pensions..fact or fiction??
Feb 19th 2004, 7:22 am
#1
Just Joined
Thread Starter
Joined: Feb 2004
Posts: 13
pensions..fact or fiction??
i am living in Australia and have my temp residence visa. I have a pension in England with two companies, both of which i have been paying contributions into for 8 years.
A friend has told me that as i now reside here i am able to gain access to my pension funds now. Does anyone know if this is correct? Or do i have to wait until im 65????!
Thanks
A friend has told me that as i now reside here i am able to gain access to my pension funds now. Does anyone know if this is correct? Or do i have to wait until im 65????!
Thanks
Feb 19th 2004, 9:17 am
#2
BE Enthusiast
Joined: Nov 2003
Location: Gold Coast, Australia
Posts: 630
Re: pensions..fact or fiction??
Originally posted by lexluthor
i am living in Australia and have my temp residence visa. I have a pension in England with two companies, both of which i have been paying contributions into for 8 years.
A friend has told me that as i now reside here i am able to gain access to my pension funds now. Does anyone know if this is correct? Or do i have to wait until im 65????!
Thanks
i am living in Australia and have my temp residence visa. I have a pension in England with two companies, both of which i have been paying contributions into for 8 years.
A friend has told me that as i now reside here i am able to gain access to my pension funds now. Does anyone know if this is correct? Or do i have to wait until im 65????!
Thanks
I go out to Oz on a 2 year temp visa soon and have worked in the uk for the same employer for 15 years I contacted them about my pension and they said once i'm over there I can get it transferred to an Oz employer, I also thought about cashing it in but I don't know if this can be done.
Lisa
Feb 19th 2004, 9:21 am
#3
Bloody Nice Bloke
Joined: Nov 2003
Location: Living the good life in sunny St Kilda
Posts: 386
Speak to the experts is my advice.
I am dealing with Darion Pohl of Prism Xpat Financial Planning
http://www.xpatconsulting.com/
but there are many others.
Allan Collett of Go Matilda is another that springs to mind.
I am dealing with Darion Pohl of Prism Xpat Financial Planning
http://www.xpatconsulting.com/
but there are many others.
Allan Collett of Go Matilda is another that springs to mind.
Feb 19th 2004, 9:28 am
#4
Migration Agent
Joined: May 2002
Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
Posts: 6,459
Re: pensions..fact or fiction??
Two comments:
1. I doubt that you will be able to transfer a UK pension fund if you are in Australia on a temporary residency visa. If you had permanent residency it might be a different story ...
2. If you could transfer your pension fund to an Australian superannuation fund accessing the fund is improbable until you are aged 55, or are in significant financial hardship.
If you want the contact details of the financial planners in Australia with whom we work please let me know.
Best regards.
1. I doubt that you will be able to transfer a UK pension fund if you are in Australia on a temporary residency visa. If you had permanent residency it might be a different story ...
2. If you could transfer your pension fund to an Australian superannuation fund accessing the fund is improbable until you are aged 55, or are in significant financial hardship.
If you want the contact details of the financial planners in Australia with whom we work please let me know.
Best regards.
Originally posted by lexluthor
i am living in Australia and have my temp residence visa. I have a pension in England with two companies, both of which i have been paying contributions into for 8 years.
A friend has told me that as i now reside here i am able to gain access to my pension funds now. Does anyone know if this is correct? Or do i have to wait until im 65????!
Thanks
i am living in Australia and have my temp residence visa. I have a pension in England with two companies, both of which i have been paying contributions into for 8 years.
A friend has told me that as i now reside here i am able to gain access to my pension funds now. Does anyone know if this is correct? Or do i have to wait until im 65????!
Thanks
Feb 19th 2004, 12:34 pm
#5
Lost in BE Cyberspace
Joined: Nov 2003
Location: Scotland
Posts: 7,949
This article might be of use although it does relate more to those approaching retirement:
http://finance.news.com.au/common/st...E23649,00.html
Expats can now bring home their pension
New rules make it an attractive option, writes Gillian Bullock
November 19, 2003
YOU'VE been living in Australia for about 20 years and, as retirement approaches, you realise you will be able to access the money accumulated in your pension fund in England before you migrated.
The question is: Should you keep the money in the UK fund and just have the income stream transferred to your Australian bank account? Or should you bring all the money here and put it in a local income stream?
Up until now, it has been less attractive to bring the money as a lump sum to Australia because you are hit with tax on the earnings from your superannuation from the day that you became an Australian resident.
