Gillian D

Hello everybody

What a great site. Everyone seems so friendly and all going through the same thing.

We are Gillian, Jim, Melissa (10) and Claudia (7). Hoping to go to Brisbane this year. Going for medicals on Tuesday 18/02. Have sent police forms away, but not heard anything yet.

I'm on the point of a nervous breakdown with all the things to do - ie sell house, car, arrange removals, sort out money, pensions and endowments.

Can anyone suggest anything. What did you do with pensions/endowments as it seems that you'll pay a lot of tax on them. I don't really understand it all. Have been quoted £350 fee just to discuss finances - but if I pay any more fees for anything I won't have any finances left to discuss.

Anyone help in plain English terms please.

Nicstids

Hi Gillian,

Welcome to the site.

I raised a query regarding endowments recently and nobody replied Boring subject but potentially could cost us a lot of money as I understand it....

Re endowments - from what I can gather there is no point keeping these on once in Oz as you will be taxed annually in Oz on any growth in the policies and taxed again on maturity. I have been looking at surrendering/selling ours now as they seem to be performing pretty dreadfully. I'd rather cut our losses now and then pay what we would have paid in premiums into our mortgage and pay it off a bit faster.

I've obtained surrender values on our 2 policies - 1 is about £1000 less than we have paid into it . The other is about £5000 more. All depends on the company and how long they've been running. Have gone onto several websites to see if I can sell them for more but so far no joy... Still if we surrender them we will get about £23000 which we'll use to pay off some of the mortgage. More equity to take to Oz. We will have to arrange some new life cover though although I think that's quite cheap at the moment...

Re pensions - I understand that you have a window of 6 months
after you become Ozzie resident to decide what to do with these. I plan to take advice from Alan Collett (an accountant and migration agent who posts here regularly) nearer the time.

Hope this helps.
Nicstids

Gillian D

Thanks for that. Will keep it in mind.

What stage are you at just now? Where and when do you hope to go?

Nicstids

We've just sent off hubby Mark's application for skills assessment to the TRA. Once that's back will put the visa application in. We can't go until Nov 2005 because that's when Mark is due out of the Navy. We have to apply now though since he's 45 next year...

Not sure where we want to go. We're going out in April for a month to have a look (war permitting). Mark's keen on Adelaide as he lived there 20 years ago and loved it. I like the sound of it but am not sure about the job situation. I'm a solicitor and he's an aircraft maintenance engineer.

Nicstids

scoobydooathome

Hi there,

We are in the visa process, OZ by later this year no hurry at the moment, got the house on the market ETC,

As for endowments yuk get out what you can sack em all sorry to be blunt, we got rid of ours 2 years ago got the cash back we paid in but no profit and this was after 11 years of payments, what a rip off, but happy to get our money BACK the robbers ...

As for the advice at 350.00 quid well I think they are having a laugh, remember when they advised endowments were the thing to invest in, yeah right whatever,

Just get all you dosh together and have a happy life in OZ,

best of luck,

Alan Collett

Hi Gillian.

Have a read of the factsheet that I have attached - it might give you an indication of the tax issues that may well arise if you keep a UK endowment policy, or a PEP/ISA, or a personal pension fund when you move to Australia.

Happy to discuss if you want more advice...

Best regards.

Terry

We are at the same stage of the process having just done the medicals on friday. I am also going to contact Alan for advise when I get around to completing his questionare.

Terry

denhim

the only thing ive to worry about is a 15 year savings plan with axa and my company pension. ive only been paying into my pension for 5 years so i might aswel just freeze it and start a new one in oz. as for the 15 year saving plan, i was thinking of just keeping my account here in the u.k open and just transfering money over anualy just to keep it going.
is that a good idea anyone??

WARDY

Hi

I have been looking at this recently. I believe that another option, if you don't need the cash now, is to make the policy fully paid up. It then runs to the original finish date but you don't make any contributions. I got a surrender value of around £16,000 quoted on a policy of mine which has another 9 years to go, supposedly to repay a mortgage of £50,000. If I make it fully paid up the value with existing bonuses is around £23,000, (plus any future growth) although I wouldn't get anything till 2012. Your insurer should provide these details for free (I think) I suppose it depends on other factors such as how much longer you have left to go on the policy, etc.

Have a look at Go Matilda and the links on there, I have found them to be very useful.

Caryn

Nicstids

Hi

One of our companies has given us details of paid-up values. The thing that puts me off this option is that I understand that you would be taxed in Aus on the proceeds at maturity i.e. the whole point of the proceeds being tax free in UK is no longer any benefit once you are Aus resident. Do you know any different?

Nicstids

karenvirginia

alan, i read the attachment and feel rather alarmed. it says the tax element could be "up to 48.5%" on maturing endowments, savings etc. is this the normal rate for your everyday man in the street? do you know what it starts at or what is usual?
i've been checking ours and once we get to oz we have one policy with 3.5 years to run and thought it would certainly be worth paying till maturity but the thought of giving virtually half to the aus government is sickening.
thanks for your time.
karen

Alan Collett

Hi Karen.

Details of the current tax rates in Australia are here:
http://www.collettandco.com/pdfs/rat...ia_2001_02.pdf

So once your assessable income is more than A$60,000 you would pay tax at 47% with a Medicare Levy of 1.5% on top.

You wouldn't pay tax in Australia on all of the maturity proceeds from your endowment. Rather you would probably have an exposure under the Foreign Investment Fund Rules based on the increase in the "value" of the policy from one Aussie tax year to the next, and you would then have a capital gains tax exposure on maturity that would be computed with reference to the value of the policy on the date that you become a tax resident of Australia, less amounts already taxed under the FIF Rules.

All of which is a bit involved ... which is why so many decide to sell or surrender their endowment policies (not that this is a recommendation to do so).

Hope this helps.

Alan Collett

Nic,

You should also be aware that a pension fund transferred from the UK into an Australian super fund is received as what is called an undeducted contribution.

And the benefit of an undeducted contribution is that the capital at retirement age, or an income deriving from an undeducted contribution, is in essence received free of tax in Australia.

This issue alone can mean that it is well worth looking at a pension transfer - subject to costs of course, but the tax saved is typically significantly in excess of any fees charged by those who assist with such a transfer.

Please feel able to mail me directly if you want further information from the people that we work with in the context of pension transfers ...

Best regards.

Nicstids

Alan

Thanks for that. My pension's with Standard Life and, given their problems at the moment, I will certainly be looking at transferring it!

Nicstids

karenvirginia

alan, thanks for getting back to me so soon. i need to get up to date figures of our policies i think before we make any decisions!
karen