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From April 2015, the UK government is proposing that those with UK defined contribution pensions should not be forced into buying annuities at retirement by their employer schemes.

Those in such schemes, and personal pensions, should be able to access their pensions in full from age 55, subject to applicable taxation. The existing UK tax free lump sum of 25% of the value of the pension would continue to be available, with the balance of any funds then taken being taxed at the pension member’s marginal tax rate.

While the government is enabling people to manage their pensions much more freely, for those with public sector defined benefit (final salary) schemes, the government is implementing a ban on transfers to other types of pensions (like personal pensions) to take advantage of the increased flexibility.  As the majority of public sector schemes operate on an unfunded basis, out of general UK taxation, if more people were to transfer out this could expose the UK Treasury to significantly higher annual costs.

If you left behind a UK occupational or personal pension and want to know what your options are now, and what they could be as a result of the proposed UK pension changes, now is a good time to undertake a review of your pension.  When doing so, make sure you consult with an adviser who understands the complexities faced by expatriates in the United States and considers the benefits offered by your existing schemes and your overall retirement objectives.

Mark Solomons
Investment Adviser Representative
Florin Pensions LLC