That means you could be paying up to 48.5 per cent tax on what could be a sizeable rate of growth. To top it off, the money generally had to come from your pocket, not the fund.
If you transfer the funds within six months of taking up residency, then no tax is payable on the transfer, the money is treated as an undeducted contribution and there is no superannuation surcharge liability.
But as a means of encouraging migrants and expatriate Australians to bring their superannuation money back to Australia, the rules are about to change. By next year any earnings on your super between the end of the six-month period and the time of transfer will only be taxed at 15 per cent, and the fund will pay the tax liability rather than the superannuant.
In addition, the transferred monies are viewed as undeducted contributions, so they will not attract tax when you are in retirement mode.
This planned amendment is welcomed by David Ford, managing director of Pension Transfer Direct (a subsidiary of Associated Planners), who is also on the federal Government steering committee to implement the changes.
Despite the restrictions on transfers up till now, it has still been a viable option for many. Pension Transfer Direct has transferred $104 million of pension funds for some 970 people from the UK to Australia since business began back in 1996.
Once the rules change, transferring your UK pension fund here will be a far more attractive option.
It's important to note that once you start drawing down the pension in the UK, it becomes non-commutable and the option to transfer is eliminated.
According to Ford, bringing the pension fund here has a number of pluses. It allows you to take the money in cash if you choose to, which is not possible if the money stays in the UK. Further, having the money in Australia rules out any currency concerns - the money you would receive from the fund in the UK would change from month to month depending on the exchange rate.
But more importantly, Australia recognises the money in your super as yours. In the UK, when you die, your spouse generally receives only 50 per cent of the pension and when your spouse dies, the pension just stops.
In Australia, when you die, your spouse can opt to continue receiving 100 per cent of the income stream or take the money out as a lump sum. When your spouse dies, any balance generally passes on to your children.
However, the downside at present is that in the year of transfer, the money received is added to your Australian income and this can have a direct effect on any Centrelink benefits you might have otherwise received. But as Ford says: "It takes some pain now for a lot of gain in the future."
Of course transferring pension funds is not for everybody. Some people may be giving up guaranteed benefits inherent in UK final salary schemes. Ford recommends that you should not transfer any fund without having comparative analysis drawn up cognisant of both UK and Australian rules and regulations.
"Right now you could compare the proposed tax changes with traffic lights," says Ford.
"Some people are at red and should wait until the 15 per cent knocks in. Others are on amber where the difference between their marginal rate and the 15 per cent is not so great, so why delay and take the risk of adverse movements in the exchange rate? And for those who are still within six months of taking up residency, the light is green."
Research and Technical Manager at ING, Louise Biti, says each case should be examined on its own merits.
"Some of the overseas pensions are quite generous and you may not be so well-off if you commute it to a lump sum and brought the income stream here," says Biti. "If you are in a defined benefit scheme in the UK, which relies on a formula including the number of years you worked with the company and your salary, then it might be much better than an Australian income stream that is determined by just the current interest rate."
This caution is also expressed by Peter Haggstrom, vice-president, Deutsche Asset Management. "The question is, could you replicate the money you are earning in a defined benefit scheme in the UK with an income stream here," says Haggstrom.
The Australian
OzTennis
http://finance.news.com.au/common/st...E23649,00.html
Expats can now bring home their pension
New rules make it an attractive option, writes Gillian Bullock
November 19, 2003
YOU'VE been living in Australia for about 20 years and, as retirement approaches, you realise you will be able to access the money accumulated in your pension fund in England before you migrated.
The question is: Should you keep the money in the UK fund and just have the income stream transferred to your Australian bank account? Or should you bring all the money here and put it in a local income stream?
Up until now, it has been less attractive to bring the money as a lump sum to Australia because you are hit with tax on the earnings from your superannuation from the day that you became an Australian resident.
That means you could be paying up to 48.5 per cent tax on what could be a sizeable rate of growth. To top it off, the money generally had to come from your pocket, not the fund.
If you transfer the funds within six months of taking up residency, then no tax is payable on the transfer, the money is treated as an undeducted contribution and there is no superannuation surcharge liability.
But as a means of encouraging migrants and expatriate Australians to bring their superannuation money back to Australia, the rules are about to change. By next year any earnings on your super between the end of the six-month period and the time of transfer will only be taxed at 15 per cent, and the fund will pay the tax liability rather than the superannuant.
In addition, the transferred monies are viewed as undeducted contributions, so they will not attract tax when you are in retirement mode.
