How to transfer your UK pension to Australia (Updated 2017)

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After tight regulations in 2015, UK pensioners aged 55 years and above can now transfer their pensions to Australia once again. These new schemes are referred to as 55 plus due to their age qualification. In 2015, Her Majesty’s Revenue and Customs (HMRC) declared all Qualifying Registered Overseas Pension Schemes (QROPS) in Australia non compliant with the UK’s new Recognized Overseas Pension Scheme (ROPS). However, there are now more than 200 Australian compliant QROPS on HMRC website after sufficient restructuring.

Qualifications to transfer UK pensions to an Australian QROPS Self-managed Superannuation Fund (SMSF) 55 plus

  • Individuals should be 55 years of age and above but not beyond 65 years unless employed in Australia
  • Only certain schemes that are not ‘in payment’ can be transferred. They are: private pension schemes, Self-Invested Personal Pensions (SIPPs), and final salary.
  • Annuities purchased in the UK as well as UK state pensions cannot be transferred
  • Only funded public sector pension funds can be moved
  • Australia should be your retirement final destination to be allowed to transfer your pension

QROPS 2016/2017 Australia rules

  • There is a maximum amount you can contribute in your lifetime which is $1.6 million Australian dollars
  • Several options exist if you are less than 55 years and as a result not qualified. I.e.
  1. Keep your pension in the UK
  2. Transfer your pension to QROPS in countries with a double taxation treaty with Australia like Isle of Man, Malta, or New Zealand
  • A yearly Non-Concessional Contribution (NCC) cap of $100,000 for individuals less than 75 years but not below 65 years and a three year bring forward NCC ($300,000) for individuals less than 65 years.
  • If you make transfers before 30 June 2017, you can move $540,000 straight into an Australian QRPS 55 plus scheme.
  • Individuals between 65 and 74 years working in Australia will still be expected to take work tests that require 40 working hours per month for the green light

Conclusion

Out of the numerous retirement destinations for British expats, Australia comes up as the most favored. Nonetheless, there are many factors you need to consider before you begin transferring your pension to an Australian QROPS. Consult financial advisors for the best guidance as well as advice on sensitive matters like taxation. Some factors to look into before moving: health, flexible drawdown, currency, tax, visa, investments, protection & guarantee foregone, inheritance & estate planning, as well as any death benefits.

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