Pension
 

Hello all,

Ok, we have our flights booked (arrive on Oz 4th Jan) and we're slowly sorting out what to take, what to store. We've sorted out our bank accounts and our direct debits. We're almost sorted, apart from one thing...

OUR PENSIONS!

I'm a bit confused by it all to be honest and am hoping for some advice. I'm only 26 and not sure what to do. I'm a primary school teacher (at a private school if that makes a difference :huh:) who was worked and paid into my pension for the past 2 years. So, what do I do now? I've finished work and will paid until the end of August. I've heard it might be possible to take the money out-is this advisable? Or do I leave it where it is until I job out in Aus?

Sorry for the ramblings and I realise I'm not being very articulate...but can somebody please help??

Thanks :o

Re: Pension
 

This is my understanding ... Australian Pension is called Superannuation, you can transfer your UK pension to a Superannuation company who allow foreign transfers in, if you do it within 6 months of arriving in Oz you don't have to pay any tax, if you do it after you have to pay tax on the amount it has grown by.

Once you have transferred it into super you cannot transfer it back to a UK pension but if you were to leave Australia and go back to the UK, upon your retirement in the UK you can still withdraw the money if you see what I mean!

I'm sure a far more knowledgable person will be along to correct any mistakes I may have made!! :)

Re: Pension
 

It used to be the case that if you had been a member of a UK pension plan for less than 2 years, you could take your money out.

I have been out of the UK pension industry for quite a while now and am not sure if the rules are still the same.

Contact your pension administrator (have a look for the name of the company on your pension statement or ask your payroll person at work for the contact details) and ask if you can cash-in your pension.

If the rules have changed (or if you were longer than 2 years in the scheme), tell the UK scheme administrator your Oz address when you have one. Then when you've got a job in Oz and joined a superannuation fund (they are compulsory over here), contact your new super fund, tell them you want to transfer over your previous UK fund, and ask that they send you the required paperwork.

(As you have been in your UK pension such a short time and are so young, it is definitely best to transfer it over into your Oz super.)

Most Oz super funds will do the transfer for you free of charge (all you have to do is sign the paperwork and wait patiently for it to happen).

Even if you are unlucky and your Oz super fund does not do transfers, it is easy to arrange yourself: Contact your UK pension administrator and tell them you want to transfer your fund to an Oz super fund, and ask them to send you the necessary forms and to tell you what details they need (they will definitely need your Oz super membership number and your Oz's fund bank details). Get the details they need, sign the papers and again wait patiently for it all to happen.

The only other detail to file away for the future is that the Oz super fund needs to be an "approved" (otherwise you pay a lot UK tax). All the big Oz funds are "approved" these days, so it is unlikely to be a problem.
Here is trhe current list: http://www.hmrc.gov.uk/pensionschemes/qrops.pdf
The list gets updated all the time, so check it out again nearer the time.

Finally, you'll see adverts for companies offering to organise the transfer for you for a fee (5% or similar of the fund value). This is a complete rip-off! The mechanics of transferring your type of pension are VERY simple (as stated above: a few phonecalls and some forms to sign).

Re: Pension
 

Can I ask - what happens if you don't transfer your pension? When you retire can it be paid into a UK bank account and you just transfer to $AU? What are the tax implications to that? I have a Defined Benefit Pension that I've paid into for 20 years (it's about to be closed by my company however!) and wondered what the best thing to do with it is. :confused:

Re: Pension
 

That's a completely different story!!! The OP is 26 years old and has paid less than 2 years into a money purchase scheme.

If you have paid for 20 years into a defined benefit scheme, the chances are that you would lose a lot if you transferred this over. But you should get some personal financial advice on the pros and cons of transferring or not with reagrds to your personal circumstances..

Some general principles:

1. Yes, you can leave it in the UK. Then when you retire, the pension can be paid into a UK or Aus account. You have to pay tax on the pension (but you get a deduction for your own contributions made over the years).

2. Leaving the pension in the UK and drawing it on retirement, leaves you vulnerable to the vagaries of the exchange rate.

3. The UK pension rules will allow you to take part of your pension in cash. However, this amount will be taxed at high rates by the Oz taxman (i.e. it is not worth taking a part-cash payment on retirement).

4. If you transfer your entitlement to Oz before you reach retirement, you get a "transfer value". A transfer value (20 years worth) re-invested into an Oz superfund is likely to give you less pension than if you leave it in the UK until retirement. But, if you do choose the transfer option, then the pension you get from the Oz superfund is tax-free and you can have access to the capital tax-free (generally).

5. If you die, your spouse will have all of the Oz superfund. But if you die, having left the pension in the UK, your spouse will generally not get all, but only a portion (often only 1/3).

The above are only some of the variables and only the "broad strokes".

You might want to contact Alan Collett (www.gomatilda.com) and ask him to recommend a financial advisor in yoru area who knows the UK and Oz pension/super rules AND who has access to an actuary who can run some models for you with different outcomes. Only then can you make an informed decision on what is best for you. (The actual transfer, if you choose to go with that option is as easy as explained to the OP above.)

Re: Pension
 

Many thanks Ozhappy for that detailed and comprehensive response. Fantastic! :thumbup: