A UK pension with an identifiable pot, such as a defined contribution workplace scheme or a SIPP, is generally reported on the FBAR at its value. A defined benefit scheme has no account balance, and practice on it varies. The UK State Pension is not an account and is not reported.
This post is for US citizens and green card holders with UK pensions, including those who built them up before they knew the US rules applied. It takes the pension rows of our guide to FBAR and FATCA for UK residents scheme by scheme, then covers Form 8938, where the value comes from, the separate question of US tax under the treaty, and Form 3520.
Do workplace pensions and SIPPs go on the FBAR?
Generally, yes. A defined contribution workplace pension and a self-invested personal pension each hold an identifiable pot for the member, with a value that can be stated on any given date. We report both on the FBAR, and the pot's value counts towards the aggregate threshold with every other account.
FinCEN has not published a statement that names UK schemes. The position rests on what the rules do say. The retirement exception described in the FBAR guidance on irs.gov (opens the official IRS page in a new tab) covers US individual retirement accounts and US tax-qualified plans, and the IRS treats foreign retirement plans as normally reportable, giving Canadian and Mexican plans as its examples. A UK pot fits that description once the total of all accounts exceeds $10,000.
There are technical arguments that a member of a trust-based occupational scheme has no financial interest in the trustees' accounts. We do not rely on them. Listing a pension costs nothing, and leaving out an account that should have been listed is the kind of gap that has to be explained later. The summary below is the practice we apply.
- Defined contribution workplace pension: reported, at the value of the pot
- SIPP or other personal pension: reported, at the value of the pot
- Defined benefit scheme: no account balance; treatment depends on the scheme
- Pot in drawdown: still an account, reported at its highest value
- Lifetime annuity in payment with no cash value: generally not listed
- UK State Pension: not an account, not reported
Is a defined benefit pension reportable?
This is the unsettled case. A defined benefit scheme promises an income based on salary and service. The member has no pot, no units and no balance that rises and falls. The FBAR reports the maximum value of an account, and here there is often no account to value.
Practice among preparers varies. Many leave a pure defined benefit entitlement off the FBAR on the basis that there is no individual account. Others list it using a transfer value where the scheme provides one. FinCEN has not said which is right. Whichever approach is taken, it should be recorded and applied the same way each year.
Two points narrow the question. An additional voluntary contribution pot attached to a defined benefit scheme does have a balance and is treated like any other defined contribution pot. And Form 8938 is clearer than the FBAR: its instructions treat an interest in a foreign pension plan as reportable whether or not there is an account.
What about the State Pension, annuities and pensions in payment?
The UK State Pension (opens the official GOV.UK page in a new tab) is an entitlement under a government scheme. It is not an account, it has no balance, and it is not reported on the FBAR. The IRS says the same of social security type benefits from a foreign government on Form 8938. The bank account the payments arrive in is reportable in the ordinary way.
A private pension that has started to pay out needs a closer look. A pot in drawdown is still a pot: it has a value, the member can draw on it, and it stays on the FBAR at its highest value for the year. Taking income from it changes the figure, not the treatment.
An annuity is different. The FBAR covers insurance and annuity policies that have a cash value. A lifetime annuity already in payment usually cannot be surrendered and has no such value, so it is generally not listed. An annuity or policy that can still be cashed in is reported at that surrender value. In every case the payments themselves are income for the tax return.
Does Form 8938 also apply, and at what value?
Yes, where the form is due. An interest in a foreign pension plan is a specified foreign financial asset. A person living abroad and not filing jointly files when total assets exceed $200,000 at year end or $300,000 at any time, and joint filers at $400,000 at year end or $600,000 at any time. A pension built up over a career is often what takes someone past that level.
The Form 8938 (opens the official IRS page in a new tab) instructions value a pension interest at the fair market value of the member's beneficial interest. Where that value cannot be known, they direct the filer to use the distributions received during the year, and zero if there were none. That gives a workable answer for a defined benefit scheme. The investments inside the plan are not listed separately.
Form 8938 is attached to the tax return, so it is only due in a year when a return is. The FBAR has no such condition. Our page on Form 8938 sets out the thresholds, and the one on FinCEN Form 114 describes the FBAR itself.
Where does the pension value come from?
From the provider: an annual statement, or a valuation from the scheme's online portal. The FBAR wants a reasonable approximation of the highest value in the calendar year, converted at the Treasury year-end rate. Periodic valuations are acceptable where they fairly reflect that value, and for a pension they are usually all there is.
UK statements are often dated to the scheme year or to April, not to 31 December. Where a portal shows a current value, take a dated copy at the calendar year end and use the highest valuation you hold for that year. Our article on FBAR maximum value and the exchange rate explains the conversion using the Treasury Reporting Rates of Exchange (opens the official US Treasury page in a new tab).
Take a US citizen employed in Manchester with a current workplace scheme, a SIPP and a deferred defined benefit pension from an earlier employer. She lists the workplace pot and the SIPP on her FBAR at their portal valuations, and records her reasoning on the defined benefit scheme. She has no signature authority over the workplace scheme, because she cannot instruct its custodian. A US person who is a trustee of a scheme and can operate its bank account does have that authority, and reports the account whatever their own benefits.
- The provider's name and address and your member or plan number
- A dated valuation for the calendar year, kept as a document
- The Treasury year-end rate used and the converted figure
- A note of the approach taken for any defined benefit scheme
Does reporting a pension mean US tax on it?
No. Reporting and taxing are separate questions. The FBAR and Form 8938 disclose that the pension exists and what it is worth. Whether the US taxes contributions, growth or payments is decided on the income tax return, and for a UK scheme the answer turns largely on the US-UK treaty.
The treaty provisions are Articles 17 and 18, published with the US-UK treaty documents (opens the official IRS page in a new tab). They do two different things. Growth inside a UK pension scheme is generally protected from current US tax for a US citizen. Relief for contributions is narrower, and it is limited by the saving clause in Article 1(4), which lets the US tax its citizens as if the treaty did not exist, subject to the exceptions listed in Article 1(5).
Because the two are different, a pension can be fully reported, largely sheltered on growth, and still produce US income from employer contributions in some cases. A position that depends on the treaty may also need to be disclosed on Form 8833. Our US and UK pensions service and treaty relief service deal with that side of the work.
Does Form 3520 apply to a UK pension?
The point is debated, and it depends on the scheme. Many UK pensions are held under trust, and Form 3520 reports transactions with foreign trusts. Its instructions list exceptions for certain employer plans and for certain tax-favoured foreign retirement trusts, but they do not name UK schemes and the conditions do not map neatly onto UK rules.
The instructions for Form 3520 (opens the official IRS page in a new tab) exclude transfers to employer compensatory arrangements of a kind that workplace schemes are commonly treated as falling within. A separate exception, in Revenue Procedure 2020-17, covers eligible individuals with tax-favoured foreign retirement trusts that meet its conditions. Self-funded personal pensions and SIPPs are where preparers disagree, and some file on a protective basis. Not every personal pension is a trust at all.
The instructions add that those exceptions do not affect other reporting, so a pension outside Form 3520 stays on the FBAR and Form 8938. Our page on Form 3520 describes the form, and the scheme documents usually settle which side of the line a pension falls. For the full reporting picture, see the guide to FBAR and FATCA for UK residents.
General information, not advice. The right answer depends on your circumstances and the tax year concerned.
