How to transfer UK pension to an Australian super
Thinking about moving your UK pension to an Australian Super? Here are some information points you should be considering.
- Chance to spend retirement in Australia.
- Tax-free pension transfer.
- Tax-free paid-out benefits after 60.
- Flexibility in investments and drawdown.
In 3 simple steps!
- Choose a QROPS.
- Consult a pension transfer service provider to help with the technicalities.
- Transfer and enjoy retirement.
What is a QROPS?
- QROPS stands for Qualifying Recognised Overseas Pension Scheme.
- Overseas pension scheme are called Superannuation fund, or just Super, in Australia.
- A Super approved by Her Majesty Revenue and Customs, HRMC, gains QROPS status.
- A QROPS can be a Self-Managed Superannuation Fund (SMSF) or a public offer Superannuation fund.
What kinds of pension can one transfer?
- Private and company pension schemes can be transferred as a lump sum (the capital value of your pension accrued to the date of the transfer).
- Age or state pension schemes are not transferable.
Is it secure?
Funds are directly deposited from UK pension provider to secure Aussie super cash account – only when all documentations are cleared by both parties.
How long is the process?
Completion of transfer takes 4 to 8 weeks.
What condition applies to the exchange rates?
After transfer, one reserves the right to decide whether to convert pension to AUD immediately or wait for the change in exchange rates.
What are the investment options?
There are plenty of investment opportunities. Speak to a UK pension specialist for an expert investment advice.
What are the criteria for eligibility?
- Aged 55+ with exceptions made in case of ill-health.
- Transferees between ages of 65 and 74, require to satisfy a work test by working 40 hours per month on the fiscal year of the transfer, in Australia.
The work is usually simple like consulting, babysitting and bookkeeping.
- Pension balance valued less than $540K.
$1.6 million AUD is the lifetime limit, i.e. the maximum amount a transferee can contribute in a Super.
The most important: Taxes?
- Tax-free transfer if asked for transfer to a QROPS before 9th March 2017.
- Tax-free transfer when transferred to scheme provided by employer.
- Tax-free transfer if transferee is resident of Australia during the transfer (i.e. the country the QROPS is based on).If not, a tax of 25% only applies.
- Tax-free transfer if pension is transferred within 6 months of either becoming an Australian resident or terminating foreign employment. After 6 months, 15% tax will be payable on the taxable part of the transfer.
- Annual Non-Concessional Contributions (NCC) cap is $100,000.
NCC are tax-free contributions made into a Super from after-tax income.
In case NCC cap exceeds limit, extra tax has to be paid.