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Old Nov 13th 2017, 11:52 pm   #1
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Default >55 UK pension payments timeline

I though it would be interesting to share our timelines.

I recently cashed in a pension with L&G. I had informed them of the long mail delivery from England to Aus and got their agreement to email the forms back.

7 Sept. Emailed form to L&G
18 Sept. Cash deposited in UK account.
11 days.

A shout-out for HMRC.
4 Oct. Completed form online for tax rebate.
13 Oct. Rebate in account.
9 days

A very pleasing experience for me with L&G and HMRC. Good job!

Now to the Mrs. She is cashing in a small pension from her Abbey National days managed by JLT. When we sent off the first form to say we wanted to take it all as cash, I enclosed a little letter asking for future correspondence to be via email. They sent us the next form (the important one) via smail mail. Anyway, we completed and sent it off. Teresa rang them Friday (UK 8.00am), 10 Nov, to enquire as to where we are at.

JLT informed her that they had received the form on the 25 Oct and payment would be made on 19 Dec. Yes, you are reading that right, Dec. She spoke to a supervisor who informed her that we had missed the 19 November pay run. Remember, they received the form on 25 Oct. Teresa explained this was unacceptable. The lady said she would investigate about getting her included in the November pay run, and would call us Monday, 13 Nov, at 9.00am UK time. No call was received.

Tonight, I will ring the Pensions Advisory Service and see what's considered an acceptable delay, to determine whether it is worth Teresa's time making a formal complaint to the Pensions Ombudsman.

Anybody else got any experiences, good or bad, to share? The difference in expectations between L&G and JLT is unbelievable.
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Old Nov 17th 2017, 11:31 pm   #2
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Default Re: >55 UK pension payments timeline

JLT managed to get the payment on the November payroll and cash arrived a few days ago.

In case somebody is wondering about the tax implications.
You get 25% tax-free and pay tax on the rest.
For £30k pot.
25% tax-free = £7500

£22500 is taxed. £0 tax up to $11500, 20% tax on anything over £11500. Total tax is £2200, so total payment is £30000-£2200= £27800.

However, you may be taxed at the emergency rate - bad! They assume your lump sum is a recurring monthly revenue so divide the tax bands by 12.

Here's a nice calculator for working out standard and emergency tax,
https://www.direct.aviva.co.uk/myfut...tor/TaxResults.

As an Aussie you will taxed at the emergency rate, so will need to apply for a tax rebate. The pension provider will supply a P45 and you can use that to go online and submit a P53, https://www.gov.uk/government/public...a-lump-sum-p53.

I have a UK account so easy transfer, although L&G offered to transfer direct to Aussie account. BTW, my Aussie bank, MEBank, does not do international bank transfers, so just as well I have a UK account. Not sure how you would get a tax rebate without UK account. Use a friend's? For the transfer to tranzfers.com for the long journey to Aus I was limited to a transfer <£20k per day by my bank, so couldn't transfer the whole amount in one go.
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Old Nov 18th 2017, 3:21 am   #3
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Default Re: >55 UK pension payments timeline

Thanks for sharing the info Ebo.

I will be working on a Trivial Commutation very similar to yours soon. You have confirmed what I understood the tax position to be so much appreciated, thanks.

If your money has been transferred into your Aus bank what level of Aus tax applies please?

I am investigating and weighing up the differences between a transfer into my bank account or to a QROPS.

Transferring a pension into a non QROPS is normally subject to up to 50% UK taxation. However I'm checking whether the HMRC allows a Trivial Commutation to be paid direct into a non QROPS Super Fund at the taxation levels you quote.
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Old Nov 18th 2017, 3:30 am   #4
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Default Re: >55 UK pension payments timeline

Quote:
Originally Posted by Bix View Post
If your money has been transferred into your Aus bank what level of Aus tax applies please?
It's treated like any other cash in your account: interest is part of your income for tax purposes.
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Old Nov 18th 2017, 3:44 am   #5
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Default Re: >55 UK pension payments timeline

Quote:
Originally Posted by ebo1608 View Post
It's treated like any other cash in your account: interest is part of your income for tax purposes.
Many thanks.
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Old Nov 18th 2017, 10:23 am   #6
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Default Re: >55 UK pension payments timeline

Good info, thanks for posting
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Old Nov 18th 2017, 9:57 pm   #7
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Default Re: >55 UK pension payments timeline

Are you sure that the ATO don’t want a cut? I know any tax paid in UK will be offset but the ATO will treat the income differently and will not recognise the tax free portion as tax free, or at least that is how I understand it. They see the whole amount as taxable income and it may put you in a higher tax bracket.
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Old Nov 28th 2017, 1:21 am   #8
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Default Re: >55 UK pension payments timeline

Hi


If you are a permanent Australia resident/ Citizen then as rammygirl points out there will be an ATO assessment also.


Typically if transferring a pension to Australia (via the QROPS path) OR taking a lump sum from the pension directly then an assessment will be made on the growth of the fund known as the applicable fund earnings (AFE), this is generally measured by considering the growth between the date of Australian residence to the date of receipt of money/transfer.


Further, the UK classify the 25% as a lump sum and hence so will Australia, however the remaining 75% you have taken as income and therefore this may give rise to the ATO assessing it as income also.


It doesn't matter in this situation whether the money has entered Australia or not (as said) if perm or Citizen as worldwide income is declarable.


Andy
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