All Australian residents with UK pensions should be evaluating the opportunity of transferring their entitlements to an Australian fund. UK Pension Transfers are available under certain conditions to both migrants from the UK and to Australians returning home after a period of work in the UK.

The process is complex and the options vary with each pension holder’s individual situation. Factors to evaluate include the amount of funds held in a UK pension, the intricacies of tax law in both countries and estate planning criteria. It’s vital to take quality professional advice before taking any action.

Key considerations

Here are just some areas that should be considered with your adviser:

  • Control – once your pension is in an Australian fund you will be better placed to maintain control of your investment strategy and retirement planning options
  • Minimise currency risks – holding your assets in an Australian dollar fund will mitigate unintended exposure to the price of sterling.
  • Income Tax – it can be dangerous to generalise but, subject always to professional advice geared to your personal circumstances, it is probable that, for most people, Australian tax rules for superannuation are more favourable than those of the UK. By way of just one example, if a UK pension holder dies over the age of 75, their beneficiaries are taxed at their highest marginal rates on the proceeds payable. In Australia there would be no tax payable in these circumstances.
  • Your age – isamong the key inputs to planning for a transfer. UK rules place strict prohibitions on transfers to Australia for individuals under 55 years of age.
  • QROPS – Individuals over age 55 may only transfer to a Qualifying Recognised Overseas Pension Scheme (QROPS). Any funds transferred overseas to a non QROPS will attract an unauthorised payment levy of 55% of the value transferred.
  • UK financial advice – if your UK pension has safeguarded benefits and your transfer value is over £30,000, UK tax authorities require you to seek advice from a licenced UK adviser.

The expert help you require

In this short article we can highlight only a few of the complexities. Our first piece of advice? Don’t allow yourself to be intimidated by the process – the potential costs of inaction can be significant.

Fortunately, expert assistance is close at hand – Kensington Wealth are here to help you achieve the best possible outcome. We invite you to book an appointment for an initial consultation.