UK Pension Transfer to Australia
If you’re planning a move abroad and need to transfer your pension from the UK to Australia, or vice versa, there are additional rules to consider that you’ve probably never even thought of.
To give you a better idea of what a pension transfer between the UK and Australia entails, this article will cover:
- Can I transfer my UK pension to Australia?
- What kind of Australian scheme can I transfer to?
- What is a QROPS?
- Why transfer a pension to Australia?
- Can I transfer my UK state pension?
- Should I transfer my pension?
- What are the tax implications of a pension transfer?
- How to transfer my pension
- Can I transfer my Australian pension to the UK?
Can I transfer my pension?
Yes, in many cases you can transfer your UK pension to Australia, however, there are specific rules surrounding such a transfer. Since 2015 changes at HMRC led to stricter rules about which Australian pension scheme you are able to transfer your UK pot to.
They include regulations around:
- Your age
- The type of Australian pension the UK’s HMRC permits you to transfer to
- Financial limits
You must be 55 or over, but not yet drawing from your pension, to be able to transfer your UK pension to Australia, regardless of whether you’re living and working.
Can I transfer my pension to Australia if I’m under 55?
If you are under 55 you cannot usually transfer your UK pension to Australia. Under the exceptional circumstances where this might be possible, you’ll likely face high charges. In addition, if you don’t make the transfer within six months of moving to Australia, you could face additional taxes.
Transferring a private pension
It’s also important to know that while many UK pensions, both private, personal and work pensions can be transferred to the right Australian scheme, some UK pensions absolutely cannot be transferred.
The main ones that are exempt from any kind of transfer (apart from to a like-for-like defined benefit scheme) are:
That’s because they’re classed as unfunded public sector pension schemes and under rules introduced in 2015, should remain invested in the same scheme or, the same type of scheme, run by or through the public sector.
An experienced pension transfers expert can help you understand the process and answer any questions you have relating to transferring your UK pension to Australia. Get in touch with us and we’ll connect you with the right pension transfer advisor for your specific needs who can answer all your questions.
Can I transfer my Irish pension?
Where the pension is considered to be a suitable scheme for Irish pension holders and the holder is working in the country they wish to make the transfer to, then some types of Irish pensions can be transferred to Australia.
Irish public sector pensions, Irish private pensions and occupational pensions all operate under slightly different rules. That means the regulations relating to overseas transfers from those schemes to Australia all differ too.
What kind of scheme can I transfer my pension to?
If you decide to transfer your UK pension to Australia, then only certain types of Australian Superannuation Funds have been approved by HMRC as suitable for such a change.
Australian Superannuation Funds, or ‘Supers’ as they’re commonly referred to, are a pension fund that all Australian employers must contribute to for each of their employers. You’re able to access your Super retirement fund once you reach the age of 60 and have retired from work. Or, when you’re 65 and a pensioner, even if you’re still in employment.
Supers are available form a variety of providers and those working in Australia are typically able to choose who to have the superannuation fund with. The Australian and New Zealand Bank, or ANZ and AMP Bank are both popular choices.
However, not all Australian super funds are considered suitable for a UK pension transfer, according to HMRC rules. In order to transfer your UK pension to an Australian superannuation fund, it must be on the QROPS list.
What is a QROPS?
A Qualifying Recognised Overseas Pension Scheme (QROPS), from a UK perspective, is a pension that has been deemed suitable for a UK pension transfer as its rules are similar to those of the originating UK-based scheme.
Since 2015, the number of Australian super funds that are considered QROPS has fallen, due to the rule changes introduced by the UK Government and HMRC. However, there are still a number of schemes that do satisfy HMRC’s QROPS rules, giving you some options if you’re transferring your UK pension to Australia.
Why transfer a pension to Australia?
If you already live in Australia, you’ve probably discovered that its can be pretty simple to access some of your finances and other details, online, from existing UK accounts. The same will likely be true of any pension or pensions you have from your time working in the UK. However, there are a number of reasons you should transfer and they include:
- You’ll avoid any fees associated with accessing your UK pension overseas, including something called trail commission.
- The general management fees for the pension you transfer into could also be lower than those you pay in the UK.
- You’ll also have a better idea of how much money you’ll receive, without the fluctuating currency conversion values.
- It’s a good opportunity to consolidate your UK pensions if you have more than one from different employers you’ve worked for.
- In addition and particularly relevant right now, is that the rules on a transfer could change and make it more expensive in the future.
To find out more about the potential benefits of making such a transfer and further information, you could get in touch with us and we’ll connect you with an experienced overseas pension transfer specialist.
