UK Pension transfers and new rules
Apr 11th 2006, 4:20 am
#1
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UK Pension transfers and new rules
I personally transferred two UK pensions to my smsf (diy super fund) within the permitted 6-month window. Interestingly (which might be a first) the funds and cash are still in my UK accounts but within the smsf - so there was no need to cash in before transfer. However I left one pension with Standard Life to wait for transfer until after their intended demutualisation. So far I have not yet found an Australian scheme willing to undertake the new UK requirements - even Macquarie had not made a decision as of yesterday.
My understanding of the new rules after talking to a very helpful person from HMRC is as follows:-
1. Transfers without a tax charge will only be permitted to a QROPS (qualifying recognised overseas pension scheme)
2. The receiving super scheme administrators must undertake to ring-fence the transferred pension and apply the UK pension rules to gain QROPS status.
3. Basically any permitted pension transfers will be subject to UK pension rules for 5 complete UK tax years i.e. to up to 6 years after transfer.
4. An Australian scheme can only transfer or roll over to another Australian QROPS scheme.
This means that one of the attractions of transfers to Australia i.e. being able to take the whole pension as cash is removed. However the requirement to have emigrated no longer applies and so I guess the requirement to be ‘gainfully employed’ also (but I did not check this). Also it means that any smsf must get QROPS status in its own right rather than expecting to first transfer to a large commercial scheme and then roll over to the smsf which is what I was intending to do.
My understanding of the new rules after talking to a very helpful person from HMRC is as follows:-
1. Transfers without a tax charge will only be permitted to a QROPS (qualifying recognised overseas pension scheme)
2. The receiving super scheme administrators must undertake to ring-fence the transferred pension and apply the UK pension rules to gain QROPS status.
3. Basically any permitted pension transfers will be subject to UK pension rules for 5 complete UK tax years i.e. to up to 6 years after transfer.
4. An Australian scheme can only transfer or roll over to another Australian QROPS scheme.
This means that one of the attractions of transfers to Australia i.e. being able to take the whole pension as cash is removed. However the requirement to have emigrated no longer applies and so I guess the requirement to be ‘gainfully employed’ also (but I did not check this). Also it means that any smsf must get QROPS status in its own right rather than expecting to first transfer to a large commercial scheme and then roll over to the smsf which is what I was intending to do.
Apr 11th 2006, 9:41 am
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Re: UK Pension transfers and new rules
Originally Posted by jumbo
I personally transferred two UK pensions to my smsf (diy super fund) within the permitted 6-month window. Interestingly (which might be a first) the funds and cash are still in my UK accounts but within the smsf - so there was no need to cash in before transfer. However I left one pension with Standard Life to wait for transfer until after their intended demutualisation. So far I have not yet found an Australian scheme willing to undertake the new UK requirements - even Macquarie had not made a decision as of yesterday.
My understanding of the new rules after talking to a very helpful person from HMRC is as follows:-
1. Transfers without a tax charge will only be permitted to a QROPS (qualifying recognised overseas pension scheme)
2. The receiving super scheme administrators must undertake to ring-fence the transferred pension and apply the UK pension rules to gain QROPS status.
3. Basically any permitted pension transfers will be subject to UK pension rules for 5 complete UK tax years i.e. to up to 6 years after transfer.
4. An Australian scheme can only transfer or roll over to another Australian QROPS scheme.
This means that one of the attractions of transfers to Australia i.e. being able to take the whole pension as cash is removed. However the requirement to have emigrated no longer applies and so I guess the requirement to be ‘gainfully employed’ also (but I did not check this). Also it means that any smsf must get QROPS status in its own right rather than expecting to first transfer to a large commercial scheme and then roll over to the smsf which is what I was intending to do.
My understanding of the new rules after talking to a very helpful person from HMRC is as follows:-
1. Transfers without a tax charge will only be permitted to a QROPS (qualifying recognised overseas pension scheme)
2. The receiving super scheme administrators must undertake to ring-fence the transferred pension and apply the UK pension rules to gain QROPS status.
3. Basically any permitted pension transfers will be subject to UK pension rules for 5 complete UK tax years i.e. to up to 6 years after transfer.