This planned amendment is welcomed by David Ford, managing director of Pension Transfer Direct (a subsidiary of Associated Planners), who is also on the federal Government steering committee to implement the changes.
Despite the restrictions on transfers up till now, it has still been a viable option for many. Pension Transfer Direct has transferred $104 million of pension funds for some 970 people from the UK to Australia since business began back in 1996.
Once the rules change, transferring your UK pension fund here will be a far more attractive option.
It's important to note that once you start drawing down the pension in the UK, it becomes non-commutable and the option to transfer is eliminated.
According to Ford, bringing the pension fund here has a number of pluses. It allows you to take the money in cash if you choose to, which is not possible if the money stays in the UK. Further, having the money in Australia rules out any currency concerns - the money you would receive from the fund in the UK would change from month to month depending on the exchange rate.
But more importantly, Australia recognises the money in your super as yours. In the UK, when you die, your spouse generally receives only 50 per cent of the pension and when your spouse dies, the pension just stops.
In Australia, when you die, your spouse can opt to continue receiving 100 per cent of the income stream or take the money out as a lump sum. When your spouse dies, any balance generally passes on to your children.
However, the downside at present is that in the year of transfer, the money received is added to your Australian income and this can have a direct effect on any Centrelink benefits you might have otherwise received. But as Ford says: "It takes some pain now for a lot of gain in the future."
Of course transferring pension funds is not for everybody. Some people may be giving up guaranteed benefits inherent in UK final salary schemes. Ford recommends that you should not transfer any fund without having comparative analysis drawn up cognisant of both UK and Australian rules and regulations.
"Right now you could compare the proposed tax changes with traffic lights," says Ford.
"Some people are at red and should wait until the 15 per cent knocks in. Others are on amber where the difference between their marginal rate and the 15 per cent is not so great, so why delay and take the risk of adverse movements in the exchange rate? And for those who are still within six months of taking up residency, the light is green."
Research and Technical Manager at ING, Louise Biti, says each case should be examined on its own merits.
"Some of the overseas pensions are quite generous and you may not be so well-off if you commute it to a lump sum and brought the income stream here," says Biti. "If you are in a defined benefit scheme in the UK, which relies on a formula including the number of years you worked with the company and your salary, then it might be much better than an Australian income stream that is determined by just the current interest rate."
This caution is also expressed by Peter Haggstrom, vice-president, Deutsche Asset Management. "The question is, could you replicate the money you are earning in a defined benefit scheme in the UK with an income stream here," says Haggstrom.
The Australian
OzTennis
Feb 19th 2004, 12:48 pm
#6
Home and Happy
Joined: Dec 2002
Location: Keep true friends and puppets close, trust no-one else...
Posts: 93,814
I've been trying for the last 5 months to move my pension to Oz - the pension people back in the UK (W Sussex County Council) just won't answer my letters; the one answer I did get said it couldn't be done! My 6 months is nearly up, and I shall just have to give up and abandon my bit of pension where it is!!!
Feb 20th 2004, 7:51 am
#7
Banned
Joined: Dec 2003
Posts: 150
Originally posted by OzTennis
This article might be of use although it does relate more to those approaching retirement:
http://finance.news.com.au/common/st...E23649,00.html
Expats can now bring home their pension
New rules make it an attractive option, writes Gillian Bullock
November 19, 2003
YOU'VE been living in Australia for about 20 years and, as retirement approaches, you realise you will be able to access the money accumulated in your pension fund in England before you migrated.
The question is: Should you keep the money in the UK fund and just have the income stream transferred to your Australian bank account? Or should you bring all the money here and put it in a local income stream?
Up until now, it has been less attractive to bring the money as a lump sum to Australia because you are hit with tax on the earnings from your superannuation from the day that you became an Australian resident.
That means you could be paying up to 48.5 per cent tax on what could be a sizeable rate of growth. To top it off, the money generally had to come from your pocket, not the fund.
If you transfer the funds within six months of taking up residency, then no tax is payable on the transfer, the money is treated as an undeducted contribution and there is no superannuation surcharge liability.
But as a means of encouraging migrants and expatriate Australians to bring their superannuation money back to Australia, the rules are about to change. By next year any earnings on your super between the end of the six-month period and the time of transfer will only be taxed at 15 per cent, and the fund will pay the tax liability rather than the superannuant.
In addition, the transferred monies are viewed as undeducted contributions, so they will not attract tax when you are in retirement mode.
