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Gerard Associates Ltd
Gerard Associates Ltd
Global Wealth Managers and Independent Financial Advisers
QropsOverseas Pension TransfersQrops ChargesUK PensionsQrops FAQ
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Australian and QROPS

The majority of the pension funds in the UK are capable of being transferred to Australia, including local government, NHS pensions and private pensions. Whether it is the right decision needs documented advice in most instances.

UK State Pensions cannot be transferred abroad but you will retain the entitlement. The exact amount can be seen by completing a form BR19. A forecast will then be sent to you.

Transferring to a superannuation fund in Australia which is a Qualifying Recognised Overseas Pension Scheme (QROPS) is a process that involves
  • Checking your current scheme arrangements and being aware of the features and benefits being potentially given up.
  • Completing applications for the Australian Superannuation and discharge forms for the UK Pension.
The pension funds transferred are sent by BACS, from your current pension fund into your Australian superannuation fund. They should not be paid into any other account and they are consequently secure

There is an extensive list of Australian QROPS which can be seen on the HMRC's website. Many of these are employer specific. There is a very competitive arrangement called Australia Super www.australiansuper.com. If a more self managed approach is required then self invested schemes are also available but as in the UK the costs increase.

The UK system works on the principal of tax relief and largely tax free growth at input with the ultimate retirement benefits (aged 50 to 55+) being taxed.

The Australian system for QROPS transfers is one of taxation of fund growth but tax free benefits at retirement post age 60.

An individual can elect to have the tax liability paid by the Australian Superannuation fund rather than themselves. The tax is 15% in this case, and the balance is regarded as un-deducted contributions. Without an election to pay at the concessionary rate of 15%, tax is at the individual's marginal tax rate which is usually only advisable for low earners.

With effect from 1 July 2007 the limits on amounts transferred and contributed per person are A$150,000pa or A$450,000 as a lump sum payment with no further personal contributions for 3 years. The rules are A$150,000pa averaged over 3 years. If the transfer value exceeds these limits the fund will tax the excess at 46.5%. Excesses therefore should be transferred in subsequent years or other QROPS in other jurisdictions considered.
  • The value that represents the growth component of the fund since your date of Australian residency to the actual date of transfer will not form part of these contributions limits.
  • If you transfer your funds to Australia after 6 months of tax residency, you are taxable on the growth since that date. You can elect for the superannuation fund to pay the tax on the growth at 15% or you can be taxed personally at your marginal rate of tax, whichever is suitable.
Overall this "tax free" period is of relatively little value and perhaps is overplayed to expedite clients' decision to transfer. Many Pension schemes take longer than 6 months to wind up and transfer.

You will pay the ongoing tax on growth of the fund at 15% or tax at your marginal rate.

Great care must be taken with a transfer to an Australian QROPS. At the surface everything is positive. For a relatively minor tax on the growth of fund you can receive the benefits as a lump sum tax free. Even large Pension funds, whilst taking several years may be transferred.

In the event of death, your Australian Superannuation fund would be paid to your dependants either as a lump sum or pension. The fund maintains its original value and 100% can be paid to your nominated dependant(s).

On disablement your Australian Superannuation can either be paid to you as a pension or lump sum and is tax free.

There are no death duties in Australia. However certain payments to Non Death Benefit Dependants would be subject to tax at 15% or 30%.

One caveat: if there is any possibility of returning to the UK or moving to another jurisdiction then bear in mind
  • It may be possible to transfer your Australian QROPS Pension to the UK depending on your current visa and on the conditions of the QROPS. However there would be a tax charge of 30%.
  • By taking the lump sum from Australian Superannuation and then returning to the UK or other jurisdiction, depending on your net assets, the lump sum will become liable to UK inheritance tax or death taxes in the jurisdiction of tax residency.
  • Alternatively you can leave your Superannuation in Australia and receive income. Currency fluctuations are likely to change the amount received.
As part of becoming resident for tax purposes in Australia, it is vital to consider your long term residency.

If there is any doubt that moving to Australia is not for life, (that is the policyholder and spouse) then take advice in the UK about QROPS.

There are many QROPS available in jurisdictions such as The Channel Islands and Isle of Man which will afford all the benefits of QROPS with none of the long term restrictions that other jurisdictions will impose.

These will allow the total flexibility of capital and income to your personal requirements but will maintain the funds under trust. In many jurisdictions and if you returned to the UK, inheritance tax can be avoided. 100% of your remaining funds on death can then pass to your intended beneficiaries and not the Inland Revenue.

Changes in legislation and the taxation on your worldwide assets are controlled by the laws and legislation of the country in which you are deemed resident for tax purposes. This may be more than one jurisdiction.

The assumptions about the tax position of the plans and recommendations made in this note are based on current law and HMRC practice which may be subject to alteration in the future.

In particular, what assets, gains or income are taxed and the levels of taxation on them are all subject to change. Tax reliefs may also change and their value to you will depend on your individual circumstances and jurisdiction(s).

This does not constitute advice. Any recommendations will be given in writing.




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