4. An Australian scheme can only transfer or roll over to another Australian QROPS scheme.
This means that one of the attractions of transfers to Australia i.e. being able to take the whole pension as cash is removed. However the requirement to have emigrated no longer applies and so I guess the requirement to be ‘gainfully employed’ also (but I did not check this). Also it means that any smsf must get QROPS status in its own right rather than expecting to first transfer to a large commercial scheme and then roll over to the smsf which is what I was intending to do.
Apr 11th 2006, 1:18 pm
#3
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Posts: 373
Re: UK Pension transfers and new rules
.
3. Basically any permitted pension transfers will be subject to UK pension rules for 5 complete UK tax years i.e. to up to 6 years after transfer.
This means that one of the attractions of transfers to Australia i.e. being able to take the whole pension as cash is removed. However the requirement to have emigrated no longer applies and so I guess the requirement to be ‘gainfully employed’ also (but I did not check this). Also it means that any smsf must get QROPS status in its own right rather than expecting to first transfer to a large commercial scheme and then roll over to the smsf which is what I was intending to do.[/QUOTE]
Does that mean after the 6 years you can take it in cash?Thats how I am reading it or is it just wishfull thinking?
3. Basically any permitted pension transfers will be subject to UK pension rules for 5 complete UK tax years i.e. to up to 6 years after transfer.
This means that one of the attractions of transfers to Australia i.e. being able to take the whole pension as cash is removed. However the requirement to have emigrated no longer applies and so I guess the requirement to be ‘gainfully employed’ also (but I did not check this). Also it means that any smsf must get QROPS status in its own right rather than expecting to first transfer to a large commercial scheme and then roll over to the smsf which is what I was intending to do.[/QUOTE]
Does that mean after the 6 years you can take it in cash?Thats how I am reading it or is it just wishfull thinking?
Apr 11th 2006, 9:53 pm
#4
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Re: UK Pension transfers and new rules
I thought the requirement to be ‘gainfully employed’ went out a few years back. Maybe Alan Collet can help you on this? 
Apr 11th 2006, 10:38 pm
#5
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Re: UK Pension transfers and new rules
Originally Posted by supersonic4
.
Does that mean after the 6 years you can take it in cash?Thats how I am reading it or is it just wishfull thinking?
Does that mean after the 6 years you can take it in cash?Thats how I am reading it or is it just wishfull thinking?
Last edited by MartinLuther; Apr 11th 2006 at 10:40 pm.
Apr 11th 2006, 10:46 pm
#6
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Re: UK Pension transfers and new rules
Originally Posted by jumbo
I personally transferred two UK pensions to my smsf (diy super fund) within the permitted 6-month window. Interestingly (which might be a first) the funds and cash are still in my UK accounts but within the smsf - so there was no need to cash in before transfer. However I left one pension with Standard Life to wait for transfer until after their intended demutualisation. So far I have not yet found an Australian scheme willing to undertake the new UK requirements - even Macquarie had not made a decision as of yesterday.
My understanding of the new rules after talking to a very helpful person from HMRC is as follows:-
1. Transfers without a tax charge will only be permitted to a QROPS (qualifying recognised overseas pension scheme)
2. The receiving super scheme administrators must undertake to ring-fence the transferred pension and apply the UK pension rules to gain QROPS status.
3. Basically any permitted pension transfers will be subject to UK pension rules for 5 complete UK tax years i.e. to up to 6 years after transfer.
4. An Australian scheme can only transfer or roll over to another Australian QROPS scheme.
This means that one of the attractions of transfers to Australia i.e. being able to take the whole pension as cash is removed. However the requirement to have emigrated no longer applies and so I guess the requirement to be ‘gainfully employed’ also (but I did not check this). Also it means that any smsf must get QROPS status in its own right rather than expecting to first transfer to a large commercial scheme and then roll over to the smsf which is what I was intending to do.
My understanding of the new rules after talking to a very helpful person from HMRC is as follows:-
1. Transfers without a tax charge will only be permitted to a QROPS (qualifying recognised overseas pension scheme)
2. The receiving super scheme administrators must undertake to ring-fence the transferred pension and apply the UK pension rules to gain QROPS status.