This planned amendment is welcomed by David Ford, managing director of Pension Transfer Direct (a subsidiary of Associated Planners), who is also on the federal Government steering committee to implement the changes.
Despite the restrictions on transfers up till now, it has still been a viable option for many. Pension Transfer Direct has transferred $104 million of pension funds for some 970 people from the UK to Australia since business began back in 1996.
Once the rules change, transferring your UK pension fund here will be a far more attractive option.
It's important to note that once you start drawing down the pension in the UK, it becomes non-commutable and the option to transfer is eliminated.
According to Ford, bringing the pension fund here has a number of pluses. It allows you to take the money in cash if you choose to, which is not possible if the money stays in the UK. Further, having the money in Australia rules out any currency concerns - the money you would receive from the fund in the UK would change from month to month depending on the exchange rate.
But more importantly, Australia recognises the money in your super as yours. In the UK, when you die, your spouse generally receives only 50 per cent of the pension and when your spouse dies, the pension just stops.
In Australia, when you die, your spouse can opt to continue receiving 100 per cent of the income stream or take the money out as a lump sum. When your spouse dies, any balance generally passes on to your children.
However, the downside at present is that in the year of transfer, the money received is added to your Australian income and this can have a direct effect on any Centrelink benefits you might have otherwise received. But as Ford says: "It takes some pain now for a lot of gain in the future."
Of course transferring pension funds is not for everybody. Some people may be giving up guaranteed benefits inherent in UK final salary schemes. Ford recommends that you should not transfer any fund without having comparative analysis drawn up cognisant of both UK and Australian rules and regulations.
"Right now you could compare the proposed tax changes with traffic lights," says Ford.
"Some people are at red and should wait until the 15 per cent knocks in. Others are on amber where the difference between their marginal rate and the 15 per cent is not so great, so why delay and take the risk of adverse movements in the exchange rate? And for those who are still within six months of taking up residency, the light is green."
Research and Technical Manager at ING, Louise Biti, says each case should be examined on its own merits.
"Some of the overseas pensions are quite generous and you may not be so well-off if you commute it to a lump sum and brought the income stream here," says Biti. "If you are in a defined benefit scheme in the UK, which relies on a formula including the number of years you worked with the company and your salary, then it might be much better than an Australian income stream that is determined by just the current interest rate."
This caution is also expressed by Peter Haggstrom, vice-president, Deutsche Asset Management. "The question is, could you replicate the money you are earning in a defined benefit scheme in the UK with an income stream here," says Haggstrom.
The Australian
OzTennis
This article might be of use although it does relate more to those approaching retirement:
http://finance.news.com.au/common/st...E23649,00.html
Expats can now bring home their pension
New rules make it an attractive option, writes Gillian Bullock
November 19, 2003
YOU'VE been living in Australia for about 20 years and, as retirement approaches, you realise you will be able to access the money accumulated in your pension fund in England before you migrated.
The question is: Should you keep the money in the UK fund and just have the income stream transferred to your Australian bank account? Or should you bring all the money here and put it in a local income stream?
Up until now, it has been less attractive to bring the money as a lump sum to Australia because you are hit with tax on the earnings from your superannuation from the day that you became an Australian resident.
That means you could be paying up to 48.5 per cent tax on what could be a sizeable rate of growth. To top it off, the money generally had to come from your pocket, not the fund.
If you transfer the funds within six months of taking up residency, then no tax is payable on the transfer, the money is treated as an undeducted contribution and there is no superannuation surcharge liability.
But as a means of encouraging migrants and expatriate Australians to bring their superannuation money back to Australia, the rules are about to change. By next year any earnings on your super between the end of the six-month period and the time of transfer will only be taxed at 15 per cent, and the fund will pay the tax liability rather than the superannuant.
In addition, the transferred monies are viewed as undeducted contributions, so they will not attract tax when you are in retirement mode.
This planned amendment is welcomed by David Ford, managing director of Pension Transfer Direct (a subsidiary of Associated Planners), who is also on the federal Government steering committee to implement the changes.
Despite the restrictions on transfers up till now, it has still been a viable option for many. Pension Transfer Direct has transferred $104 million of pension funds for some 970 people from the UK to Australia since business began back in 1996.
Once the rules change, transferring your UK pension fund here will be a far more attractive option.
It's important to note that once you start drawing down the pension in the UK, it becomes non-commutable and the option to transfer is eliminated.
According to Ford, bringing the pension fund here has a number of pluses. It allows you to take the money in cash if you choose to, which is not possible if the money stays in the UK. Further, having the money in Australia rules out any currency concerns - the money you would receive from the fund in the UK would change from month to month depending on the exchange rate.
