Alan Collett

This posting probably pertains to the new pensions legislation in the UK that comes into effect on 06/04/2006 ("A Day", as it is being called) - which affects UK tax, not Australian tax.

As with all new legislation (particularly in an area as complicated as pensions) I think there's a lot that remains to be taken on board and understood, with a significant amount of clarification needed before it can be put across to the people most affected in plain English - I'm afraid the people who draft the legislation in the UK make it devilishly complicated to understand.

Personally, I doubt there will be a UK tax charge if there is a transfer to a qualifying overseas pension scheme - but that's only a hunch, not an opinion based on any detailed review of the new provisions.

Best regards.

Alan Collett

PS. Here's a link to the draft HM Revenue Guidance Material for starters:

http://www.hmrc.gov.uk/manuals/rpsmm...sm14101020.htm

Alan Collett

PPS. It therefore seems one will have to ensure the Australian super fund into which the UK fund is being transferred is "recognised" by HM Revenue. Or more accurately, the trustees of the UK pension scheme which is making the payment to the Australian super fund will need to be satisfied in this regard ...

worzel

The guy from Colonial / CBA said that we should urgently transfer funds before 6/4/06 to get around these rules. If you don't and transfer to a non-approved fund you get hammered for tax and if you transfer to an approved fund it would have to apply UK rules (such as hurting you for taking a significant lump sum out). He also said that Colonial's scheme was one of only 2 approved to date (about 8 weeks ago). His sales pitch was very soft-sell but thinking about it after the fact I am taking it all with a pinch of salt.

Alan Collett

Agreed that a transfer before 06/04/2006 means you are working within a regime that is understood by more people ... and of course if you do so you can move your UK fund to (perhaps) a wider choice of funds.

In a wider context, isn't it ironic that these new rules are being introduced under the pretext of a simplification of the pension regime? It reminds me of the introduction of the financial services legislation a few years ago, which was brought in to protect the public and resulted in legislation that took years to understand, mostly because it seems the law was written by people who had no practical experience of working at the coalface of industry.

Hey ho ...

Best regards.

NedKelly

IMHO they are trying to tighten up the flow of pension money overseas. The reason is because the UK is stuffed with pension liablilites it can't fund and levys on individual pension funds may be the only way it can help alleviate the burden. This process has already been started with the compensation scheme.

Alan Collett

Sounds like you are as much of a cynic about the underlying motives of the UK Government as me ... :-)

Best wishes.

NedKelly

If you take on board the idea that the principle underlying aim of New Labour is Redistribution of Wealth and view everything they do with this in mind, then all the unnecessary changes they make to everything, education, taxes, policing and even pensions then fall into place regardless of the spin they put on it.

vb2

cheers, will have a nosey later, as i could do with doing some research too, my hubby has a frozen pension that will need transferring at some point
regards
vb2

jumbo

Presumably this might be a problem for diy super funds?

Alan Collett

Possibly ... it may be that one transfers to a "holding fund" that is recognised by the UK Revenue and then onto a DIY Fund ...

Best regards.

Neil & Shell

There has been a lot of misinformation about the changes on "A Day". As best I can make it out the following will apply:

1. There is a concept called a "Qualifying Recognised Overseas Pension Scheme" (QROPS) and as far as I know there are none in Australia at this time. There are any number of recognised schemes which essentially means any complying Australian superannuation fund.

2. A transfer made to a QROPS will avoid the deduction of 40% tax by the UK pension fund manager. By definition a transfer made to a fund that is not a QROPS will bear the 40% tax in the UK.

3. A transfer in excess of 25% of the fund value will be subject to a 15% surcharge (tax be another name) and this cannot be avoided. This is paid to the HM Revenue & Customs in the UK.

4. Provided the cheque for the transfer is dated prior to 6 April 2006 then the new rules will not apply.

If you require any further information, the firm of accountants I work for in Brisbane may be able to help - please send me a PM with your email address.

Shell

ozzieeagle

I've only found out recently via this forum that if I pay approx 8months insurance stamps that I can claim a portion of the british pension (8 months giving me 10 years in the UK workforce). Reading this particular thread, it looks like it could be prudent to try and qualify sooner rather than later.


Anyone know where I make the first initial inquiry and what I need as a reference for them.

NedKelly

Do you have a link where this is explained, prefereably in words of one syllable for us laymen. Thanks

NedKelly

Well I found it, it's not that easy to read but perhaps Alan can comment:-

http://www.hmrc.gov.uk/pensionscheme...-transfers.pdf

This is all put out by HMRC under the guise of "Pensions Simplification'.