On 19th September 2014, in an historic referendum, Scotland voted to stay part of the United Kingdom. What does this mean for members of UK pensions, living in the UK and Australia, who are looking at a pension transfer to Australia?
As a United Kingdom, many of the laws, both historic and recent, are set to continue for the time being. This includes the details released in the UK Budget, on 19th March 2014, where the Government outlined its intention to ban pension transfers from Public Sector Pension Schemes.
This is important when considering a UK pension transfer to Australia because, as a United Kingdom, this ban still applies to members of Scottish based Public Sector Pensions.
In addition, the flexibility afforded to UK defined contribution pensions, where a 100% lump sum will be available, from age 55, from 6th April 2014, will still go ahead as planned.
One short term consideration is the exchange rate. This is important as anyone considering a UK pension transfer to Australia, both now or in the future, would need to be looking at their funds in both GBP sterling and Australian dollar terms.
During the build up to the Referendum, the uncertainty of the outcome resulted in the GBP sterling weakening against the Australian dollar. Scotland’s decision to remain part of the UK has meant the GBP sterling has strengthened – we have seen the exchange rate hit as low as around A$1.74 to £1 in this time, rising to circa A$1.83 to £1 when the results were published.
This emphasises the fragility in the exchange rate and how political circumstances can influence the value of someone’s UK pension fund in terms of the value both in UK GBP and Australian dollars.
If you would like more information on the best way to capitalise on positive changes in the exchange rate or guard against a drop in the exchange rate, whilst considering a UK pension transfer to Australia, please contact us immediately and we will be happy to advise.