FATCA- fund managers and UK- based pensions

Hi,

I recently posted about this on British Expats and was advised (by nun) to post here too.

Both my (US citizen) wife and I (UK citizen and US green card holder) moved to the US in 2012.

We have UK SIPP pensions with Aviva, invested with a variety of fund managers- Blackrock, Invesco etc.

To avoid FATCA, the fund managers are putting agreements in place with Aviva which state that the fund managers will not allow any US persons/ residents to invest in their funds, including "look through" (where a fund invests in other funds that invest in e.g. Blackrock).

Aviva have no problem with us keeping our pensions with them. They have no reporting requirement. But the fund managers are refusing to allow our pensions to be invested with them, despite the HMRC/ IRS agreement which excludes pensions.

As a result our fund manager holdings will shortly be converted to cash.

Has anyone received a similar notice? Any ideas?

Thanks!

I can't answer your question but if you have any concerns about FATCA I would like to steer you, and other users of this site, to the Isaac Brock Society: http://isaacbrocksociety.ca/

Please also see this legal challenge being mounted to FATCA - the cost of the law suit is high and I would like to encourage all US persons living abroad to contribute. http://www.adcs-adsc.ca/ The law suit is based in Canada but its ramifications are worldwide. Please dig deep!

Thanks. I came across that when reading about the US govt. criticising Eritrea, the only other country in the world with citizen-based taxation.

newcomer link: http://isaacbrocksociety.ca/2012/01/30/only-the-u-s-may-tax-its-citizens-living-abroad-u-s-condemms-use-of-disapora-tax-for-other-countries/ [nonactive]

As if by magic, the Daily Mail have picked up on account closures and FATCA:

newcomer link: http://www.dailymail.co.uk/wires/afp/article-2824688/US-anti-tax-evasion-law-FATCA-starts-hit-home.html [nonactive]

Thanks. I came across that when reading about the US govt. criticising Eritrea, the only other country in the world with citizen-based taxation.

http://isaacbrocksociety.ca/2012/01/30/only-the-u-s-may-tax-its-citizens-living-abroad-u-s-condemms-use-of-disapora-tax-for-other-countries/

It's absolutely galling, isn't it.

Problem solved!

Aviva have agreed to let us continue to use our SIPPs pensions for investments, rather than just cash holdings, on the basis that we use their Core Insured Funds (multi- asset funds).

Phew!

The issue was that the external fund managers (Blackrock etc.) didn't want to take funds from Aviva which could have been mixed- made up of pension funds (FATCA exempt) and/or collective (i.e. non-pension and therefore FATCA reportable) funds.

Aviva's own fund managers don't have that problem. They can identify pensions easily, so they know that FATCA reporting won't apply to those funds (including ours).

I understand that Vanguard might also be able to offer something similar, but for the moment we're happy to stay with the Aviva set up.

Thank you to everyone who contributed to this thread.

Thanks for reporting back!

Good job in getting through the compliance fence, but you've still got heavy charges (3% p.a.), and limited fund investments. What would you need to know / be confident in / to be able to move your SIP for yourself to a (less expensive) administrator and invest directly into any security you like (which don't trigger a FATCA problem)?

Good job in getting through the compliance fence, but you've still got heavy charges (3% p.a.), and limited fund investments. What would you need to know / be confident in / to be able to move your SIP for yourself to a (less expensive) administrator and invest directly into any security you like (which don't trigger a FATCA problem)?

+1, look at the Aiva charges, all of them! The Aviva fees and all the fees associated with the funds, platform and transactions.

Take a look at the usual UK platforms, some I've seen mentioned are:
Sippdeal SIPP,
Alliance Trust Select SIPP
Hargreaves Lansdown (H-L) Vantage SIPP
Best Invest Best SIPP

I'd also look at Fidelity

As for investments go with low cost trackers and don't trade so you minimize costs. You might want to rebalance periodically.