Hi Guys!
I don't know who it was a good few days ago who asked for advice on whether to transfer pension rights from the UK to Oz. Well, I've just found out (my colleague is a pensions expert) that it is really important to transfer your pension from the UK to Oz because, if you don't the Aussie government will tax any capital gain on your fund by 20% each year :sign68: :68: :68: Obviously you'd need to get proper financial advice before doing this - but you do need to be awaire.

Also, if you want to transfer your pension from the UK to Oz - UK rules state it must be transferred to an occupational (ie work-related) pension. This means that if you have a pension in the UK but don't intend to work in Oz then you can't transfer your pension (you can't transfer into a personal pension).

Thought I'd better let people know, 'cos this could obviously effect a lot of people (including me).

Hope it helps!!

Stompy
xx

Yes, the Ozzies have it sewn up - I went for a pensions transfer review with a compnay called Prism Expat yesterday and they told me that you have 6 months to get the transfer done and you will not get taxed on you pension at retirement. If you dont get in within the 6 months, your pension fund will be taxed at the highest rate for your PAYE (wages) - for me this is 48% so I would lose half of my pension funds. To get them to do the transfer is costing me over £400 but it will save half of he money I paid in over the last 15 years

-Neil (Nottingham - Adelaide bound in 4 weeks)

I have been looking into pensions they are only taxed if they are personal pensions worth over $50000, and its only the growth that is taxed beware of companies who claim they are the only ones who can do the swap for you.

I checked with the ATO and if you find out the growth they will tax it from the pension for you if you ask them to - its called an ELECTION.


The ATO seem to give good advise on the phone but its very difficult to find out anything over here.

The child benefit scheme is called family tax benfit and you are allowed to claim it - you can elect for two types a maximum that you have to pay back a portion of if you earn more than 70000 (I think - not sure) and a minimum that is not payable whatever you earn.

Worth checking out cos no one will tell you anything when you get here.

Good luck

i have heared that if you transfer your pension over to aus, and you decide not to stay in aus and come back to the uk, you cant transfer it back over to the uk???


is this true? :sign69:


kev

Hi,
As i have recently found out, my Pearl pension is not worth a carrot,( wise move Lee) :doh: i have now been contracted back into SERPS. So how will i go on regarding my state pension :what?:

Lee

I'm glad this thread has started, some good information above

Can I ask a question just to get it clear in my mind on this pension transfer

I was told that yes you would be taxed by Australia on your pension after 6 month, but, only the growth part.
if you didn't transfer it for 12 months from arrival, you only pay tax on the growth part of your pension on the 7th month to the 12th month (or until transfer date).

So, if you had 25K in a pension fund, which grew by 1K over the 12 month since leaving the UK, you are applicable to tax on that 1K growth from the 7th month onwards, not the total 26K worth.

Or, have I got this totally wrong

I'm a bit reluctant to pay for financial advice at the moment because, what if I don't manage to find employment until after the 6 month period, I'll be applicable to tax anyway.

Take Car

Ozzy

We took financial advise regarding our pensions and were told that we had to transfer within 6 months for favourable tax treatment. We were also told that you had to be employed at the time of the transfer - this is a requirement from the British end not the ozzie end aparently.

In terms of passing on something useful :) to those of you still in the UK (we emigrate on 2 September!!! :bouncing smiles: ), you can make a contribution to a personal pension scheme before you leave which will then attract tax relief from the UK government. We were allowed to contribute 17.5% of my husbands salary last year (the pencentage you can contribute is based on your age) to his person pension. This advise alone has more than paid for the financial advisors fee!! We requested that the money was allocated to the cash fund.

We are paying for our pensions to be transfered (lost quite a bit though!!) but in terms of wrapping up the rest of our financial affairs, we took advise but actioned it all ourselves cashing in ISAs, stocks, etc. Leaving money behind in the UK seems to cause tax probelms in Oz - even children's accounts, which they seem to regard as being the parents for taxation purposes!

All the best,

Claire

Hi

we do not have 'Private Pensions', but a number of deferred occupational pension plans!

I spoke to the organisations involved last year regarding our impending move to Australia and was told to let them have a forwarding address once we're settled and to contact them again when we are nearer pensionable age!!

Have I been given the wrong advice? :doh:

Would appreciate any new advice, as we're leaving soon.

Jules :unsure:

Hi Jules,

Unless anyone on the forum is a financial advisor I would really suggest you take proper advise from an expert. The whole field of pensions is complicated enough in the UK without adding in the UK- Oz dimension as well!!

We consulted Montfort International and found that they seemed to know what they were talking about although the advise didn't come particularly cheap (the tax relief we got on the pension contribution softened the blow a bit though!). Maybe other members can recommend people they used??

Given the 6 month thing you still have time to sort it out even if you are leaving very soon so don't panic too much.

Best of luck with your move!

Claire

Sounds like a job for Mr Collett - perhaps he'll drop by here before too long.

"Bump"!!

