Green Grass

Hi. Have any Brits transferred their pension shemes to Australia? I have 3 final salary / defined benefit pension schemes in the UK which have a lot of value here and I'm not sure about transferring them to Australia. Is transferring your pension schemes to a superannuation fund the only option or have others seen any benefits of leaving their pension funds in the UK? Thanks.

johnnye

Talk to an expert.

The I am aware of:-

1. If you are going to transfer, they need to go into a QROPS super fund otherwise you pay vast quantities of tax

2. Growth in overseas pensions is taxed in Australia if you transfer after 6 months of arrival - this may not apply to occupational schemes though - you will need to check

3. The exchange rate at the moment is poor coming this way so you might want to consider this when you decide

4. I don't think there's anything else you can do with UK pensions other than leave them there or bring them here.

5. Be aware if you leave them there and you retire in Aus, your UK pension money will be taxed as income when you start receiving it. If you bring it over then once you reach a certain age your pension money is tax free.

6. Do a search on this site there's lots of info

bingobob777

It's fairly well known that transferring a defined benefitt pension is NEVER a good idea.

h2oskineil

Check this out, I think I'm correct.....
If you die here in Oz, your spouse gets the entire pension fund and I believe this is not the case in the UK.

Somebody please correct me if I'm wrong?

quoll

Make sure you actually plan on spending the rest of your days in Australia first. Once a pension is brought into Aus you cant take it out with you if it all goes pear shaped until you reach retirement age.

bingobob777

Get a transfer fund value for each, work out the annuity you could get for that in the open market then compare that against what the defined benefit scheme will pay you.

It will be alot less.

EvannTel

That is simply not true. I grant you it seems to seldom be the case especially these days but I know of two people who have had professional actuaries weigh up the pros and cons and the considered advice was to cash in and move here.

Green Grass

Many thanks to all for your contributions. There are clearly some differing views and I will take some professional advice.

My general view was that, as my defined benefit / final salary schemes from my past employers are not exposed to investment market volatility and pay out an annuity on retirement which grows with inflation until I retire, that I should leave these in the UK.

I also have a defined contribution scheme with my current employer which I would transfer within 6 months of arrival and thereby avoiding tax on the growth.

I believe my tax implications are that my UK based funds would grow tax free but I'd pay tax on the retirement income and that my Australian fund would suffer tax on growth until retirement and then the income would be tax free on retirement. Is this correct?

In the UK,when you die, your spouse and children are likely to benefit, but often only at half your pension, whereas in Australia, I'd heard the fund is transferable in full on death according to the wishes expressed in your will. Is this correct?

Thanks

johnnye

If you leave it in the UK and stay in Aus you'll always be taking a risk as you do not know what the exchange rate will be when you retire. In addition the income received after retirement will be taxed. So even though the defined benefit option may look good on paper it may not be the best option.

You say that your Aus fund would suffer tax on growth until retirement. What are you referring to here? Contributions are taxed at 15% that's why it's tax efficient to contribute as much as possible, within the defined limits, to your super, as it reduces your tax burden.

Bix

Now you know three.

Bix

Yes, it belongs to you and remains yours or your benefactors.

It can be left to whomever you nominate.

Bix

These are the ones that people recommend are left in the UK.
I'm not entirely convinced but am open minded on it.

I transferred my final salary scheme but it was not as good as the above. The company effectively controlled the growth and there was none, nor was there likely to be any.

bingobob777

The OP had 3 defined benefit schemes (final salary), the growth risk is with the employer not the employee. These payout a % of salary for each year of service. The OP does not need to care about growth as he's done the service.

Maybe not never, but I'd say the instances when transferring a final salary/defined benefit scheme are advantageous are extremely rare.

bingobob777

why would an actuary advise you to move the risk of future growth from the employee on to the employer?

Bix

Yes, I would say that is correct for the large majority.