swimmingsaintee

Yep as Trev said thanks very much - a most erudite explanation !
Don't know what to do about paying NI contributions. I'm contracted out so am asking for a forecast with a view to contracting back in rather than transferring my protected rights bit. Might pay the contributions as they're so low, but could do with a crystal ball. I do think that uk state pensions will eventually ( in next 15-20 years) become means tested and the retirement age deferred, so maybe it's a better idea to bung the money in to a fund in oz. I susupect that there will be a huge pensions review here soon - there has to be.
Just my opinion 4 what it's worth.

TrickyTrev

ERUDITE!!! Good word Swimmingsaintee!!! I don't know what it means, thicko that I am, so I will look it up in my dictionary after I have finished playing on the net! Agree with your view on the State Pension. It isn't a lot now and I can't see the levels improving for 'all' on the 'pay as you go' system that we have here in the UK. Means testing is the only way, I believe, that the State Pension will improve and that surely is just a question of time before it comes in. This shouldn't stop you from transferring your 'Protected Rights' though Swimmingsaintee. These funds are basically a refund made to you by the pensions office to free them of their commitment to pay you the 'SERPS' pension at retirement age that these funds would have otherwise entitled you to. They are now your own personal funds to do with as you please (pension rules applying of course). Is that right KirstyandAL and GINAUK??? Can I just ask too.....why Swimmingsaintee for the name? It is very long and I don't type well!!!!! You may have to become Swim for short!!!! Catch ya later, Trev.

kirsty&al

Hiya Trev and swim,

I'm not an IFA, but I did manage to acquire three different types of pension (1 personal, 1 group, and 1 occupational MP) in the UK before transferring them. My protected rights came across as well. There were some extra papers to sign, but no big problem. I must admit I did have someone help me transfer them over, but that was only because I found out at the last moment that there was going to be a problem with the FIF tax. Given a couple of months and I would have done it myself.

It is worth getting as much done as possible in the UK before you leave. Contact all your pension companies and make sure they are aware of your intentions, get the forms from them and ask them what they require. Find out what requirements they will need from Aus for them to send the money over. They will want to make sure that you have a proper super company on this end (so you wont be allowed to transfer directly into a self-managed super fund). The UK govt also requires that you have worked for at least 1 day in Aus.

You will find that by the end of this process, that you have also become very knowledgeable about pensions.

On the NI front, I've stopped making payments, for the reasons you gave above, in that, I don't have a clue what it's going to be worth when it pays out, along with the current problem where it is frozen when it starts paying out. However, you should check that you have contributed for the minimum number of years to qualify (11- I think). If you've only done 9 (say) then you get sweet FA (unless you've had home responsibilities protection).

Cheers
Al.

GinaUK

1. Firstly, you have confused SERPS (State Earnings Related Pension) and the Basic State Pension! By contracting out, you've given up your right to SERPS and S2P (S2P [State Second Pension] replaced SERPS in 2002).

Instead of getting an entitlement to SERPS/S2P (provided the government of the day at the time when you retire chooses to honour this entitlement), you have chosen to invest NI rebates in a separate fund that has actually got your name on it. For reasons I won't go into, this is referred to as "protected rights".

There are a number of factors to consider when deciding whether to contract out or stay contracted in, but it has NOTHING to do with the Basic State Pension!

Once you cease to be liable to UK income tax because you're out of the country, you cannot build up any further entitlement to S2P. (You cannot pay "voluntary contributions" towards this entitlement then.)

2. Being contracted out DOES NOT affect your entitlement to the Basic State Pension. Part of your remaining NI contributions governs that entitlement. You'll get the full Basic State Pension if you've paid NI contributions (or got NI credits) for 40 years. If you haven't got the full 40 years, you'll get a reduced Basic Pension.

You can pay voluntary contributions to keep adding "years" to your entitlement to the Basic Pension even after you've left the UK.

3. Currently, the full Basic State Pension is around £80 per week.
By the time you're due to retire, in maybe 15-20 years time, the Basic State Pension may have ceased to exist. Rather than paying voluntary contributions, you may be better off paying the money into an Oz fund (and that's what I'll be doing).

Gina

TrickyTrev

Thanks guys and gals. Really helpful information. We have also established Al is not an IFA!! So......Gina.....are you an accountant? Thanks again peeps, Trev.

