Another Pension Question(final salary)-Sorry
#1
Another Pension Question(final salary)-Sorry
I am employed by BT and joined their final salary pension just before it closed to new members. I have only been contributing for 7 years so my defined benefit at 60 would be £2900 per year.
I have read many threads on this forum but still cannot come to a decision on whether or not to transfer to aus or leave it in the UK. Obviously i am worried whether or not BT will be able to honour the pension in 20 years time although I suppose the scheme is closed and in theory the funds more or less exist to pay the remaining members(I think!). I assume a transfer value may be a good sum for the number of years contributed so before i continue to ramble......
Any advice/ what would you do please.
Thanks
Bruce
I have read many threads on this forum but still cannot come to a decision on whether or not to transfer to aus or leave it in the UK. Obviously i am worried whether or not BT will be able to honour the pension in 20 years time although I suppose the scheme is closed and in theory the funds more or less exist to pay the remaining members(I think!). I assume a transfer value may be a good sum for the number of years contributed so before i continue to ramble......
Any advice/ what would you do please.
Thanks
Bruce
#3
Forum Regular
Joined: Nov 2006
Posts: 108
Re: Another Pension Question(final salary)-Sorry
If it were me, I would transfer it. BT will be butchered and its various business units owned by Russian, Indian or Chinese Telecoms companies in 20 years time. Who knows where the liability for the pensions will end up?
#4
Re: Another Pension Question(final salary)-Sorry
Bruce
#5
BE Enthusiast
Joined: May 2005
Location: Liverpool UK
Posts: 992
Re: Another Pension Question(final salary)-Sorry
Plus, if you leave it in the UK, you will be taxed on it by the Aus. tax man as its classed as an income even though its a pension so you will loose a wedge of it if you dont transfere.
Last edited by john_w; Jul 11th 2007 at 8:33 pm. Reason: made a bit more sense second time !!
#6
BE Enthusiast
Joined: Mar 2006
Location: Pelican Waters
Posts: 374
Re: Another Pension Question(final salary)-Sorry
I am employed by BT and joined their final salary pension just before it closed to new members. I have only been contributing for 7 years so my defined benefit at 60 would be £2900 per year.
I have read many threads on this forum but still cannot come to a decision on whether or not to transfer to aus or leave it in the UK. Obviously i am worried whether or not BT will be able to honour the pension in 20 years time although I suppose the scheme is closed and in theory the funds more or less exist to pay the remaining members(I think!). I assume a transfer value may be a good sum for the number of years contributed so before i continue to ramble......
Any advice/ what would you do please.
Thanks
Bruce
I have read many threads on this forum but still cannot come to a decision on whether or not to transfer to aus or leave it in the UK. Obviously i am worried whether or not BT will be able to honour the pension in 20 years time although I suppose the scheme is closed and in theory the funds more or less exist to pay the remaining members(I think!). I assume a transfer value may be a good sum for the number of years contributed so before i continue to ramble......
Any advice/ what would you do please.
Thanks
Bruce
#7
Re: Another Pension Question(final salary)-Sorry
Bruce
#8
Forum Regular
Joined: Jul 2006
Posts: 69
Re: Another Pension Question(final salary)-Sorry
Transferring your pension to Australia is not without risk. There is no guarantee that the good returns on pension assets being experienced in Australia at the moment will last.
You may also have to pay tax when you take your benefits from age 60. The 0% tax after age 60 applies when benefits drawn from the taxed element of pension fund. If you transfer your BT pension, part of it will be classified as untaxed element and will therefore be subject to tax.
#9
Re: Another Pension Question(final salary)-Sorry
Not necessarily true for final salary schemes (at least before they go into payment).
#10
Forum Regular
Joined: Apr 2007
Posts: 58
Re: Another Pension Question(final salary)-Sorry
Just takes me back to the days when everyone advised to move out of a final salary scheme to a personal pension with no guarantees. Looking back everyone realises what a major mistake it was. There are guarantees at this moment in time with a final salary scheme with BT, transfer it and you lose the guarantees. Yes, I appreciate the apparent tax benefits in transferring it to Australia, but what if as someone has already suggested its future performance is not very good, you may end up worse off than if you had retained a final salary pension in an apparently less tax efficient fund. Also what and tends to be ignored final salary scheme benefits are typically indexed linked in payment, maybe up to 5% per annum. Think of the cost of obtaining this in a personal pension type arrangement or other form of investment with the s ame guarantees. Typically at this time in the UK if you have 100K in a pension and retire at the age of 65 you will get alevel pension of circa £6,400 per annum, if you require these benefits to be index linked you will only an inital pension of £3,900 per annum. It is quite possible that you may end up with a signifantly higher pension from BT after tax than from an Australian tax efficient scheme. My remarks here are just food for thought.
Seek profesisonal advice from a recognised financial planner preferably someone who is fee based and not commission based with experience of both UK and Australian schemes, and ideally someone with an internationally recognised qualification.
Seek profesisonal advice from a recognised financial planner preferably someone who is fee based and not commission based with experience of both UK and Australian schemes, and ideally someone with an internationally recognised qualification.
Last edited by expatadvisor; Jul 14th 2007 at 6:42 pm.