Kathryn V

It appears that the window for transferring a NHS pension to Australia may be closing. There are tax implications for both transferring the pension and leaving it in the UK. Has anybody on this site transferred their NHS pension to Australia or, after receiving advice, has decided not to transfer the pension? I am trying to weigh the pro and cons for each option. Any advice welcome.

quoll

You'll want to be 110% certain that you want to end your days in Aus before doing it because once Australia has your money it won't let it go again!

john in oz

Quoll is correct it is a one way transfer and funds can not be accessed until you meet a condition of release such as retirement.

Kathryn, it is currently proposed that unfunded public defined benefits funds such a police, teachers and NHS will not be able to be transfer from April 2015. Given high demands for transfers time is running short on meeting this deadline.

There are a number of posts within my sponsored forum which contains information on pensions and proposed changes. Please review these and if you need further assistance let me know:

UK Pension Transfers, Home Loans and Financial Advice - British Expats

Cheers

Kathryn V

Thanks 'Quoll' and 'John in Oz'. I would not have considered transferring the pension until this new proposal was announced. I have received a transfer value statement in the last 2 weeks, but I just want some unbiased advice about the pros and cons. The pension transfer specialists, who get a 3% cut of the pension on transfer, have a vested interest in encouraging me to transfer the money to Oz. I want to do what is best for me.

john in oz

Yes there are many banks in Oz and Advisers charging large fees for doing this. The Banks then make additional money on the Foreign Exchange rates by Converting the funds at the worse rate they can give on the day.

If you have a Large Balance then it is normally best to use a Foreign Exchange Service to provide enhanced retirement Outcomes as well.

Try also to use a service which is a Flat rate as well :-)

Kathryn V

John, it appears that these changes are still just proposed, is this correct and when could this change be made permanent? Surely the Government have to give notice of this happening, permanently, so people have the chance to transfer before the deadline. It is hard because it is a case of do it now or never.

john in oz

Yes proposed with legislation finally before UK parliament on 03 Dec 2014. Proposed Legislation states that unfunded public defined benefits will not be able to be transferred from April 2015. There is known in general terms as an Exceptional Cases Clause - which may allow them to be transferred ongoing offshore but no one knows any details as the govt has not been forthcoming in this area.

So we have to work on what is known and that is April 2015 is the cut of date to have transfers done.

Yes this has not been well publicised as the govt intention is to not to drain the govt purse both now and into the future. :-(

Grayling

Be very careful about transferring an NHS pension.

It is a guaranteed final salary scheme and, if you have had it for a number of years, it may be better left where it is.

Bermudashorts

It is impossible to know what is the best thing to do, you would need a crystal ball for that. But no way would I move a defined benefits NHS pension to an Australian pension. No way.

Kathryn V

Thank you for all your advice so far. I have almost 20 years in the original NHS scheme (1995) and something is telling me not to transfer it to Australia. Don't you pay tax on the transfer of the NHS pension to Australia and then have to pay tax again every time you take money out of the Australian super?

john in oz

Kathryn - details on tax etc can be found in my forum

UK Pension Transfers, Home Loans and Financial Advice - British Expats

cheers

Bermudashorts

Don't make it all about tax... it is not the only consideration here.

Kathryn V

I know that there are lots of considerations, 'Bermundashorts', but paying tax twice over isn't a good idea either, which I thought would be case

Scotty1

We have done both and decisions made on each were based on our circumstances. My OH commenced his pension (public sector but fully funded) before we left. He pays Oz income tax on his monthly pension, had a tax free lump sum as he took it before we left and we have born the considerable currency fluctuation risk in the past few years. This is a big consideration when working out what to do. The year we moved the exchange rate was 2.4. For parts of last year it was 1.45. This was painful!
On the other hand I moved my public sector pension over to Oz and have it our SMSF here. While the decision was borderline, it was the right thing for us as we did not want two lots of pension exposure to the exchange rate, and we wanted to be able to leave one of our funds to the other in the event of death.
If you have been contributing to an NHS pension for a long period of time it is likely that it is best left where it is. You are also unlikely to get the actual "transfer value" calculation from the NHS, unless things have improved recently.
However, you need to be aware of currency issues and that a UK "tax free lump sum" will not be tax free in Oz if you are resident here when you take it. You also need to be aware that you will pay income tax on your pension, neither of which is the case if you move it.
You may benefit from some advice on your circumstance from someone who understands tax in both places. Go Matilda comes to mind.

Kathryn V

Thanks Scotty1, I just logged in today. I am aware of all the things that you pointed out and I received a transfer valuation this month. I have almost 20 years in the NHS pension, but I do not really plan on relying on it for my retirement funds. I am, however, aware that if I die my husband will not get any of that pension whilst we are living in Oz. We still have a house in the UK and who knows we may even move back there one day. It just seems a big decision, but it is now or never.