xcaretuk

Hi Everyone,
Must be loads of ex-pats that had to sort out their company pension before moving to Oz. Generally, can anyone advise what is the best thing to do? Transfer or keep in the UK. Or is it too complex?
My husband has paid into a Ford Pension for approx 20 years and we haven't a clue what to do with it apart from obtaining advice from expensive consultant's such as Montfort International which I do not mind doing if things are really that complicated.

Thanks
Barb

Nicstids

Hi,

I intend to ask Alan Collett of Go Matilda when the time comes for me to make that decision. He's already posted something recently about this on the Immigration Forum.

xcaretuk

Thanks for that, I will look it up the posts.

Barb

Gibson

Hi Barb,

We've been in Perth 6 weeks now and just are getting round to sorting our pensions. My hubby has 2 good ones and we're bringing them over with us. It is tons easier transfering them once you've got here. Once we calculated the tax we were gonna lose by leaving them in England it just wasn't worth it. I have the name of a good pension guy over here who emigrated 7 years ago he's brilliant.

Hope all goes well

Jane.

xcaretuk

Hi Jane,
Thanks so much for your advise, much appreciated. Will be in touch.

Barb

markeh

Hi Barb,
I'm in a final sallary sceme, which I presume thet your hubby is as well. They are quite good but there transfer value is tends to be low, compared to how much they pay. It worries me transfering out of the scheme.

We are planning to rent out the house we have in the UK, giving us a small income and as such will pay tax in the UK on the earnings from that.
I plan to leave the pension alone if I do this and just pay tax on it in the UK. (since they are tax exempt in the UK.)


To those with a better knowledge that me, Is this possible with a UK pension / Australian tax system to do this?

I hope that it goes well for you Barb,
Regards
Markeh

hevs

Just spoke to my financial advisor and he advises to leave them alone. He basically says that its a long time till your 60 and with all the "what ifs" involved it seems silly to drag them all overthere, to maybe have to drag them all back again! Also our pensions company will pay them to us whever we are, we just need to inform them of where we are living.

Wol

My understanding is, that for a final salary scheme, you just have to ask for it to be paid in Oz by electronic transfer. My scheme charges £2 per month for this.

I also understand that the Inland Revenue asks for the appropriate form to be completed and then the UK pension scheme is told to pay it free of UK tax. You then pay the Oz tax :scared:

Please, anyone, tell me if I have got it all wrong!

ayanem

That's the way I read it.

markeh

Hiya h garrett.
I'm going with your advisor. The transfer value from final salary seems is very poor and this is what makes transferring out the scheme not worthwhile.
The schemes will pay the money to where ever you won't. (Out of interest you could have it paid into a Nationwide account and draw it from a cash point in Oz and save the £2 fee. Remember to set up the account before you migrate. I think it's Nationwide that do this for free.)

I was more concerned with the tax implications of having an investment outside Oz, which I believe is heavily taxed in Oz
(47% I think) on the profits it makes. The UK tax system gives you a tax break on your pension - 0% tax.


I think that this needs more thought than most people give it.
10 or 20 years of early payments is the lion share of the scheme.


Any comments from people out there?

Regards

Markeh

Alan Collett

My immediate reaction to a comment like that from a financial advisor in the UK is "he would say that wouldn't he." Or maybe I'm being too cynical.

In my experience most advisors in the UK have little or no idea about the tax consequences of retaining a UK pension or UK investments once their clients move to Australia. Indeed, the comment about bringing your pension funds from Australia back to the UK perhaps betrays the advisor's knowledge - you can't take an Australian super fund back to the UK, unless you have been in Australia on a temporary residency visa.

Pension transfers to Australia and the reasons for and against are a complex area => please, take advice from people who know what they are doing. Don't leave it to your average financial planner or accountant in the UK who will know very little about the tax issues involved.

By the same token not many financial planners or accountants in Australia have knowledge of the type of pension and investment products found in the UK (tax advantaged investments such as personal pension plans, ISAs/PEPs, etc simply don't exist in Australia), or the specific issues that apply to them under Australia's tax laws.

This isn't meant to be an advertisement for my business - there are some other advisors out there offering their services in this field - but I would urge those who are moving to Australia to not ignore the issue in the belief the tax issues will go away. They won't, and it might be an expensive mistake.

Best regards.

Alan Collett

Hello Markeh.

Pension income paid from a UK scheme to an Aussie tax resident is taxable in Australia under the UK-Australia Tax Treaty.

Compare this with a pension transfer to an Australian superannuation fund from a UK scheme, which is received in Australia as what is called an "undeducted contribution". Once you are in receipt of pension income in your retirement you can claim a deduction in your Australian Tax Return for undeducted contributions attributable to the pension income, effectively eliminating a good proportion of your pension income from the charge to tax in Australia.

Best regards.

Jacqui

Given that approx. 50% of migrants return to the UK, you can see why people are reluctant to do anything with their pensions in the first couple of years. All the hassle and expense involved getting it transferred, only to decide to return to the UK later on. What happens with the pension then? A similar hassle to get it transferred back to the UK I expect.

If the value of the UK pension fund is going down (as most have over the last three years) then there won't be any tax to pay, surely? Or the government will clobber you for the profit made as it starts to go back up in value, I suppose?

Alan Collett

Yes, I hear what you say Jacqui. And indeed the Senate Select Enquiry that looked into the transfer to Australia of superannuation funds also heard similar points made by those involved and affected.

Giving newly arrived migrants 6 months to effect pension transfers (failing which there is an exposure to a section 27CAA tax charge on a future pension transfer) is clearly too little time. I have seen arguments for a 2 year window, and I had hoped the Government would take this on board. However, it appears not to have done so, and so we are left with an invidious situation.

And as noted already, it is not possible to effect a pension transfer in the "opposite direction" unless you are a temporary resident of Australia departing permanently.

Whether or not to effect a pension transfer can be a difficult decision to make, particularly in the case of final salary schemes.

Best regards.

xcaretuk

Thanks to everyone that has replied to my original thread, certainly have alot to think about.

Barb