But more importantly, Australia recognises the money in your super as yours. In the UK, when you die, your spouse generally receives only 50 per cent of the pension and when your spouse dies, the pension just stops.
In Australia, when you die, your spouse can opt to continue receiving 100 per cent of the income stream or take the money out as a lump sum. When your spouse dies, any balance generally passes on to your children.
However, the downside at present is that in the year of transfer, the money received is added to your Australian income and this can have a direct effect on any Centrelink benefits you might have otherwise received. But as Ford says: "It takes some pain now for a lot of gain in the future."
Of course transferring pension funds is not for everybody. Some people may be giving up guaranteed benefits inherent in UK final salary schemes. Ford recommends that you should not transfer any fund without having comparative analysis drawn up cognisant of both UK and Australian rules and regulations.
"Right now you could compare the proposed tax changes with traffic lights," says Ford.
"Some people are at red and should wait until the 15 per cent knocks in. Others are on amber where the difference between their marginal rate and the 15 per cent is not so great, so why delay and take the risk of adverse movements in the exchange rate? And for those who are still within six months of taking up residency, the light is green."
Research and Technical Manager at ING, Louise Biti, says each case should be examined on its own merits.
"Some of the overseas pensions are quite generous and you may not be so well-off if you commute it to a lump sum and brought the income stream here," says Biti. "If you are in a defined benefit scheme in the UK, which relies on a formula including the number of years you worked with the company and your salary, then it might be much better than an Australian income stream that is determined by just the current interest rate."
This caution is also expressed by Peter Haggstrom, vice-president, Deutsche Asset Management. "The question is, could you replicate the money you are earning in a defined benefit scheme in the UK with an income stream here," says Haggstrom.
The Australian
OzTennis
Surely this means that if the transfer is added to income it would be taxed! This contradicts what you said earlier about not being taxed if transferred within 6 months. When does the 15% tax rule start?
Regards
Feb 20th 2004, 8:08 am
#8
Lost in BE Cyberspace
Joined: Nov 2003
Location: Scotland
Posts: 7,949
Originally posted by jumbo
However, the downside at present is that in the year of transfer, the money received is added to your Australian income and this can have a direct effect on any Centrelink benefits you might have otherwise received.
Surely this means that if the transfer is added to income it would be taxed! This contradicts what you said earlier about not being taxed if transferred within 6 months. When does the 15% tax rule start?
Regards
However, the downside at present is that in the year of transfer, the money received is added to your Australian income and this can have a direct effect on any Centrelink benefits you might have otherwise received.
Surely this means that if the transfer is added to income it would be taxed! This contradicts what you said earlier about not being taxed if transferred within 6 months. When does the 15% tax rule start?
Regards
You'll need to await Alan Collett et al clarifying the position.OzTennis
Feb 20th 2004, 8:50 am
#9
Migration Agent
Joined: May 2002
Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
Posts: 6,459
No, it doesn't necessarily mean it will be taxed ... though I can't claim to be an expert on this subject (and I'm happy to be corrected on this) I believe that sometimes Centrelink factors certain "income" and "capital gains" into its considerations for Benefit purposes when the same amounts are not in fact assessable to tax in Australia. This can particularly be the case in the tax year that you arrive in Australia where I believe Centrelink look at (for example) capital gains received pre-arrival in Australia in deciding your entitlement to Family Tax Benefit Part A - but these amounts are typically outside the charge to tax in Australia.
There is a discussion of FTB Part A here.
The 15% rule is not yet law, and I believe the Government has not yet even started the consultation it promised when it announced the proposed change.
Best regards.
There is a discussion of FTB Part A here.
The 15% rule is not yet law, and I believe the Government has not yet even started the consultation it promised when it announced the proposed change.
Best regards.
Originally posted by jumbo
However, the downside at present is that in the year of transfer, the money received is added to your Australian income and this can have a direct effect on any Centrelink benefits you might have otherwise received.
Surely this means that if the transfer is added to income it would be taxed! This contradicts what you said earlier about not being taxed if transferred within 6 months. When does the 15% tax rule start?
Regards
However, the downside at present is that in the year of transfer, the money received is added to your Australian income and this can have a direct effect on any Centrelink benefits you might have otherwise received.
Surely this means that if the transfer is added to income it would be taxed! This contradicts what you said earlier about not being taxed if transferred within 6 months. When does the 15% tax rule start?
Regards