GinaUK

Used to be.

Gina

P.S. I think you need to be renamed "cheeky Trev"

TrickyTrev

Cheeky!!! Me???? NEVER!!!!! Now nosey........... yes!!!! Ta for that Gina

swimmingsaintee

Trev - yep swim is fine by me. I swim a lot and husband is a saints fan ( locally known as saintees ) hence the name.Saints being St Johnstone fc Perth, Scotland. Sorry about the Erudite. Will stop drinking sherry in the morning.

Gina ace explanation. I've spent years thinking I should really get my head round the pension stuff but after 4 kids didn't think I had enough neurons still firing. I've seen the light- I understand! What a cosmic experience.
So to recap, will leave husbands final salary here and transfer my protected rights "bit". Will forget about paying extra ni.
Thanks again
Swim

TrickyTrev

Hi guys,
Now that we have all established what we are going to do with our pensions can I be so cheeky (well Gina says I am!!) as to ask this;- I also have a couple of pure and simple life cover policies in force in case I croak it. I have checked with both providers that I can continue to pay contributions and continue my cover when I depart (to Oz I mean not the next life!!) and they both said no problem! This thread has now got me thinking though - will there be any tax catch on the Ozzie side if Mrs.TrickyTrev became a rich widow or would she be O.K. to claim it all tax free and move her toy boy in??!! I await your replies!!! Trev.

p.s. thanks for the explanation Swim. Would love to give stick to hubby about supporting St.Johnstone but hey I live in Leicester so I have to keep my mouth shut!!! We have Craig Levein here now though so we are now known locally as Leicester McCity due to all the recent scottish signings. LOL

swimmingsaintee

Hi Trev.Hadn't thought about the life assurance as assumed I'd live 4 ever.Suppose I might not though. Short answer is I don't know. I'd bet that if you have a policy maturing eg a mortgage endowment then there will be some sort of tax implication. I'll have to do more research tho'
So many policies are underperforming that selling/cashing them in might mean getting a lot less for them.
I think you should start a new thread about this and hope someone who knows more than me sees it.
Re Leicester City - nice to know we're not the only family supporting it's (local)losing team. Our children are used to failure after endless seasons of enforced support with their dad! Me , I'm changing to cricket - far more civilsed. Croft Original and all that.

TrickyTrev

Thanks for the thread suggestion Swim. I will just wait to see what the two experts KirstyandAl and GinaUK say. My policies have no savings element they are just pure life cover only (term assurance policies). Re the sport - I didn't know that the scots played cricket!!! LOL. Catch ya later, Trev.

swimmingsaintee

Well, we have a team . Not sure play is the word tho

kirsty&al

Hello all,

Life assurance that only pays on death are exempt from the FIF rules, so the payout should be tax free. Life assurances that pay out on death or after a term (e.g. endowments) are subject to FIF rules.

Under FIF rules your family (known as you and your associates) are allowed up to $50k before the ATO becomes interested. If you go over the $50k then the yearly increases in the funds (termination value) will be taxed yearly. If you are under the $50k limit you will get taxed when they pay out.

Things that come under the FIF rules are:
- life insurance policies that pay out after a certain period (e.g. endowments).
- ISAs and PEPs (although Cash ISAs (and I presume TESSAs) are treated as bank accounts).
- Personal Pensions and Group Pensions including Stakeholder pensions (including ones for kids and spouse).
- Investment Funds (Foreign ones obviously).

Although they have been introduced since I left, I think the new Child Savings thingys, come under the rules.

Personally, I got rid of or transferred everything I was allowed (endowments, personal pension and group pension). The only thing that I'm left with, are stakeholder pensions for 2 of the kids (these can't be transferred because of the UK's rule that you have to work for a day). If your endowment is near its end then it's probably worth hanging onto (even if you end up paying tax, you'll probably still be better off).

Regards
A

swimmingsaintee

thanks Al. Another great explanation.Will take endowments i think .
Swim

TrickyTrev

Ditto Swims comment Al....Thanks and yes, you do explain things so well!!
Cheers, Trev.

Hey Swim - I looked in the Sunday papers and St.Johnstone are top of the league!!! It is early days though I suppose!! LOL