The 2014 UK Budget statement, in March 2014, contained a serious announcement for UK Public Sector Pension members considering a UK pension transfer to Australia.
The announcement, which has subsequently been confirmed in the Freedom of Choice in Pensions document, stated that the UK Government intend to introduce legislation to remove the option for members to transfer out of Unfunded Public Sector Pension schemes (except in very limited circumstances), with effect from 6thApril 2015.
For anyone looking to transfer out of their NHS, Police, Civil Service, Teacher’s, Armed Forces or Fire Fighter’s pensions, this could potentially be a valuable option lost from April 2015.
For those looking at a UK pension transfer to Australia, a country where an individual has the opportunity to retire tax free, the Public Sector Pension transfer ban would prevent this opportunity and could lead to both tax and exchange rate risk on future pension income in retirement (if forced to take the benefits from the UK Public Sector Scheme).
Timescales to Consider
Although the ban on Public Sector Pension transfers is still several months away, a Public Sector Scheme member has a limited opportunity to get a transfer affected in time, if their pension scheme administrator sticks rigidly to their timescales.
Public Sector Pension scheme administrators can enforce the following steps under UK pension legislation:
Step 1: When a request is made for a Cash Equivalent Transfer Value (CETV) calculation, the scheme has 3 months to produce this for the member.
Step 2: The CETV is then guaranteed for a further 3 months. If a request to transfer is not forthcoming within the 3 months then the scheme can charge the member to produce a new CETV
Step 3: If the member accepts the CETV, within the 3 month guarantee period, the scheme has 6 months from the original calculation date to pay the CETV to the new scheme
If you are looking at a UK pension transfer to Australia – or anywhere else in the world – please contact Global QROPS and one of our expert advisers will be happy to discuss this with you.