Recommendations - UK pension

[Andrew Reed]

I have been in Australia for 3 years now, we are quite settled and I am looking at transferring my assets. The problem is that I have no idea how to transfer my pension, I have spoken to a couple of friends that transferred their pensions over into something called an Offshore QROPS but they seemed to have paid quite high charges (e.g. 3-5% of the total pension) are there any cheaper options out there and is this the best option?

[Andrew Williams]

Hello Andrew

The UK pension transfer landscape has changed dramatically over the last few years with changes to the UK and Australian system.

Offshore transfers now very rarely make sense due to a newly introduced UK tax charge of 25% of the pot if a person living in Australia transfers a pension to a country other than Australia.

So simply put Australia is now usually the only consideration to transfer a UK pension too however another change fairly recently means that only people over the age of 55 can transfer a UK pension to Australia due to another set of UK rules.

Therefore in summary if you are over age 55 then a transfer to Australia may be worth exploring.

If you are under age 55 then a transfer to Australia cannot occur at this stage however there may be merit in reviewing your current UK pension arrangements for a number of reasons.

I hope this helps Andrew, feel free to ask any further questions you may have.

Kind regards

Andy

[Kieran White]

Hi Andrew,

Thanks for your input, my retirement is looming in the next few years so it is not far off.

My understanding is one of the options is a UK SIPP. As,correct me if I'm wrong, but there can only be a certain amount brought into Australia on an annual basis?

My pension is a final salary therefore it would need to be in some sort of a more flexible setup to bring it in part by part (Or so I'm told).

[Andrew Williams]

Hi Kieran

Yes there are contribution limits in place being $100,000 each financial year however a bring forward rule exists (effectively utilising 2 future years allowance) allowing a person to contribute up to $300,000 in one go if under age 65.

In addition it also may be possible to transfer any Applicable Fund Earnings (AFE) however great care needs to be given if doing this as there are complex rules surrounding it.

Are you Australian based?

 

 

 

[Kieran White]

Hi Andrew,

Sorry I have been off in the UK for Xmas.

I see, so in essence the possibility of 300k and then 100k per annum after year 2?

Yes I am based in Mandurah WA.

 I have been exploring the options of moving things into a UK SIPP as well having spoken to an advisor as this would help me retain currency and shield my assets from UK inheritance tax to a certain point (I believe the chap said 75 years old).

 

[Andrew Williams]

Hi Kieran

Happy new year.

No using the bring forward rule means that you are using 3 contribution years up in one hit so the neat transfer would then be year 4, it may be possible to bring in another $300k at this point.

The SIPP option with the ability to convert to Aussie dollars at an agreeable future point is certainly something that should be considered. Does your Adviser has experience of UK Pension Transfers to Australia?

Depending on how long you have been here (in Australia) partial transfers to Australia from the SIPP (if that is the way you go) may need to be done by creating further SIPPs with sideways transfers beforehand to avoid unnecessary tax charges.

KR

Andy

[Mark E]

Hi Andrew, I'm want to do exactly that, transfer my UK pension into a SIPP that has Australian exposure (to ease full transfer later on). But the big question is, Who can do it for me? can anyone recommend someone or can I try it myself?

cheers

[Andrew Williams]

Hi Mark

So is your existing UK Pension a defined benefit or defined contribution scheme..............if defined benefit who is it with?

Andy