There are a number of superannuation funds in South Australia that anyone can join.
"Statewide" is one that springs to mind and the interest rates on their earnings were pretty good a short time back.
From my limited understanding, some super funds can charge you a % of your money to "enter" their fund and park your money with them. They can also charge you an "exit" fee if you want to take your money out later on and put it elsewhere. Some let you enter free, but hit you on exit. Others don't charge anything, but charge 1 or 2 % commission each year, so the thing is to do your homework and don't put it into just any ol' fund!
There are more sharks out in "Super"land than in the ocean off Adelaide!
In my understanding, there is the usual "investment" fund that Super schemes operate, and they have been offering clients a variety of options with their investments.
You can opt to put all your money into "High Risk" . . . meaning shares and property, returning the highest interest over the long term however.
"Managed" . . . meaning a large amount of share / property investment with a small % in cash and bonds for more security.
"Capital Stable" . . . .meaning invested in fixed interest
"Capital Secure" . . . cash and Gov't bonds, etc. . . . most secure, but at lowest interest.
Once you are pensionable age . . . 55 in Australia . . . you can draw on your Superannuation.
There are usually two options of investing after "retirement"
"Allocated Pensions" . . . they invest your money and give you a fixed amount each month, set by Australian gov't guidelines. You must draw between a minimum of 5.5% but no more than a maximum of 10.6% of your allocated pension at 55.
the figure goes up as you get older. If your investments earn more in interest that year than you draw out, your capital grows and you are ahead! Most times you end up drawing on your capital though, from what my mates tell me!
"Annuities" pay a fixed amount each month for the rest of your life, or at least 20 years.
There are Australian income tax advantages with both options.
With Old Age Pensions, a few years ago, the Australian gov't paid migrants from the UK the full Australian Old Age Pension after a short qualifying period, but that was obviously saving the British gov't heaps because they collected all your working life and the Australian gov't was the one doing all the paying!
The Australian gov't eventually insisted on folks from Britain to claim whatever they were entitled to from Britain once they were pensionable age, and the Australian gov't now "tops" it up to the level of the full Australian O.A.Pension, with a bonus of $70 a week tax free, I understand, over and above what an Aussie gets.
The Australian gov't will not pay a pension until you have applied to Britain for what you're entitled to receive from there.
Hope my limited knowledge of pensions and superannuation will help out!

Hello!

Lots of interesting comments here ... I'll have to keep it brief though (as this is an area where I earn my living):

- Pension transfers need to be made within 6 months of being a tax resident of Australia otherwise the growth in the value of the fund from the day before you become tax resident to the day the pension is transferred is assessable under section 27CAA of the ITAA 1936.

- Amendments to the tax legislation effective on the 1st of July 2004 mean that the taxpayer can elect that the receiving Aussie super fund can pay the tax (at 15%) rather than the taxpayer (at whatever marginal rate of tax applies).

- Pensions transferred to Australia are received as what are called Undeducted Contributions => the lump sum received at retirement is tax free, and the growth in the value of the Aussie super fund is usually taxed concessionally to the extent that it falls within what is called the Reasonable Benefits Limit.

- A pension fund that is left in the UK might give rise to an annual income tax liability under the Foreign Investment Fund Rules, based on the growth in the value of the fund from one year to the next. This can be a major problem, as you can't access the pension fund to pay the tax (the fund is "preserved" until your retirement), meaning that the FIF tax has to be paid from already taxed income.

- There are some exemptions from FIF taxation - such as where the pension fund is an "employer sponsored superannuation fund".

- If a pension fund is left in the UK the income payable in retirement is assessable in Australia (if you are tax resident there) under the Uk-Australia Tax Treaty. However, a taxpayer in that situation should be able to claim a deduction against his/her income for what is called the Undeducted Purchase Price of his/her UK pension.

Hope this helps ... happy to advise more formally if anyone interested wants to send me an email ...

Best regards.

And if anyone wants one of my Australian CA colleagues (also a financial planner) to confirm the costs of helping to administer a pension transfer I'm sure he'll be happy to advise ...

Best regards.

What happens if you're self employed then, you cant be in an occupational pension as such?? :what?:

You may be caught by the FIF Rules if you retain your pension (presumably a personal pension, or one of the older style Retirement Annuity policies) ...

Best regards.

Yup Ozzy, I think that's how ot works.
Stompy
xx

OK - update time as there has been a fairly major change since the original thread started.

QROPS - Qualifying Recognised Overseas Pension Scheme.
If tranferring your pension from the UK to an overseas scheme - that scheme must be QROPS recognised - otherwise the incoming fund (ie your pension) will be taxed at 40%.

Here is a list of QROPS Schemes - as published by HMRC

Note that it says it doesn't list all the schemes - just the ones that have consented to have their details published. According to the website this list is updated monthly.

This is also worth reading.
http://www.gomatilda.com/news/article.cfm?articleid=376

Another point to highlight.
If you have PR.....once your pension fund has been transferred to Oz -
IT CAN'T BE TRANSFERRED BACK!

So make sure you have a reasonable intention of staying before comitting your retirement savings.

The 6 month 'window' will allow you to transfer your fund tax free. If it's done afterwards - no major panic. It'll just get taxed (@15%) of the GROWTH since the day before you became tax resident in Oz and when it's transferred.

Say for example your fund is worth £50,000, it's been a year since you became tax resident and it's grown at 3% since then (£1,500). Your fund will be taxed 15% or £225. Hardly a massive amount.

Note : This is as I understand things. Please obtain your own professional advice.