3. Basically any permitted pension transfers will be subject to UK pension rules for 5 complete UK tax years i.e. to up to 6 years after transfer.
4. An Australian scheme can only transfer or roll over to another Australian QROPS scheme.
This means that one of the attractions of transfers to Australia i.e. being able to take the whole pension as cash is removed. However the requirement to have emigrated no longer applies and so I guess the requirement to be ‘gainfully employed’ also (but I did not check this). Also it means that any smsf must get QROPS status in its own right rather than expecting to first transfer to a large commercial scheme and then roll over to the smsf which is what I was intending to do.
Apr 11th 2006, 10:47 pm
#7
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Re: UK Pension transfers and new rules
Originally Posted by NedKelly
I thought the requirement to be ‘gainfully employed’ went out a few years back. Maybe Alan Collet can help you on this?
Apr 11th 2006, 11:53 pm
#8
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Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
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Re: UK Pension transfers and new rules
I came away from my conversation with the chap at the Revenue a few weeks ago with the understanding that the requirement to report was for 5 complete tax years ...
Best regards.
Does that mean after the 6 years you can take it in cash?Thats how I am reading it or is it just wishfull thinking?[/QUOTE]
Best regards.
Originally Posted by supersonic4
.
3. Basically any permitted pension transfers will be subject to UK pension rules for 5 complete UK tax years i.e. to up to 6 years after transfer.
This means that one of the attractions of transfers to Australia i.e. being able to take the whole pension as cash is removed. However the requirement to have emigrated no longer applies and so I guess the requirement to be ‘gainfully employed’ also (but I did not check this). Also it means that any smsf must get QROPS status in its own right rather than expecting to first transfer to a large commercial scheme and then roll over to the smsf which is what I was intending to do.
3. Basically any permitted pension transfers will be subject to UK pension rules for 5 complete UK tax years i.e. to up to 6 years after transfer.
This means that one of the attractions of transfers to Australia i.e. being able to take the whole pension as cash is removed. However the requirement to have emigrated no longer applies and so I guess the requirement to be ‘gainfully employed’ also (but I did not check this). Also it means that any smsf must get QROPS status in its own right rather than expecting to first transfer to a large commercial scheme and then roll over to the smsf which is what I was intending to do.
Apr 12th 2006, 12:17 am
#9
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Re: UK Pension transfers and new rules
The form needed to apply for QROPS status is now available:
http://www.hmrc.gov.uk/pensionschemes/apss251.pdf
Guidance notes are here:
http://www.hmrc.gov.uk/pensionschemes/apss251-notes.pdf
Best regards.
http://www.hmrc.gov.uk/pensionschemes/apss251.pdf
Guidance notes are here:
http://www.hmrc.gov.uk/pensionschemes/apss251-notes.pdf
Best regards.
Originally Posted by MartinLuther
I'd imagine the hassle of getting and retaining QROPS status would be too much of a burden for most people's smsf. The most probable path would be to put it in a commecial fund for 5/6 years before transferring it. (Assuming any commercial funds get QROPS.)
Apr 12th 2006, 12:22 am
#10
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Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
Posts: 6,459
Re: UK Pension transfers and new rules
The reporting requirements of QROPS are discussed here:
http://www.hmrc.gov.uk/manuals/rpsmm...SM14101070.htm
UK Revenue form APSS 253 does not yet seem to be available.
Best regards.
http://www.hmrc.gov.uk/manuals/rpsmm...SM14101070.htm
UK Revenue form APSS 253 does not yet seem to be available.
Best regards.
Apr 12th 2006, 3:17 am
#11
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Re: UK Pension transfers and new rules
Originally Posted by Alan Collett
The form needed to apply for QROPS status is now available:
http://www.hmrc.gov.uk/pensionschemes/apss251.pdf
Guidance notes are here:
http://www.hmrc.gov.uk/pensionschemes/apss251-notes.pdf
Best regards.
http://www.hmrc.gov.uk/pensionschemes/apss251.pdf
Guidance notes are here:
http://www.hmrc.gov.uk/pensionschemes/apss251-notes.pdf
Best regards.
PS: Not that I really need to know - I'm just curious.
Last edited by MartinLuther; Apr 12th 2006 at 3:20 am.
