An immigration lawyer at the recent US Expat Wealth Conference in London in Feb laid out the interesting conditions which trigger a relinquishment of US Citizenship including joining a foreign army as an office or NCO. You might care to check now that you have discovered that you are an accidental American whether you have accidentally given it away again!
Some SIPP administrators will take on US Persons for their UK pension money on the basis that their client is the UK resident SIPP. There are three advisory firms in the UK that can advise you which, and understand the UK, US tax and reporting consequences are, but the moderator and our compliance people will object I think if I share which they are on this site. Alternatively, if you'd like to detect your way to the same information, search on the CFP Board of Standards site for CFP licensees in the UK, and then look for fee-only firms from that subset.
There is no requirement to use the above firms to make an introduction or pay commission. You can approach the SIPP administrators on an execution only basis if you can show that you have studied the issues. The 'issues' are about five pages long, and is free.
These three cross border advising firms are consistent that one should invest directly and not through funds - whether US or UK or European - for a simple life and to keep annual charges for custody, administration, management and dealing down to less than 1% p.a. A 'simple' life because the PFIC considerations go away.
Comments on this site lead me to deduce that UK individuals generally believe that a fund manager adds performance (consider evidence consider on the FSA site to refute this) or will conduct market timing (funds managers say they lose their jobs when doing this) or in some way seek to make the investor money (clearly the asset allocation decision is always yours, and that's 90% of your performance). Our US colleagues don't have this segregation between retail and direct investing that the UK have and as a consequence informed competition has driven down the annual charges of retail funds. In the UK, only a few firms provide advice on direct investments and also advise on retail products (such as your SIPP): and that is why you rarely read about the alternative of investing directly.
However, should you decide to invest in funds, there's no reason why your UK SIPP should not invest in whatever you like subject to normal permitted investment legislation and there are light reporting requirement beyond the 3520 (and some say this is not required) if you claim treaty protection. There is no reason to limit yourself to USD investments or mutual funds.
If one has the choice, it might be worth mentioning here that a UK domicile and resident person will currently pay less UK tax (assuming they remain resident in the UK) on the resulting annuity using a US pension rather than a UK one. Of course to apply for one, one needs to show a presence or past presence in the US, and therefore you may well feel this is not open to you. On the other hand you may be thinking of going to live there for a year or two.
