Australians and Expat Australia Residents Do Have Options
Australians or expat Australia residents who have previously lived and worked in the United Kingdom need to know that there are still options available to transfer their UK pensions despite various rule changes.
Depending on their age, they could face a long wait if they want to transfer their UK retirement funds into a domestic Australian superannuation account. Under changes to the British system, Aussies must now be aged at least 55 to transfer their pension money to an Australian scheme. The same also applies to other nationalities moving their pensions over to Australia.
Previously people could move funds across at any age.
But even when they hit 55, many may not be able to transfer the cash to an Australian scheme because Britain has banned Australia’s largest super funds from accepting transfers.
Regulations were tightened in 2015
HMRC tightened regulations in April 2015 that meant over 1600 schemes that can receive British transfers were removed overnight from the list that indicates compliance with Recognised Overseas Pension Scheme (ROPS) status.
Qualifying funds (QROPS) are few and far between – but there are still suitable options available to Brits and Australians in this situation. Or for any Australian residents who have previously worked in the UK with UK private or company pensions.
The HMRC list of Australian funds with QROPS status is now largely composed, domestically, of specialist self-managed accounts (SMSF) that restrict membership to the age of 55 and over. Once transferred, payment of pension benefits cannot start under the Australian system until you reach preservation age which is currently 58 and being increased to 60. If the pension remains in the UK, when people reach 55, it is possible to have the pension paid to a British or Australian bank account, though it may have tax implications.
The number of Australians working in the UK continues to increase
Figures from the British Office of National Statistics show the number of Aussies working in the UK hit a decade high this year at 103,000 employed between January and March.
The move to tougher regulations by the UK was prompted by authorities’ concerns about more lax regulation around early access offered via other jurisdictions.
A pension age test was introduced as part of the reforms, effectively preserving QROPS money until the age of 55, with a few exceptions.
Are You An Australian or Australian resident with an existing UK Pension?
There are still options for you. Forth Capital are vastly experienced in advising all former residents of the United Kingdom, and specifically holders of UK Pensions, on their best options for relocating pension funds outside the UK. We continue to advise large numbers of international expatriates resident in Australia, and Australians returning (or planning to return) home with UK-based pensions/assets.
The superannuation system in Australia and the Pension system in the UK are very different in the way they operate and provide benefits.Forth Capital has licensed and qualified Australian financial planners based in Sydney with decades of UK experience as well as UK qualified advisors in the company so we are uniquely positioned to help you understand the benefits and potential pitfalls of both systems.
Contact us today to speak to a pension transfer specialist.