UK Pension Transfers – Information Thread

[Andrew from Vista Financial]

This thread is designed to provide some general information in relation to transferring UK Pensions to Australia as this may be one of the biggest financial decisions you make with respect to living your new life here.

 

Background

 

HMRC allow individuals the ability to transfer their private/company Pensions overseas including to Australia so long as it is transferred to a QROPS fund. QROPS stands for Qualifying Recognised Overseas Pension Scheme.

 

 

What is an Australian QROPS?

 

An Australian QROPS is simply an Australian Superannuation Fund that has registered with HMRC UK to be able to receive UK Pension monies and the scheme has agreed to adhere to the reporting obligations set out by HMRC. The reporting obligations are in place for 10 years from when the Pension arrives into the Australian scheme.

 

Other than this it is no different to any other Australian Superannuation Fund in terms of the way it operates.

 

 

Do I have to transfer my Pension?

 

No, there is no requirement to transfer a Pension out of the UK it can be left in the UK and the benefits taken at the retirement age of the scheme or the legislated age of retirement.

 

 

Should I transfer my Pension?

 

There is not a definitive answer to this as it depends on a number of factors, for example ones residency status ie permanent or temporary, intention to remain/retire in Australia, type of UK scheme ie final salary or market linked etc etc.

 

Having UK retirement monies in Australia can be more favourable in some cases than leaving them in the UK as there are some very good benefits available here as follows: (not exhaustive)

 

 

 

• Generally tax free upon withdrawal and in retirement;
  
• Greater control over the funds;
  
• May help boost Australian Age Pension entitlements;
  
• Generally 100% of funds can be passed to the family upon death with little or no tax implications;
  
• More flexibility in retirement as up to 100% of the funds can be accessed.
  

 

 

 

However it does not always make sense to transfer a Pension and so it is recommended that advice is sought to understand your position based on your individual circumstances goals and objectives.

 

The Australian superannuation system can be very different to the UK system especially if the UK scheme is a defined benefit (final salary) scheme and so by transferring from the UK to Australia it could mean that you are entering a completely different type of arrangement.

 

 

How long do I have to transfer my Pension?

 

There is no time limit in place in relation to transferring a UK Pension there is however a ruling in place in Australia that gives a 6 month time period in which an overseas Pension/Superannuation fund can be transferred in without any taxation implications on growth.

 

Once over the 6 month period UK Pensions can still be transferred to Australia but there may potentially be tax to pay on the transfer with regard to any growth of the fund.

 

However do not feel pressured to have to make a transfer within the first 6 months as the tax is generally not as onerous as may be suggested and there are generally ways to mitigate a tax liability.

 

 

I am a temporary resident does this make a difference?

 

Yes, in my opinion it is very unwise to transfer a UK Pension to Australia whilst a temporary resident, there are now systems in place in Australia that mean if one does not obtain permanent residency and thus has to leave Australia after transferring their UK Pension serious breaches could occur which could potentially result in penalties of between 40% - 55% of the fund.

 

Therefore unless it is guaranteed permanent residence will be obtained then this could be a dangerous path to take.

 

 

Once a Pension is transferred can it be accessed?

 

If a UK Pension is transferred to an Australian QROPS Superannuation fund there are still obligations to HMRC with regard to the monies. There are reporting obligations in place for a period of time after a transfer occurs and there are also rules around how and when this money can be accessed.

 

If one has been a UK tax resident within a certain time period, failure to adhere to these conditions laid out by HMRC may result in a breach which could lead to a charge of between 40% - 55% of the fund.

 

In addition to this once the funds are in the Australian Superannuation environment they are also subject to the rules of Superannuation legislation and can only be accessed accordingly.

 

 

Summary

 

Transferring a UK Pension to Australia is likely to be big financial decision, there can be implications of transferring and even implications if you decide not to transfer and having a full understanding of the implications involved should be understood.

