UK Pensions can still be Transferred to Australia however it is now restricted to those aged 55 and Over. You can no longer move to Australia if under aged 55! Recent changes also mean that you incur 25% Tax penalties if you move it to another Country you do not reside in.
Important Warning: Given the ever increasing restrictions on transfers Most Australian Firms and Banks No longer offer this Service and Others including those Firms Based Overseas are offering either very expensive services to move your Pensions to Australia or services simply not suitable to you with one aim only – to generate fees for themselves. You should currently avoid the following:
1. Adviser Firms / Advisers based Overseas especially in Dubai.
2. Adviser Firms / Advisers providing Hype over what the future changes may be in order to make you do business now.
3. Adviser Firms using a Self Manage Super Fund (SMSF) as the only Option to move funds into. There are other Cheaper Options available.
4. Adviser Firms / Advisers who cold contact you especially if overseas. ie via Facebook, Linkedin etc.
5. Seriously Question any service offering to Consolidate your UK Pensions in the UK if you are under aged 55. There may be excessive fees for doing so. This is a heavily promoted currently. (See Point 6 below).
6. Avoid any provider who invests in Non UK Funds especially offshore Bonds and the like as part of any UK Consolidation offering. there are normally large Fees involved and High Risks associated with this all. (see point 5 above).
Since 2015 there have been dramatic changes to the rules involving UK Pension Transfers from the UK – the main one that affects you are:
1. If you have a Defined Benefit Scheme (Final Salary Scheme) such as a Employer Fund with a Balance greater than 30,000 GBP then you must obtain Advice from a UK based Adviser to facilitate the Transfer. They must provide advice and sign a form / certificate to confirm they have. No Pension provider will allow the release of funds until this occurs.
2. Unfunded Public Defined Benefit Schemes such as Police and National Health Service (NHS) etc can no longer be Transferred. Funded Public Defined benefit Schemes such as the Local Government Pension Scheme can still be moved. The difference is one is paid from funds invested and held by the pension provider whilst the other unfunded schemes are paid from Government Revenue.
3. Funds that can be transferred currently are Private Pension / Defined Contribution Schemes, Employer Final Salary Schemes / Defined Benefit Schemes and Funded Public Defined Benefit Scheme (Final Salary Schemes)
4. One option to transfer if Under aged 55 consolidation of your pensions in the UK with little or no benefit to you. You should also avoid Advisers offering only a Self Managed Super Fund as the only Super Fund Option to receive the funds.
5. Transfers to a Country of Non-Residency will incur a Overseas Transfer Charge of 25 % Tax. More importantly – Should you depart your Country of Residency within 5 full UK Tax Years after the Transfer then you will be liable for this Charge as well! In simple terms you should only transfer directly to your Country from the Uk and not via other countries otherwise you will wear a tax Charge of 24%.
6. Whilst you can now access your UK funds in the UK from aged 55 the minimum age normally in Australia is aged 60 if not working. In some cases given expenses of transfers etc you may consider drawing down very small balances in the UK.
YOUR TRANSFER OPTIONS IN AUSTRALIA
Currently you have the following options Only:
1. If a member of a very few select Australian Super Funds listed on the ROPS List (see below) such as an Older Government Employer Schemes it may be still able to accept Transfers from the UK. These schemes are generally closed to new members. It must be on the HMRC ROPS list in order to do so.
2. A Recognised Retail Fund in Australia – There is Currently only one Retail Fund Approved in Australia to receive UK Pension Funds and this is restricted to aged 55 and over members. The fund has a higher running cost compared to low cost super funds but is generally less costly for small to medium balances than a Self Managed Superannuation Fund (SMSF)
3. The other Option is into a Self Managed Superannuation Fund (SMSF). this option is normally suitable for those with balances in order of $ 200,000 AUD and above. Even with balances above this amount you may still wish to utilise a Retail Fund.
