Pensions

Hello folks!

I'm not sure if this is the best board on the forum to ask this question, but here goes:

For US Citizens who have moved to the UK and are employed locally... Did you choose to enroll in the Pensions scheme? My employer here offers a 5% match and I'm tempted to enroll because it would otherwise mean leaving that money on the table. However, I'm unclear on the implications/means of accessing that money, should we return to the states... Any advice from others who have joined a UK pension scheme / ISA vs. those who have opted to retain 401(k)s / IRAs etc. would be appreciated. I don't want to put a bunch of money into a pension scheme that I'll never be able to touch if we leave the UK - is that a possibility? Also, since this is the tax forum... Since the UK Pension seems to be the equivalent of a Roth IRA, but are there any tax implications?

Thanks in advance!

Great questions and I'm keen to hear some of the responses since my son will be coming to that decision point soon on the employer pension. He is a dual US/UK citizen who arrived back in the UK last year. He has been working "on probation" at a company here and in a couple of months will hopefully be taken on as a full employee and get access to benefits such as a contributory pension scheme with employer match. My thoughts are that he should contribute up to the employer match, but I don't know of any IRS tax complications that may create. I realize he will have to add the account to his FBAR filing each year.

I don't believe a UK employee contributory pension scheme is like a Roth. The money is not all tax free, just tax deferred like a 401k.

An ISA is totally UK tax free but it is not like a Roth in that the money can be withdrawn penalty free at any time. Since it is a tax free savings account then any gains are taxable by the IRS each year.

I also believe that if one should return to the USA then the money in the UK pension scheme is not lost. I myself started receiving distributions from my final salary pension schemes many years after I had left the UK and was living in the USA.