Apr 12th 2006, 3:29 am
#12
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Re: UK Pension transfers and new rules
Not sure yet?! Have sent an email to the chap I spoke to before at the Revenue in Nottingham seeking clarification on one specific issue, but otherwise ... it looks to be a fairly straightforward application.
It may be that if the banks and other superannuation providers don't want to participate (eg because of the reporting obligations) that each migrant sets up their own self managed super fund into which they transfer their UK pension fund. Self managed super funds involve set up costs and annual compliance costs, so their cost effectiveness is usually a function of how much is in the fund - I'll make enquiry as to typical costs and the point below which self managed superannuation funds are generally considered uneconomic.
Alternatively why don't we set up our own British Expats Superannuation Fund with QROPS status?!
Best regards.
It may be that if the banks and other superannuation providers don't want to participate (eg because of the reporting obligations) that each migrant sets up their own self managed super fund into which they transfer their UK pension fund. Self managed super funds involve set up costs and annual compliance costs, so their cost effectiveness is usually a function of how much is in the fund - I'll make enquiry as to typical costs and the point below which self managed superannuation funds are generally considered uneconomic.
Alternatively why don't we set up our own British Expats Superannuation Fund with QROPS status?!
Best regards.
Originally Posted by MartinLuther
Are you saying it's easy then?
PS: Not that I really need to know - I'm just curious.
PS: Not that I really need to know - I'm just curious.
Apr 12th 2006, 3:43 am
#13
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Re: UK Pension transfers and new rules
Originally Posted by Alan Collett
Not sure yet?! Have sent an email to the chap I spoke to before at the Revenue in Nottingham seeking clarification on one specific issue, but otherwise ... it looks to be a fairly straightforward application.
It may be that if the banks and other superannuation providers don't want to participate (eg because of the reporting obligations) that each migrant sets up their own self managed super fund into which they transfer their UK pension fund. Self managed super funds involve set up costs and annual compliance costs, so their cost effectiveness is usually a function of how much is in the fund - I'll make enquiry as to typical costs and the point below which self managed superannuation funds are generally considered uneconomic.
Alternatively why don't we set up our own British Expats Superannuation Fund with QROPS status?!
Best regards.
It may be that if the banks and other superannuation providers don't want to participate (eg because of the reporting obligations) that each migrant sets up their own self managed super fund into which they transfer their UK pension fund. Self managed super funds involve set up costs and annual compliance costs, so their cost effectiveness is usually a function of how much is in the fund - I'll make enquiry as to typical costs and the point below which self managed superannuation funds are generally considered uneconomic.
Alternatively why don't we set up our own British Expats Superannuation Fund with QROPS status?!
Best regards.
As I said before I was just curious - I already have all my pension here in an smsf. It looks like it depends on how onerous the reporting requirements are as to whether it is worth it. I guess another option would be to run the fund as QROPS for 5/6 years and then drop the status (if allowed) or transfer it to another (new) smsf when the trust deed comes up for renewal.
The financial press seem to suggest that you need at least $200k-$250k to make an smsf viable. I reckon the higher figure is nearer the mark.
Apr 12th 2006, 10:37 am
#14
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Re: UK Pension transfers and new rules
The FAQs are also interesting...
http://www.hmrc.gov.uk/pensionschemes/faqs.htm
http://www.hmrc.gov.uk/pensionschemes/faqs.htm
Apr 12th 2006, 10:58 am
#15
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Re: UK Pension transfers and new rules
Originally Posted by lesleys
The FAQs are also interesting...
http://www.hmrc.gov.uk/pensionschemes/faqs.htm
http://www.hmrc.gov.uk/pensionschemes/faqs.htm
Australian Self Managed Funds (similar to SSAS and SIPP)
Q. Is it correct that a SMF cannot be granted QROPS status as it is not open to the public and so doesn’t meet Primary Condition 1 of The Pension Schemes (Categories of Country and Requirements for Overseas Pension Schemes and Recognised Overseas Pension Schemes) Regulations 2006 (SI 2006/206)?
A. No, that would not prevent a SMF being a QROPS. Primary condition 1 will be met by a SMF provided it is open to residents of Australia i.e. it is not exclusively for non-residents.
