Moving to Australia - what do I do with my pension?

masco1

I have worked in the NHS for 30 years and have just reached 50 yrs old. I am thinking of moving to Australia to work where my new employer will contribute 17.5% into a pension scheme. I haven't a clue as to what to do with my NHS pension (do I move it, transfer it, cash it, leave it?) and am I going to be worse off pension-wise if I go to Oz compared to staying here in NHS for another 10 years? I will be on a similar salary of around £75K.
Any expert advice welcome, Hospital's pension advisor clueless!

Loughton_Monkey

Doesn't matter whether you are going to Australia, or a different UK employer, or any other option really, the advice is the same.

Leave your pension where it is.

The 'value' in the pension is the guarantee of benefits in the future at retirement age and you cannot fail to have heard of the exceptionally high cost and value of Final Salary schemes? The Government is today trying hard to reduce the cost of these going forward. If you move yours away, the Chancellor, and all of us tax payers will be delighted!

As to your 'worse off' question, then it's more difficult to answer - not least because going forward, none of us knows if/how/when the NHS scheme might be affected for future accruals [your existing benefits will be guaranteed, though].

My opinion, though, is that if you had stayed here in the NHS scheme, you would still have an extremely valuable pension for the remainder of your working career.

You should note, however:

1. By leaving the NHS (and by definition the pension scheme) your deferred benefits will be based upon you salary at leaving. They would otherwise have been enhanced by any further promotion or 'real' pay rises in the future.

2. Even if (and I doubt it) your new employer in Australia had as generous and a similar scheme, then the two pensions would normally add together to be far less than 40 years in the original scheme would have been.

3. Although your NHS pension will be 'good', for the reasons mentioned above, you will need to save a really big proportion of your new salary in order to make this up - if you want a decent pension in retirement. Maybe looking towards 25% to 30% of gross income.

masco1

Thanks for your reply LM. It is a big dilemma as I have always planned for a decent NHS pension to see me through retirement in the UK. However the opportunity to transfer to a University post in Australia is so tempting. It sounds like this would come at a not-insignificant cost though!

Loughton_Monkey

Well it will still be a decent pension. If you get to staying in Oz for retirement, I'm afraid Mr Osbourne will pay you your state pension quite happily, but refuse to increase it by CPI ever.

Marine_life

masco1 wrote: »

I have worked in the NHS for 30 years and have just reached 50 yrs old.

Slightly off topic and don't want to be ageist but ....are you sure you are will be allowed into Australia at 50? Generally 45 is seen as the upper limit.

Loughton_Monkey

Marine_life wrote: »

Slightly off topic and don't want to be ageist but ....are you sure you are will be allowed into Australia at 50? Generally 45 is seen as the upper limit.

I think you can if you have a job. But you are right about some sort of 45 year limit. My understanding is that over 45, (a) you will never be allowed Australian citizenship, (b) you will have to pay private medical insurance while you are there.

And without a job, subject to the above two points, you can generally expect to be granted continued renewals of your resident's visa forever, but to get there in the first place, you have to show substantial capital.

ffacoffipawb

Loughton_Monkey wrote: »

Well it will still be a decent pension. If you get to staying in Oz for retirement, I'm afraid Mr Osbourne will pay you your state pension quite happily, but refuse to increase it by CPI ever.

You think Mr Osborne will be Chancellor in 17 years time?

Loughton_Monkey

ffacoffipawb wrote: »

You think Mr Osborne will be Chancellor in 17 years time?

Well I guess you can't rule it out!

People like Ken Clarke seem to 'come back'. Certainly won't be Brother Brown. That's for sure!

Cook_County

The crucial question is how Australia will tax the investment when you get to Australia. You may want to look at recent threads on QROPS.