Things you should know about UK Pension Transfers.

As the awareness and instances of UK Pension transfers grow, so to does that group of people who suffer from poor or inexperienced advice.

As the most experienced company dealing in the transfer of UK Pension funds to Australia, we are seeing more and more people who have placed themselves in difficult circumstances. These problems arise simply because they or their advisers don’t know enough about the relevant legislation in both countries and the downstream taxation implications.

Put simply, UK Pension transfers can be a financial windfall to the great majority of UK migrants BUT there is a right way (and about a dozen wrong ways) to go about it. Everyone’s circumstances are different and each transfer needs to be handled as a specific case. Generalisations and assumptions drawing on superficial information can never provide the level of certainty you need and the security of knowing you’re making the right decision.

Following is a checklist of do’s and dont's and tax considerations regarding the transfer of UK pension funds to Australia.

The exchange rate applied to your transfer is not negotiable and is set by your receiving scheme's banker in line with the prevailing market rate at the time of transfer.

UK pension rules allow you to retire from age 50, rising to 55 after April 2010. Preservation ages are different in Australia and if you transfer you may not be able to access your funds before age 60.

Transferring your UK pension fund is likely to give rise to a tax liability if made after you have been resident in Australia for longer than 6 months.

Most UK company and personal pension plans can be transferred to Australia. The UK State Pension cannot be transferred. The monthly pension must be drawn from the UK. That Her Majesty’s Revenue and Customs (HMRC) new Pension Simplification Rules require that any lump sum pension benefit transferred to Australia must be transferred to an Australian superannuation fund that has been approved by HMRC as a Qualified Recognised Overseas Pension Scheme (QROPS). Failure to do so will result in HMRC imposing severe tax penalties – up to 55% tax levied on the benefit transferred. The reporting obligations of the QROPS in Australia to HMRC. When you are considered by HMRC to be ‘tax resident’ in the UK and how your ‘tax resident’ status may affect pension benefits transferred to Australia. That in electing to transfer your pension the UK pension fund will capitalises your annual pension and it is this capitalised value or lump sum that is transferred to an Australian QROPS. The tax issues under Australia’s Foreign Investment Fund (FIF) that may affect you. That a portion of any lump sum transferred may be subject to tax in Australia. In terms of Subdivision 305-B of the Australian Income Tax Assessment Act, tax may be payable on the ‘growth’ portion of the lump sum transferred. Any tax payable is levied at a concessional rate and is paid by the receiving QROPS out of the lump sum transferred. The tax implications of leaving your pension fund in the UK and drawing a pension in Australia. The tax concessions applicable to lump sum payments and pensions or income streams paid from a superannuation fund in Australia.

IMPORTANT: This information has been prepared without taking into account your objectives, financial situation or needs. Before acting seek professional advice. Things you should know. © Pension Transfers Direct (PTD). PTD is a Corporate Authorised Representative of Genesys Wealth Advisers AFSL No. 232686.