Chris Mitchell

does anyone know what the options are for company and private pensions. our thoughts were not to do anything until we decided to stay permantly (or as much as anyone is able to). Anyone had any experience.

really just want to know what our options might be,
Chris

kirsty&al

If you don't know whether you are going to stay permanently then it's probably best not to transfer the pensions. Under current rules you can transfer them to Oz but you can't transfer them back.

Obviously each person's situation is different, but generally I don't think you can transfer Final Salary schemes (or it is not advisable). Personal pensions and group pensions (personal pensions arranged by your employer) come under FIF regulations which means that if they are worth more than $50k (including those of your associates (wife, kids, dependents, ...)) then you can be taxed on any increase in the fund’s value, from year to year, even though you don't actually get any money now (note that this tax comes out of your income). Money Purchase schemes do not come under FIF regulations (so you wont get taxed on any increases) – however as you are bearing the risk on these not performing, rather than your employer in the case of a Final Salary scheme, you may want to transfer it.

If you do decide to bring some or all of your pension money across then there are no tax implications if you do this within 6 months of becoming an Oz tax resident. If you do it later then you will be taxed 15% on any increase since you arrived (so if your fund was 10,000 when you arrived and it is 11,000 when you transfer then you will get taxed 150). This tax is now taken out of the fund rather than your income. It’s not as bad as it sounds as the money goes into your Oz pension as an undeducted contribution which means that it comes out tax free, which is not bad considering it went in tax free.

Remember at the end of the day only you can decide what is best in your circumstances.

Regards
Alistair

OzTennis

Great post Alistair, very informative.

OzTennis

kirsty&al

Thanks.
Al

Perthforme

Ive got a crappy little pension i stopped paying in to when the stock market went pop a while back as my money halfed in value it is only worth 5K can i get this money back ( ie in my hand)with i flee the uk or just transfer it ????

kirsty&al

Hello,

You can't get any of it until you reach pension age (currently 55 in the UK but about to be raised to 60), even then you can only get part of it. You can transfer it when you have done at least 1 day of work in Oz (UK rule - Oz doesn't care). With £5k it is probably best to do it yourself as advisors will probably take a large chunck. Before you leave, it is worth getting in touch with your pension company and find out what you need to do and what forms you require.

Regards
Alistair

Perthforme

Thanks Will try and get it transfered to my superfund got a whole A$500 in that could prob give work the ole heave ho now

kirsty&al

Hello,

One other thing to check is how much will get transferred. Some older pensions in the UK have exit charges that plunder your savings when you take it out. If this is the case then it may not be worth transferring.

$500 is a start: won't be long till you get to chuck the job

Cheers
Al.

Perthforme

Will check that out cheers may have to put the bread Knife out to work

Chris Mitchell

Thanks Alistair,

its given us some answers didnt really want to do anything with it until sure staying in Oz. Presumably its advisable to let them know left country.
hubby has a pension that kicks in in 5 years when he is 50, are there any tax implications if we leave it here being paid into uk account while we are in Oz

Thanks for your help, obviously we will need to take personal advice but really appreciate your answers, gives something to think about.

Chris

storerg

What is the issue with final salary schemes?

kirsty&al

Hello Chris,

If you are close to a pension paying out then I think the general advice is to leave it in the UK (you wont recover the losses of the transfer). While you are in Oz you will need to get yourself 0 rated for tax purposes (not sure if this is the correct term) with the IR in the UK. For some reason tax deducted on pension payments in UK cannot offset the tax in Oz. When you become 0 rated you don't pay any tax in the UK but you pay tax in Oz.

Another thing, if there is a possibilty of going back then you may want to keep your NI payments up with voluntary contributions while you are in Oz. This means that your state pension wont be affected if you decide to return.

Regards
Alistair

kirsty&al

Hello,

Unfortunately of all the pension types, I've not got any personal experience with the Final Salary scheme (I had 1 private, 1 group and 1 Money Purchase - complicated thing pensions ).

However, I spoke to someone who has been here for about 6 years and he said that he was not allowed to transfer his (Rolls Royce) Final Salary scheme. Also, I think it is generally accepted that Final Salary schemes are more desirable as the employer is taking the risk of ensuring the scheme pays out the expected benefits at the end, whilst with all of the other you bear the risk. Obviously there is a risk with a Final Salary scheme if the employer goes bust (as with ASW - http://newswww.bbc.net.uk/2/hi/uk_ne...es/4289259.stm).

Regards
Alistair

Bix

Thanks for all the info Alistair - much appreciated.

I am on a 457 temp visa so will not transfer my pension until I know if I can get PR. If yes then I will need to assess if it is best to do so.

Mine is a final salary scheme and they can be transferred.

kirsty&al

Hello,

Thanks for that. I'll mention it to my mate.

Cheers
Alistair