TAX BENEFITS – The most obvious benefit is that upon converting your super funds in Australia to a Pension after 60; those funds become tax-free and any earnings on the pension fund also become tax-free! If you Transfer your UK Pension to Australia within 6 months then no tax is payable on the initial transfer. (Refer to the tax payable section below)
LUMP SUM AVAILABLE – With an Australia Pension, you can draw out up to 100% as a lump sum anytime as opposed to the UK where an initial once-off maximum of 25% lump sum is allowable. This may be an important consideration should you need funds for health, travel or other reasons later on in life.
NO ESTATE TAXES – As opposed to the UK there are NO Estate or Death Duties in Australia ie in the UK your surviving spouse loses up to 50% of the value of your pension upon your death. This may save your estate many thousands of dollars!
OTHER CONSIDERATIONS – Foreign exchange rates – no one can tell you what the dollar or pound will be worth at a given time and it is best to look at the long term rather than short term historical values.
TAX PAYABLE ON TRANSFER
The UK does not apply additional tax on the transfer as the Australian Government has a suitable tax treaty between the two countries. There is no tax payable if transferred within 6 months of coming to Australia and if transferred after this date, then there is some possible tax payable on the growth component only of your fund.
The growth component is the difference in values between the date of arrival in Australia and the date the funds are received in Australia.
For example: On 1st Jan 2011 you arrive in Australian and your balance was $10,000 and on the 02 Feb 2012, the balance of your UK Funds received was $12,000.
The difference between the two amounts is $2000, which is the amount that is subject to Tax payable as the time difference was greater than 6 months. However, if the time difference was less than 6 months then you would pay no tax.
OPTIONS TO PAY TAX – You have two choices:
a. Elect to pay it at 15% within your Superfund so your Superfund pays for any tax payable
b. or include as earnings in your Tax Return and pay the tax at your personal tax rate (between 15 – 45 %) with payment made personally from your own funds.
TAX PAYABLE IF YOU GET IT WRONG
It is important to use a Professional in your UK Pension Transfer because if you fail to comply with the UK QROPS rules then you will incur an additional penalty tax from the UK of 45 %. Additional charges imposed by HMRC may also see a further 15% penalty charge and / or the new 25 % Overseas Transfer Charge!
5 TO 6 YEAR RULE (Now 10 years)
Funds can not be transferred to another non-approved fund until after 5 full UK financial years. This has now been extended to 10 Years! UK Pension transferred funds can still be accessed within that time period if you meet a condition of release for super for both UK (aged 55) and Australia (aged 60 min).
HOW MUCH CAN I TRANSFER
There is no limit to the amount that can be transferred; however due to Australian Super Contribution Caps very large balances over $300,000 may have to be transferred in stages.
INVESTMENT IN RESIDENTIAL PROPERTY
Under current rules you are not ever able to purchase Residential Property anywhere in the world using your UK Pension Funds within a Super/Pension Fund including Australian Residential property! However, UK Pension Funds can be used to purchase Commercial Property.
WHY US – PEACE OF MIND!
From our experience, Trust and Peace of Mind is the number one consideration in choosing a Company to look after your Transfer.
Our Firm has considerable experience in undertaking overseas pension transfers and unlike other Firms, we actually deal with more than One Country! Therefore, we have considerable Technical Knowledge and Experience in a wide range of Overseas Funds to ensure a safe and secure transfer for you.
Unlike other Firms, Muntz Partners is a Full Financial Services Firm meeting all the legal requirements to provide advice and undertake Transfers. Security and Peace of mind comes from knowing that we meet all the government regulations and hold all the appropriate liability insurances to further protect you.
Our Licence details are disclosed and we strongly suggest that you should think twice about using another transfer service if they do not disclose any licence details on their website!
To Request a Refund or Transfer:
It is quick and simple – for general transfer enquiries or to request one of our team members to contact you to discuss a Transfer with you please phone (08) 9392 7600 or email us at firstname.lastname@example.org