Can I transfer my UK state pension?
No, it’s hardly ever possible for a UK state pension, sometimes known as a Government pension, to be transferred to an Australian pension scheme.
There may be circumstances in which an Australian pension can be enhanced due to your contributions to your UK state pension. However, a physical transfer of one state pension to another form the UK to Australia is not something that, in most cases, can be done.
Should I transfer my pension to Australia?
Whether or not you should transfer your UK pension to an Australian scheme depends on different details specific to your situation. They include tax details, scheme benefits – both of your UK pension and the Australian super you’re considering.
One important detail to consider is if you’re definitely going to live out your retirement in Australia. If there’s a chance that you could return to the UK, then transferring your UK pension to an Australian scheme might not be the right decision.
Aside from that, as with any pension transfer, you need to fully understand the type of pension you hold, its benefits and what you could lose if you undertake a transfer. Broadly speaking, it’s often easier to compare the benefits between a defined contribution pension in the UK and an Australian scheme.
Transferring a final salary pension
Defined Benefits pension schemes, often also known as final salary schemes, come with very specific and often generous benefits which often means a transfer would see you losing out on some guaranteed benefits upon retirement.
Speak with a registered and experienced pension transfer advisor, like those we work with, who provide answers to all your questions on transferring your pension to Australia and help you decide if you should make the transfer.
What are the tax implications of pension transfers?
With regards to taxation and your UK pension, should you decide to transfer it to Australia, it typically depends on:
- When you make the pension transfer
- The value you transfer to your chosen Australian super fund
If you transfer your UK pension to an Australian one within six months of moving to Australia, then you can do so without any tax implications. If, however, you don’t make the transfer until after that period, the amount you transfer will be subject to a 15% tax, according to the Australian Tax Office (ATO).
However, even though a 15% tax rate may seem high, it could still work out to be preferential to the exchange rate fluctuations your pension income would be subject to if it remained in the UK.
You can find out more about the tax implications of a UK pension to Australia transfer from the ATO. But, the best way to understand the full tax implications of transferring your UK pension to Australia is to speak with a specialist pension transfer advisor with experience of UK-to-Australia transfers. They will know all the tax rules and rates and help you work out the best decision for you.
How to transfer my pension
If you are considering transferring your UK pension to an Australian scheme, the way to do it would be as follows:
- Contact your pension provider to find out their rules on transferring your pension out of the scheme and into an overseas fund.
- Consult the HMRC list to find a QROPS Australian super fund that accepts transfers from the type of UK pension you hold.
- Ensure you’re aware of all the rules relating to the transfer, charges, fees, taxes, time scales and financial limits.
- If everything is as it should be, you should sign the paperwork to allow the UK to Australian pension transfer happen.
That may seem like a straightforward list of steps, it’s essential you understand every detail and rule relating to your existing pension, the HMRC QROPS rules and your new Australian super fund.
Failure to do that could result in you losing more money to charges and taxes than you expected. Or, your pension may end up in a scheme that’s not really suitable for your future retirement needs.
We work with qualified and reliable pension transfer advisors who understand all the rules, are up-to-date with all the relevant legislation and can offer advice to help you make the right decision.
Can I transfer my Australian pension to the UK?
Whether you can transfer your Australian pension, which is typically a superannuation fund, to the UK, typically depends on if you’re a temporary or permanent Australian resident.
If you’re a temporary resident of Australia and you’ve earned enough money for a super to be created in your name, you will be eligible to claim a departing Australian Superannuation payment (DASP). You can make a DASP claim if:
- You’re right to work in Australia has ended.
- You’ve left Australia.
However, you cannot claim the full amount of super fund payments that were made, you may face a tax of up to 65% of the amount, plus a management fee in some cases.
Where you’re a permanent resident of Australia who has opted to emigrate to enjoy retirement in the UK, you cannot transfer your Superannuation into a UK pension fund. You can access the funds when you retire, in the usual way but the Super fund will remain in Australia.
While there are special circumstances in which you can access your Australian Superannuation early, it’s unlikely they will relate to a move to the UK.
For further guidance on how to transfer or access your Australian superannuation pension fund from the UK, a registered pension transfer expert such as those we work with, can offer advice on this.
Speak to a pensions transfer specialist today
If you’re interested in finding out more about transferring your UK pension to Australia, or your Australian Superannuation Fund to the UK and are looking for a simple process where an expert is on hand to answer all your questions, call us today on 0808 189 0463 or make an enquiry here.
Then, just sit back and relax while we do all the hard work of finding the expert with the right experience to advise on your specific needs.