US Pensions Beyond Social Security: What Happens After You Renounce

Social Security gets all the attention. Every article about renunciation covers it, and rightfully so — it’s the benefit most people have. But a surprising number of people considering renunciation also have pension income from other sources: a federal career, military service, a teaching job, a fire department, a company that still offered defined benefit plans back when companies did that. These pensions don’t get nearly enough discussion, and the rules are meaningfully different from Social Security in some important ways.

The headline is the same: your pensions continue. You earned them. Renouncing your citizenship doesn’t forfeit benefits you accrued through years of employment. But the tax treatment changes, the paperwork changes, and the amount that actually hits your bank account might be less than you planned for.

Federal Employee Pensions: FERS and CSRS

If you worked for the federal government, you’re in either the Federal Employees Retirement System (FERS) or the older Civil Service Retirement System (CSRS). Both continue paying after renunciation. The Office of Personnel Management (OPM) administers these benefits and has processes in place for paying non-resident aliens — you’re not the first federal retiree to move abroad and give up citizenship.

The default: 30% withholding on each payment, withheld at source by OPM before the money leaves the building. On a $4,000 monthly FERS pension, that’s $1,200 withheld and $2,800 deposited. Over a year, you’re sending $14,400 to the IRS.

To reduce this, you file Form W-8BEN with OPM, claiming treaty benefits based on your country of residence. The rates depend entirely on where you live:

• United Kingdom: Government pensions under the US-UK treaty are often taxable only in the country of residence, meaning 0% US withholding. You’d pay UK tax on the income instead.
• Canada: The treaty generally limits withholding on periodic pension payments to 15%. Your $4,000 monthly pension has $600 withheld instead of $1,200. Canada taxes the income and credits the US withholding.
• Germany: Similar to the UK — government pensions may be taxable only in Germany under the treaty, though the specific article that applies depends on whether the pension is from government service performed for the government itself (which has special rules).
• Australia: No treaty relief on pensions. You pay the full 30%. Australia also taxes the income, and while you get a foreign tax credit, the combined rate isn’t pretty.

The treaty rate you get depends on the specific article and the type of pension. Government service pensions sometimes have different treatment than private pensions under the same treaty. This is one of those areas where reading the actual treaty text — or having someone who has — matters.

Military Retirement Pay

Military retirement pay continues after renunciation, full stop. You served, you earned it, and your citizenship status at age 65 doesn’t change what you did at age 25. The Defense Finance and Accounting Service (DFAS) handles payments and has a process for NRA payees.

The withholding mechanics work the same as federal civilian pensions: 30% default, reducible by treaty, claimed via W-8BEN filed with DFAS. The treaty rates are generally the same as for civilian government pensions, though some treaties distinguish between military pensions and civilian government pensions — check the specific provisions for your country.

One practical note: DFAS can deposit payments to foreign bank accounts through international direct deposit. The process involves submitting a direct deposit form with your foreign bank details. It works, but give it time — DFAS is not known for speed, and adding international banking details to an existing account takes longer than it should.

If you’re receiving concurrent retirement and disability pay (CRDP) or combat-related special compensation (CRSC), the disability portion may have different withholding rules. Disability payments are often exempt from NRA withholding under the same provisions that make them tax-free for citizens. Confirm this with DFAS directly, because the interaction between disability classification and NRA status is one of those niche areas where general guidance falls short.

State and Local Government Pensions

Taught school in California for 20 years and then moved to Portugal? Your CalSTRS pension keeps coming. Retired from the NYPD and relocated to Ireland? The pension doesn’t care about your passport status. State and local government pensions — teachers, firefighters, police officers, municipal workers — are contractual obligations based on your service. Renouncing citizenship doesn’t void the contract.

The federal withholding rules still apply: 30% default, treaty-reducible via W-8BEN. But here’s where it gets messy — state tax withholding varies by state. Some states (California, notably) may continue to withhold state income tax on pension payments to non-residents. Others don’t. And whether a tax treaty overrides state withholding is a question that state tax authorities and the IRS sometimes answer differently.

Most state pension systems have experience with international payees. CalSTRS, CalPERS, the New York State and Local Retirement System — they all process payments to foreign addresses. Smaller municipal pension systems may be less sophisticated. If you retired from a small city’s fire department, their pension administrator might never have dealt with a W-8BEN before. Be patient. Bring documentation. Expect it to take longer than you want.

Private Company Pensions

If you’re lucky enough to have a defined benefit pension from a private employer — and these are increasingly rare — the same principles apply. The pension was earned through employment. It continues after renunciation. The plan administrator withholds 30% for NRA recipients unless you file a W-8BEN claiming treaty benefits.

The practical challenge with private pensions is that plan administrators vary enormously in competence and willingness to deal with international situations. A Fortune 500 company’s pension plan probably has a process. A smaller company’s plan, especially one that’s been frozen or transferred to an insurance company, might not.

If your pension is now administered by an insurance company (common after plan freezes and corporate acquisitions), contact them well before renouncing. Ask specifically whether they can pay a non-resident alien. Ask whether they can process a W-8BEN. Ask whether they can wire payments internationally. Get answers in writing. Some insurance companies will tell you they can only issue checks to US addresses, which creates an unnecessary logistical headache if you don’t maintain a US bank account.

