Transferring Final Salary UK Pensions

[Andrew from Vista Financial]

Just thought I would do a post on this as I have had quite a few enquiries recently from new(ish) arrivals regarding transferring their UK Final Salary Pensions.

 

Many believe that they need to do this to ensure the Pension is transferred across within 6 months to avoid the taxes imposed if it is transferred outside of that time.

 

Yes it is the case that there is a 6 month window to transfer tax free, however if it is done outside of that time it is only the growth that is liable to tax and not the whole fund. Also this tax can usually be mitigated so it is generally not that onerous.

 

I would suggest that anyone with a Final Salary scheme considers waiting until they have had a feel for Australia and it is their intention on staying before they look at transferring.

 

There are some fantastic reasons for having Pension/Superannuation money in Australia as opposed to the UK but transfers should be done for these reasons not purely in case of tax outside the 6 month window.

 

Regards

 

Andy

[Guest ben&sharon]

Thanks Andrew - this is really useful. I have a Final Salary scheme that we're just looking into transferring, but it's not a huge pot, so it sounds like it won't impact too much if I wait awhile.

 

And since you mentioned it, can I just take the opportunity to ask about this six month window? No-one we've spoken to seems to be able to give me a clear answer. If we have proceeds from the sale of our house and savings that we want to transfer, then what are the rules from a timing point of view? And which bits are taxable?

 

We're planning to be out there in the next couple of months, but since the FX rate is a bit rubbish at the moment, we're still looking at our options as to when is best to transfer (chance of FX rate improving v interest paid in an Aussie savings account). A bit of a guessing game! But it would be good to know what our tax restrictions are.

 

Many Thanks,

 

Sharon.

[Andrew from Vista Financial]

Hi Sharon

 

The rules relating to if and how much tax applies to forex exchange transfers differ depending on a variety of things.

 

However if any tax is due it would only be on the gain made not the whole amount of the money transferred.

 

 

Andy