From A-Day (6th April 2006) the UK Her Majesty’s Revenue and Customs (HMRC) has permitted unsecured pension funds to be transferred to another pension scheme after income drawdown has commenced. For migrants looking at a pension transfer to Australia, where income drawdown has commenced on their UK schemes, the option to transfer is still available.
The main restriction, for those looking at an unsecured pension transfer to Australia, is that the receiving scheme has to be an Australian QROPS (Qualifying Recognized Overseas Pension Scheme). There are, however, many superannuation schemes that are approved as QROPS by HMRC so, with the appropriate advice, this should not be a problem.
A second restriction would be on the benefits that can be taken during the QROPS reporting period. Should an unsecured pension transfer to Australia be completed, any benefits paid from the Australian QROPS would have to be in line with the UK GAD (Government Actuary Department Rates). Any payments to the member, in access of UK maximums during this period, would be subject to an unauthorized payment charge.
After the QROPS reporting period, which is 5 complete UK years tax years of a member’s overseas residency, payments made from the scheme can revert to the local Australian rules. UK pension members should, therefore, be aware of all benefits and restrictions before they affect a pension transfer to Australia – especially if they are already drawing an income or tax free cash from their UK pension fund.
Posts Tagged ‘Australia Pension Transfer’
An Unsecured (Drawdown) Pension Transfer to Australia
Monday, October 19th, 2009Australian Rule Changes and UK Pension Transfers to Australia
Monday, August 31st, 2009For UK migrants looking to live and retire in Australia, looking at UK pension transfers to Australia has changed since 1st July 2007 when new restrictions, imposed by the Australian Tax Office (ATO) came into effect.
What were these changes and what effect did they have on UK pension transfers to Australia?
By way of background, in May 2006, the Australian Budget included an announcement to the end of the Reasonable Benefit Limits (RBL), which was basically a limit on how much an individual could take completely tax free from their Australian superannuation scheme. As a result the Australian government introduced a cap on how much an individual could contribute as a contribution, made from the individual taxpayer’s income after tax. These contributions are known as non-concesssional contributions.
The limit was, from 1st July 2007, $150K per annum (or $450K every 3 years).
Included in these contribution limits were transfers in from overseas pensions. This had an immediate effect on UK pension transfers to Australia where the UK pension member had in access of the Australian limit within their pension.
Global QROPS Ltd offer advice on the options for an individual who has in excess of the limit. Can an individual partially transfer from their existing UK scheme? Are there alternatives to using an Australian QROPS? These are amongst the important considerations for someone to address before leaving the UK.
QROPS Rules Affecting UK Pension Transfers to Australia
Monday, August 17th, 2009UK overseas pension transfer specialists, Global QROPS Ltd, are a UK based firm of financial advisers that specialise in advising migrants to Australia, with UK pension schemes, the options available for their funds.
UK pension transfers to Australia have been a big topic, even before the introduction of Qualifying Recognised Overseas Pension Schemes (QROPS) in April 2006, however the UK’s Her Majesty’s Revenue and Customs (HMRC) introduction of the QROPS legislation has meant that advice is crucial.
From April 2006, if an individual wished to transfer their UK pension to an overseas pension scheme, the scheme would have to be registered and approved as a QROPS with the UK HMRC. In doing this, the overseas pension scheme that received the UK pension transfer, would have to agree with the UK reporting requirements. The QROPS requirements were, essentially, for the first 5 UK tax years of the former UK pension member’s overseas residency, the overseas pension scheme would be restricted to paying pension benefits broadly in line with that of a UK scheme ie restricted to 25% tax free cash lump sum and the rest of the fund to provide income. The QROPS administrators would have to report as and when these benefits were paid.
As the Australian pension system allows for their members to take a lump sum benefits at retirement, pension transfers to Australia were appealing for UK retirees, prior to the QROPS rules, as they could get a 100% lump sum out straight away. Since the QROPS reporting requirement were introduced however, retirees migrating to Australia now need to take specialist advice about when they take the 25% tax free lump sum and what to do with the balance of their fund.