Andrew P

Hi,

I was just wondering what anyone else had done as regards pension funds when moving to Australia. Is the best thing to transfer them or leave them where they are and take a pension when you retire.

If you transfer the fund to a super fund in Auz within 6 months of moving (complete the whole transfer) you don't have to pay tax on the amount of the fund if longer than 6 months you do. Or if you do take the pension at a later date you will have to pay 8% tax on the amount you get.

Anyone had any advice on this from someone that knows?

Cheers

bored_bean

What's the $/£ rate going to be when you retire? Do you want to gamble that it will be good for you when you've retired? I had friends who retired to france when the franc went from £1=14ff to £1=7ff. They lived without heating for their first winter!

Alan Collett

Not quite correct ... where did you get your information?

- The section 27CAA tax charge is on the increase in the fund value from the date that you arrive in Australia.

- Not sure where you got the 8% figure from, as pension income from the UK is wholly assessable in Australia once you have become tax resident there.

- You are allowed to claim a tax deduction of 8% of the annual pension for most UK State Pensions, but not for personal pension or employer pension annuities:
http://www.ato.gov.au/content.asp?do...uper/18917.htm

Best regards.

jumbo

My information is that a UK employers pension does have a UPP and the taxable amount is reduced by the deductable amount. (see also pension guidelines for Britons Overseas No 3 - www.britishpensions.org.au)

bussie

lol so what do you do transfer it or not

i only under stood about 1% of all those threads

gld

gld

Morning

The 8% refers to the State Pension and the use of the UPP. Depends on type.

If you are asking that question it could be a military pension that prompted your question though.

I did post something on this but because I am not netiquette competent - I don't know what happened to it.

So here it is

Hidden costs in pensions can be controlled by exercising prudent planning pre-departure. The first 3 alone account for 6% of fund value for starters.

• The hidden costs of bank charges on transfer, (Factor in 2% of fund value – it should be 0%) – its incredible how much is lost at this stage;
• Uncontrolled exchange rates – what rate will the receiving scheme change your money at? (4% Variance is common from the Inter-Bank rate – 1% is what it should be)
• The cheque which is sent and not the electronic option, you better believe it (Factor in 1% of fund value – it should be 0%)
• The avoidable tax charge caused by missing the 6 months if a pension should be transferred – surface post, the wrongly addressed cheque (Potential of maybe 3% loss in value)
• The not merging of benefits where appropriate pre-departure, (increased handling costs – difficult to quantify as to the % loss but we estimate 2%)
• The reduction of charges from the exiting scheme, (scheme by scheme depends on when the transfer took place – no % stated due to the variance factors)
• The managing of compensation issues pre-departure due to the potential tax impost and the grossing up provisions, (another difficult one to judge – but case by case examination necessary)
• The not offering to protect a fund against the exchange rate fluctuations, (could be 15% - e.g. we had a very happy client transferring funds at A$2.90 when rate was A$2.45 – he was not alone) what rate do you switch your pensions at?
• The lack of knowledge of re-basing provisions, (could be 3%) – its the pre-six month switch.
• The UK IHT issue on pensions, (40% of Value)
• Etc, etc.

These hidden costs are ones which an Australian based advisor will invariably to shy away from – unless he or she has a UK counterpart who is co-ordinating the pre-departure planning. Those of us who handle UK pensions for migrants or make recommendation as to which advice route to take should always consider the above effects,

We face complications such as the following (on the other hand clients meanwhile face the consequences of the costs of the above by delaying advice):

It can take months to get pensions into the right shape for departure to minimise the above exposure to loss. Because of the six month rule the pressure is on to get moving as it is pre-departure planning that gets the costs down. Once you leave UK, time is against you – but a signature can be turned round by driving to a location if you happen to be in the UK, but if you are post departure it just adds a good week in each direction for mail to turn around, if for example original signatures are required – watch that six months. Hence why because of some of the above cost issues, there may be no real option but to recommend (in our capacity as advisors) a client to delay a departure.

It goes without saying that to action the above, reality says you need to be UK regulated with the necessary UK based service providers and facilities and qualifications to handle the above pre-departure with Australian based advisors linking in who understand the above financial planning techniques.

If you want drop me an email
Geraint Davies

www.miplc.co.uk

Nogo

You are also allowed a tax deduction through the UPP for Uk employer paid pensions.

Arron

Hi
Thought about this before crimbo.
Till "Pearl" decided not to invest my contributions on the stock market, thus not getting enough return. Consiquently returning me to the state pension ( if there is such a thing).

End of problem.

Arron