An important decision has been reached, by the European Court of Human Rights (ECHR) on 16th March 2010, as to the level of State Pensions paid to UK migrants living in Australia.

For migrants receiving their UK State Pension entitlement in Australia, there is no increase on the income paid to them. This stacks up unfavourably compared to someone, who has paid exactly the same UK National Insurance contributions, who has chosen to stay in the UK or migrated to another country, such as the USA or an European Economic Area (EEA) state.

Many appeals to the EHCR have been made, not just by UK state pensioners in Australia, but by those in Canada, New Zealand and South Africa too, citing that this is discriminatory.

Unfortunately for those appealing, the EHCR ruled (on 16th March 2010) that the UK Government were not discriminating as migrants had themselves chosen to live outside of the UK in countries or states without a reciprocal state pension agreement with the UK. Judges decided that the link with National insurance contributions paid was not an exclusive link to the level of UK state pension paid and that the ECHR had no jurisdiction to dictate on how the UK’s public funds were distributed.

Advisers at Global QROPS Ltd are more than happy to speak to clients regarding UK State Pensions as well as discussing issues regarding a private pension transfer to Australia.

Pension Transfer to Australia – What will happen with my State Pension? is a post from: Global Qrops

However, as with many other issues with migration to Australia, just because a friend or work colleague in Australia has transferred their final salary scheme to Australia does not mean that you should follow suit. Not all benefits from final salary schemes are calculated the same way for each employer – indeed, even within the scheme the factors determining your retirement benefits can change depending on when membership of the scheme commenced.

The first main factor determining your benefits is the question of what defines a final salary? Final salary or final remuneration can be defined in several different ways. This can be an individual’s last year’s earnings in the year of their retirement or date of leaving employment or the best salary in the last 5 years of employment but more commonly it is an  average of the final 3 years salary when leaving employment.

The next factor is years of service. Again, each scheme can vary in this definition. This can be based on years of service in the scheme. It could also be based on the years of service with the employer (if the member joined the pension scheme at a later date of joining employment). A member would also need to be aware how their scheme defines a ‘year’ of service – are part years counted? Are whole years only counted?

The final main factor is the accrual rate. This is the ‘fraction’ applied to each year of service, for example 1/60ths or 1/80ths, to determine the final pension. Each final salary scheme can apply a different fraction.

Putting this altogether, if an individual retires with a final salary of £90,000 and has worked for 40 years, a scheme with an accrual rate of 1/60th would provide a pension of £60,000 pa (£90,000 x 40/60ths).

The above example is a basic calculation to illustrate – and would not be the calculation used for all final salary schemes – and assessing whether a pension transfer to Australia should occur in these circumstances would largely depend on what the scheme offers as a transfer value.

Global QROPS Ltd advisers have both the experience, and importantly, the permissions from the UK financial services authority (FSA) to provide advice on pension transfers from UK final salary schemes.

A UK Final Salary Pension Transfer to Australia – What are the factors? is a post from: Global Qrops

For those UK migrants living in Australia many of them would have UK pension benefits held in the UK. Should a UK expat pension member in Australia transfer their UK pensions to Australia?

Whether a UK pension transfer to Australia is a good idea or not is a big issue, not just for a UK expat pension member but also for a returning Australian that has returned to Australia after a period of work in the UK.

The benefits from a UK pension scheme can vary. This is because historically the UK has a variety of pensions that provide different benefits. For example, a final salary (defined benefit) scheme is not a common type of scheme throughout the world. The benefits from this type of scheme depend on the years of service an individual has from their employer, their final remuneration and the scheme accrual rate. This is unlike an Australian scheme where benefits depend on the fund size at retirement – where there are no guarantees.

If you are a UK expat pension member of a final salary scheme how can you compare two totally different types of benefits, in two different countries, in order to decide whether a pension transfer to Australia would be advantageous or not?

The advisers at UK based IFAs Global QROPS Ltd have many years of experience advising on pension transfers to Australia from the UK and can make firm recommendations to UK expat pension members in Australia deliberating on what to do with their UK pensions.

UK Expat Pension Members in Australia is a post from: Global Qrops

Due to the increasing cost of retirement in the UK and the taxable nature of UK expat pension member’s retirement income in the UK, an increasing number of expats that are working abroad are choosing to remain abroad in retirement. For UK expat pension members (ie members of UK pension schemes that are living abroad), overseas pension transfer advice is required to assess whether their funds should remain in the UK or transfer to a QROPS (Qualifying Recognised Overseas Pension Scheme).

The surveys have shown that 60% of expats abroad retire in Europe (with France and Spain being the most popular destinations), with the purpose of being close to their family. For other expats, the USA, Canada, Australia and New Zealand are the popular destinations – largely because they are English speaking countries. Wherever an individual retires overseas, though, they have to weigh up the better climate and quality of living against issues such as the standard of health care, emergency services and the tax system of their new country.

When funding for retirement, recent statistics have shown that expats look at their savings as the highest source of retirement funding with 27% coming from this source. The other major sources of retirement funding include the UK State Pension (23%), private pensions (20%) and rental income from property (6%).

What is surprising is that private expat pension funds makes up only 20% of retirement benefits. There may be QROPS options available that could increase pension provision for a UK expat pension member.

UK Expat Pension Members in Retirement is a post from: Global Qrops

Since 6th April 2006, regardless of where you are living overseas, under the UK Her Majesty’s Revenue and Customs (HMRC) Qualifying Recognised Overseas Pensions Scheme (QROPS) rules, it is now possible for:

 Pension benefits to be accessed before the UK pension scheme’s stated retirement age;
 Payments to the pension member to be paid free from tax;
 Pension benefits to be paid with no requirement to purchase an annuity;
 Have the scheme investments grow free of UK tax.

Her Majesty’s Revenue and Customs (HMR&C) will allow UK pensions to be transferred overseas, providing the receiving scheme is a QROPS.

What is a QROPS?

In short, a QROPS is essentially an overseas pension scheme that is required to follow UK pension rules for a period of the pension member’s overseas residency. It is important to know the finer details of the rules, however, as any unauthorized payments to members could result in tax charges.

Using their knowledge and experience of QROPS, Global QROPS can ensure that the UK rules are followed and the maximum benefits can be utilised.

QROPS Opportunities is a post from: Global Qrops