 

If a transfer is the approach decided upon or advised the procedure can be very complex and technical and does not end once a transfer is carried out due to the many rules surrounding the UK and Australian Pension/Superannuation environment like contribution caps and unauthorised payments.

 

A breach of these rules can lead to hefty tax penalties therefore ensuring it is done correctly is essential.

 

 

 

Kind regards

 

 

Andy

 

 

 

Please note that the above is general informationonly and should not be taken as financial advice

[Guest Lorraine Doyle]

That's the clearest way of describing the transfer I've read in 4 years... Thank you.

[ratters2005]

We moved our funds through Andy and Stacey, no pressure and they exclaimed every positive and the negatives.

Hoping it now grows and affords us the funds to retire on when we get there.

Andy/ Stacey Thanks for your help and for the extra work on our NI contributions and making sure our tax liability was nil...

see you for our yearly meeting!!

Thanks to you both

D and Angie

[Guest AJ1881]

Hi Andy,

 

I know this is an old post, I wonder how much has changed since the last post you kindly made.

 

Also am I right in thinking that one has to be an Australian resident for at least 3 years in order to transfer QROPS without having further NIC and TAX implications (HMRC) related.

 

I assume this would be a straight transfer to Australian fund (less the advisory fee).

 

Many thanks

 

Alex

[Andrew from Vista Financial]

Hi Alex

 

Having just looked through the information I cannot see anything that would have changed other than perhaps the following two points:

 

 

• May help boost Australian Age Pension entitlements;
  

 

• More flexibility in retirement as up to 100% of the funds can be accessed (only if recent budget proposals go ahead and then likely only to be for market linked schemes).
  

 

Your question about the 3 years is not quite right, generally one must be a non uk tax resident for a period of 5 full UK tax years before being clear of breaching in relation to unauthorised payments/withdrawals etc.

 

In relation to your question regarding our service, we charge an advice fee and if a transfer is going ahead and the client wishes for us to project manage the transfer from UK to Oz and place the investments upon arrival we charge an implementation fee.

 

Hopefully this answers your questions?

 

Kind regards

 

Andy

[Guest AJ1881]

Cheers Andy, I shall keep your details on hand, hopefully I will be able to use them sooner rather than later.

 

BR

A

[nomorehashbrowns]

Have been here in Adelaide for 8 years now, and have left my Royal Mail pension in the UK. It's a fair size, and has grown really well. I know that I'm up for 15% tax on what it has earned in those 8 years. I'm 57 now and have been thinking about a good time to get it over in a QROPS. Like most people I have had one eye on the exchange rate, but understand that it could take up to 3 months to get the funds over here.

 

I recently wrote to the Pension people at Royal Mail regarding the new rules regarding transfer that will take affect from April 2015, but I'm none the wiser when I got this reply:

The new proposals mean that members of RMSPS will not be able to transfer benefits to a scheme that allows for the payment of Flexible Benefits. Members will only be able to transfer their RMSPS pension to an Occupational or Personal Pension scheme that does not use the transfer value to provide them with flexible benefits.

 

Can anyone enlighten me if this applies to a normal Super over here. Thanks

[Andrew from Vista Financial]

Have been here in Adelaide for 8 years now, and have left my Royal Mail pension in the UK. It's a fair size, and has grown really well. I know that I'm up for 15% tax on what it has earned in those 8 years. I'm 57 now and have been thinking about a good time to get it over in a QROPS. Like most people I have had one eye on the exchange rate, but understand that it could take up to 3 months to get the funds over here.

 

I recently wrote to the Pension people at Royal Mail regarding the new rules regarding transfer that will take affect from April 2015, but I'm none the wiser when I got this reply:

The new proposals mean that members of RMSPS will not be able to transfer benefits to a scheme that allows for the payment of Flexible Benefits. Members will only be able to transfer their RMSPS pension to an Occupational or Personal Pension scheme that does not use the transfer value to provide them with flexible benefits.