The W-8BEN: Your Most Important Form

After renunciation, the W-8BEN replaces the W-9 as your identity document with every US payer. It certifies that you’re a non-resident alien and, if applicable, claims tax treaty benefits for reduced withholding.

You need to file a separate W-8BEN with every institution that pays you: OPM, DFAS, your state pension system, any private pension administrator, your IRA custodian, your bank. Each institution has its own process for receiving and processing the form.

The W-8BEN is valid for three years from the date you sign it (or until the end of the third calendar year following the year you sign, to be precise). After that, you need to file a new one. If you let it lapse, the payer is required to withhold at the full 30% default rate until they have a current form on file. Set a reminder. Three years goes by fast, and the difference between 0% and 30% withholding is too much money to lose because you forgot to renew a piece of paper.

Deferred Compensation: The Covered Expatriate Trap

Stock options, restricted stock units (RSUs), deferred bonuses, and similar compensation arrangements have their own rules for covered expatriates, and they’re harsher than the pension rules. (For a full breakdown of covered expatriate thresholds and the mark-to-market exit tax, see Exit Tax Explained.)

Under Section 877A, a covered expatriate’s interest in “eligible deferred compensation items” is treated as if the full amount was received on the day before expatriation. The payer is required to withhold 30% of the “deferred compensation item” when it’s actually paid, with no treaty reduction available. This is the same no-treaty-benefit penalty that applies to retirement accounts for covered expatriates.

If you have unvested stock options or RSUs from a US employer, the treatment depends on whether they’re classified as “specified tax deferred accounts” or “eligible deferred compensation.” The distinction matters and affects both timing and rate of taxation. This is specialized territory — if you have significant deferred compensation and are approaching the covered expatriate thresholds, this is not a do-it-yourself calculation.

Thrift Savings Plan (TSP)

The TSP — the federal employee equivalent of a 401(k) — follows the same rules as other defined contribution retirement accounts after renunciation. Distributions are subject to 30% NRA withholding (treaty-reducible for non-covered expatriates, locked at 30% for covered expatriates).

TSP does permit international payments and has a process for NRA participants. You’ll need to update your tax withholding status with TSP and submit a W-8BEN. The TSP website has specific guidance for participants living abroad, and their customer service, while not fast, is generally accurate.

One important detail: if you leave federal service and have a TSP balance under $200, TSP will automatically cash you out. If you’re above that but relatively small, consider whether rolling the TSP into a traditional IRA at an NRA-friendly custodian before renouncing gives you more flexibility and better service than keeping it in the TSP system.

Getting Payments to a Foreign Bank Account

The logistics of actually receiving pension money abroad are simpler than most people expect — but not without friction.

Federal programs are the easiest. OPM, DFAS, and the SSA all support international direct deposit to banks in most countries. You provide your foreign bank details (IBAN, SWIFT/BIC code), and payments arrive in your local account, usually converted to local currency by your receiving bank.

State pension systems generally support international payments, though some may charge wire fees or require you to maintain a US bank account as an intermediary.

Private pension plans are the wild card. Large plan administrators usually can wire internationally. Small ones sometimes can’t — or won’t. If your plan administrator insists on a US address, maintaining a US bank account solely for receiving pension payments is a common workaround. The money lands in your US account, and you transfer it abroad through Wise, OFX, or a standard international wire. It adds a step and a small cost, but it works.

The Pension You Forgot About

Here’s a scenario that comes up more often than you’d think: you worked at a company for eight years in the 1990s. They had a pension plan. You left, forgot about it, and now you’re 55 and thinking about renouncing. That pension is still there. The plan still owes you a benefit. And it’s subject to all the same NRA withholding rules.

The National Registry of Unclaimed Retirement Benefits and the Pension Benefit Guaranty Corporation (PBGC) can help you track down old pensions. If the company went bankrupt or the plan was terminated, PBGC may be paying your benefit directly — and PBGC has experience paying international recipients.

Find these pensions before you renounce. It’s easier to sort out the paperwork — contact information, beneficiary designations, payment elections — while you still have a US address and a Social Security number that everyone’s systems recognize. Trying to claim a forgotten pension as an NRA with a foreign address and an ITIN is possible but significantly more annoying.

The Practical Takeaway

Your US pensions — all of them — survive renunciation. The money you earned through decades of work doesn’t disappear when your citizenship does. What changes is the wrapper: 30% withholding unless a treaty says otherwise, W-8BEN paperwork with every payer, and the occasional logistical headache of getting money from a US pension administrator to a foreign bank.

For most people, the treaty rate is the variable that matters most. If you’re moving to the UK or Germany, your effective withholding on pensions may drop to 0%. If you’re heading to Australia, you’re stuck at 30%. That difference, compounded over 20 or 30 years of retirement, is substantial. Factor it into your renunciation planning.

File your W-8BENs promptly. Renew them before they expire. Track down every pension you’ve ever earned. And keep a US bank account as a backstop if any of your plan administrators can’t handle international payments. The pension system was built for Americans living in America. You’re asking it to work across borders, and mostly it does — but with a little more effort on your end.

For the related picture on Social Security, see our Social Security after renunciation guide. For retirement accounts like IRAs and 401(k)s, see Your IRA and 401(k) After Renunciation.