applied to future pension income, and whether the plan is to remain in the US permanently or to return to the UK later. That last question changes the answer materially, because a structure that suits a permanent US resident is not always the structure that suits someone expecting to repatriate within a decade.

If you have not yet moved, the window before your US residency start date is the most valuable planning period you will get, and it closes on a fixed date. Decisions about the timing of the move, the treatment of holdings that will become reportable, and the sequencing of any UK pension consolidation are far easier to make before that date than after it. The US tax levers themselves belong with a US-qualified tax adviser, a CPA or Enrolled Agent, and we work alongside one rather than replacing them. What we handle is the UK pension side: what your Royal London arrangement actually is, whether it should move, and where it should move to.

The Position for US Persons

For US citizens, Green Card holders and US tax residents, a Royal London pension creates considerations that go beyond the general cross-border issues above. The platform was not designed to service US persons, and it does not produce the US-specific tax reporting documentation a US person often needs. The annual FBAR obligation applies where the aggregate value of foreign financial accounts exceeds 10,000 US dollars at any point in the year, and a UK pension counts toward that total. The IRS sets out the requirement on its FBAR page and publishes a comparison of Form 8938 and the FBAR, which apply at different thresholds and are not alternatives.

On PFIC, the mechanism matters more than the headline. A reporting exception applies to PFIC interests held through an arrangement treated as a foreign pension fund under an income tax treaty, where the treaty defers taxation of the income of the fund until it is paid. That exception sits in the regulations under section 1298(f) and can be read in the Code of Federal Regulations. It attaches to the pension wrapper. It does not extend to investments held outside it, such as an ISA or a general investment account. Managing all of this alongside a UK pension held on a domestic platform that offers no cross-border support falls entirely on the member.

The 25 percent lump sum: contested, not settled

The mainstream practitioner position is that the United States taxes the 25 percent pension commencement lump sum as ordinary income, with no UK tax paid to generate a foreign tax credit. That is the position we plan around. It is not settled. Article 17(2) of the treaty assigns lump sums to the state where the scheme is established, which points to the UK alone, while the counter-argument is that the saving clause permits the United States to tax its own citizens and residents regardless. A minority of advisers claim the exemption under Article 17(1)(b) and disclose it on Form 8833. No court has decided the point. Take the decision with your US tax adviser before any crystallization event rather than after it, and be wary of anyone who tells you the answer is obvious in either direction.

Jonathan Laws, ACA Ch.FCSI

Senior Independent Financial Adviser, Cameron James

“In conversations with US-resident clients who hold a Royal London pension from their UK working years, the moment of truth almost always comes when we talk about beneficiaries. A client in the United States will usually assume their spouse or adult children will simply inherit the pension and carry on drawing from it. When we explain that a lump sum encashment may be the only option offered, and what that means on a US tax return, the planning priority changes immediately.

Royal London is a genuinely good provider for the right client. The mutual structure, the Governed Portfolios and the competitive charges are real advantages for a UK resident. The question we have to answer is whether those advantages translate to someone living in Boston, Austin or San Diego. Usually they do not. A transfer to an International SIPP does not mean giving up quality. It means finding quality in a structure built for the life you are actually living.”

Royal London Transfer Options for US Residents

An International SIPP is structurally identical to a standard UK SIPP. It is a registered pension scheme in the UK, listed with HMRC. The difference is that the platform, the trustee and the administration are built to serve US-resident clients, with payments to US bank accounts, multi-currency support, an accessible investment universe, and the ability to offer beneficiary drawdown to US-resident family members. Our wider treatment sits in the pillar guide to UK pension and SIPP transfers for US residents.

Table: the comparison as it applies to a US-resident member. Confirm the beneficiary row against your own plan documentation.

Why a QROPS is not the answer for a US resident

A QROPS transfer carries two compounding problems for a US resident. The 25 percent Overseas Transfer Charge applies to most QROPS transfers unless the member is resident in the same country as the scheme, and because there is no QROPS established in the United States that condition cannot be met in practice. HMRC sets out the charge in its Pensions Tax Manual. Second, a QROPS held by a US person is commonly treated as a foreign trust, bringing Form 3520 and in many cases Form 3520-A into play, with severe penalties for errors regardless of whether tax was due. Our detailed treatment is here. For these reasons an International SIPP, not a QROPS, is the route we recommend to almost all US-resident clients.