 

Can anyone enlighten me if this applies to a normal Super over here. Thanks

 

I can't quite work out whether the RMSPS is now a government un-funded pension scheme or not, having read this article it seems as though it may be: http://www.out-law.com/articles/2012/march1/government-to-take-over-royal-mail-pension-scheme-deficit-from-next-month/

 

If it is then the above statement makes sense to me ie a government un-funded defined benefit scheme cannot be transferred to a defined contribution scheme post April 2015 due to the new proposals.

 

Defined Contribution schemes post April will allow one to access up to 100% of the pot at retirement, I assume this is what they mean when they refer to flexible benefits.

 

Hope this helps.

 

Regards

 

Andy

[SwanseaJack]

Hi,

I have been here now for one year and was thinking about moving my Standard Life personal pension over.

 

I should quite a big fund by now and was interested at looking at self managed super funds. I just wanted to know if firstly this would be possible and what be the potential costs of doing so.

 

I would appreciate your help.

[SwanseaJack]

Hi,

 

I should also also mention my wife has a teacher pension in the UK which she has had for nearly 14 years.

 

We are also wondering if it would be wise to move this over.

 

many thanks

[Andrew from Vista Financial]

Hi SwanseaJack

 

Yes we could assist in relation to advising on a potential transfer of your Standard Life Pension and Wife's Teachers Pension.

 

Not sure if you are aware of the situation with UK Government Un-Funded Defined Benefit Pensions currently (http://www.pomsinadelaide.com/forum/money-finance/43609-government-response-uk-pension-ban-australia-qrops.html) Teachers Pensions, NHS, Police Pensions and the like fall into this category!!

 

Therefore it may mean it is not possible to address the Teachers Pension as we may run out of time if the current state of play remains therefore this would need to be addressed pretty quickly.

 

If you would like us to work with you please PM or email (Andrew@vistafs.com.au) with a contact number and we will call to discuss our service/process etc in the first instance followed by if appropriate us sending a request for the transfer information to the UK pension providers.

 

 

Kind regards

 

Andy

[she1971]

Hi there

we have now been in Australia for 41/2years wnd just became citizens!

Our UK accountant sent me a link about pensions and changes in UK after 31/3/15. Im slightly confused to say the least!

I'm a nurse and was also in Uk so know my UK pension was 'final salary' but really dont understand what this means.

Also do you deal with insurance policies? We have 2 still which we took out quite a few years ago in UK?

thank you.

[Andrew from Vista Financial]

Hi Sheila

 

Congratulations on becoming Aussie's!!!!! its a great feeling isn't it.

 

The changes regards Pension Transfers (I think this is what he would be referring to) can be found here: http://www.pomsinadelaide.com/forum/money-finance/42941-uk-pension-transfers-ban-update.html

 

The NHS Pension is a UK Government Defined Benefit Scheme which is un-funded therefore currently falls into the banned category as of April 6 2015.

 

In actual fact given the time involved it may be too late to transfer now (that said this does not mean that you will lose any of the pension you have already built up).

 

If you would like a quick chat with us about this please PM or email a phone number (email in signature) or call the office 8381 7177.

 

Kind regards

 

Andy

[james0070]

Hi My Wife and I hope to be emigrating about may 2017 we will be Sally 55 and me James 56 we will only have our state pension, what we are thinking is that when we retire at the age of 65/67 we were thinking of leaving our pension in a British bank for the first year, then once a year transfer one years worth to Australia, then the same each year after.

 

what do you think.

 

Regards

James & Sally Griffiths

[Andrew from Vista Financial]

Hi James and Sally

 

This could be one way of doing it but it will of course depend on whether you need the income for your cash-flow requirements as well.

 

The other way is to have it paid directly to an Australian Bank, the UK government negotiate good exchange rates so if you were thinking of doing it the way you initially suggested for purposes of getting a better rate as a lump sum rather than smaller regular contributions that may not be too much of an issue.

 

Hope this helps

 

Regards

 

Andy.