Transferring Your Pension to Australia

Category: Australia & Pensions & QROPS

If you are planning to live, work or retire in Australia you may wish to undertake a pensions transfer, which will move your current UK pension fund savings to an Australian scheme.

Before you do so, you will need to check whether the receiving scheme is a ‘qualifying recognised overseas pension scheme’, otherwise known as QROPS. If it is not, your existing scheme provider will not allow the transfer.

If you are thinking of transferring your pension to Australia you will most likely need specialist advice. This is because there have been a number of recent changes to UK pensions legislation which affects overseas transfers.

The rules governing pension transfers to Australia are complex. For example, if you leave your UK pension scheme in the UK and take benefits from the scheme, you may be assessable for tax in either the UK or Australia,  if you are resident in Australia.

At bdhSterling we are experienced in helping clients move their pension schemes overseas, and can help you avoid common pitfalls.

How Has QROPS Legislation Changed?

One recent change to UK pension legislation took place in 2015. This clarified which schemes qualified as QROPS under UK rules. It also prevented people in public sector pension schemes from making a transfer out to an overseas scheme.

The rules around QROPS are constantly changing, which is why it is so important to get specialist advice. At present, you are allowed to transfer your pension to Australia if it is a company pension or personal pension, or if you have already taken some of your pension (known as flexi access or capped drawdown).

You can’t make a transfer of your UK State pension under the QROPs rules. Nor can you transfer your pension if you have already bought a fixed income product (e.g. an annuity) or if you are already drawing your pension from a final salary guaranteed payment. You are also not allowed to take your funds from the NHS, Teachers’, Civil Service, Armed Forces, Police or Firefighters’ schemes.

What if I Want a Pension Transfer, but am Under 55?

It may be that you are moving to Australia for work or family reasons, but are not yet age 55.

In these circumstances, bdhSterling can advise you on what to do until you meet the QROPS transfer requirements to Australian schemes.

Although it would be possible to leave your funds in the UK until you are ready to draw on them, there might be better arrangements, depending on your personal tax position and the status of your existing fund.

If you are over the age of 55 and would like to transfer your UK pension fund to Australia, the favoured option is to establish a Self Manager Super Fund (SMSF).

The main difference between an Australian SMSF and other retail superannuation funds is that the fund holders are the trustees. In other words, you run the fund yourself, for your own benefit.

For an SMSF to accept UK a pension transfer the scheme needs to have attained QROPS status, and adhere to the requirements set by HMRC.

We recommend that you only consider this type of fund if you have more than $250,000 (AUD) in retirement savings while still adding to the fund. And we suggest having over $350,000 if you are retired.

In Australia, Superannuation, also known as a ‘super’, is money put into a fund during your career or working life that will support you financially in retirement. There are various ways money can be added to the fund. There are also a number of investment strategies and methods that can be used to build your superannuation over time. These schemes are popular and flexible.

In July 2015 HMRC removed hundreds of Australian schemes from its list of approved QROPS providers because they did not meet its transfer criteria, mainly on the grounds that Australian members of the schemes were, in certain circumstances, allowed to access their funds before age 55. HMRC saw this as incompatible with the UK rules.

If you would like more information about transferring your pension to Australia or into a QROPS, contact bdhSterling for information from experienced pensions advisers. We offer a telephone, Skype and face-to-face consultation service, making the process as convenient as possible for you, no matter where you are currently based.