Taking pension to Oz?

sleepybear_2

Hello there
Myself and my husband are emigrating to South Australia in the new year. We are both Paramedics with the Scottish Ambulance Service and have pensions with them. My husband will be working in Oz as a Paramedic but they cannot accept our pension transfer.
We are wondering if anyone has any experience of this. If we get it wrong we could lose a lot of money. We have an appointment to speak to someone about it and will be paying for that service, which we are happy to do as it may potentially save us thousands!
But also thought it would be useful to see if anyone knows about this? Is transferring to a provider over there best or leave it here?
Thankyou for any info anyone may have!

jonathon_hart

As far as I was aware pensions can in general be transferred to Australia. The scheme in Australia needs to be registered with the UK Inland Revenue as a recognised overseas pension scheme (I can't remember the exact term of what they need to be...there are several subtly different variations on the registration), otherwise you get hit with a massive tax bill.

It could be the scheme is not registered, or that the Australian scheme is not prepared to accept the transfer in.

Also if your UK scheme has GMP (Guaranteed Minimum Pension) I am not sure that that can be transferred.

Apologies for being vague but the rules were extensivelly re-written for April 2006 and I have not had much exposure to them post that date.

If you are seeing an adviser make sure they are knowledgable about overseas transfers, they are very different to normal transfers and can drag on for quite a while and get very complicated.

Hope this helps

Jonathon

EdInvestor

sleepybear wrote: »

Hello there
Myself and my husband are emigrating to South Australia in the new year. We are both Paramedics with the Scottish Ambulance Service and have pensions with them. My husband will be working in Oz as a Paramedic but they cannot accept our pension transfer.
We are wondering if anyone has any experience of this. If we get it wrong we could lose a lot of money.

Are these public sector (eg NHS) pensions? Are they final salary?

Why do you think you could lose a lot of money?

sleepybear_2

Hi
Yes our pensions are NHS and final salary.
The receiving providers are not members of QROPS so we cannot transfer to them. During the brief initial consultation with advisor he mentioned we may lose thousands if this is not handled correctly and by a professional. I realise that this is part of his sales pitch but we are talking about a lot of our money. So as much info as possible will help and is greatly appreciated.
Possible loss of money may be due to taxation?

EdInvestor

If the choice is to transfer to an Australian money purchase/personal pension type scheme, or leave it in the NHS, the latter may well be best.The Australians tax investment returns on overseas pensions, however it's hard to see how they could do this with a UK public sector f/s pension since it is not backed by an invested fund

Cook_County

Ed is incorrect - at least from an Australian perspective.

If these are not transferred you will owe Australian tax under the FIF regime even though you can't withdraw any money until age 55.

There is no reason why your chosen Super can't apply to HMRC for QROPS status. If they won't and your IFA can't persuade them then try a different Super plan or IFA...

EdInvestor

Cook_County wrote: »

If these are not transferred you will owe Australian tax under the FIF regime even though you can't withdraw any money until age 55.

Can you give more details?As far as I can see the tax issue relates to transferring the fund over in the first six months of residence (it is not taxed) or later than that ( it is taxed on arrival but you can possibly avoid it).

http://www.ato.gov.au/super/content.asp?doc=/content/47419.htm

Can't see any info on what happens if you don't transfer it at all.It would be very bad advice ( actually misselling) in the UK to suggest anyone transfer out of the NHS scheme unless it was either to another public sector or copper bottomed final salary pension: certainly not to any money purchase pension of the type on offer to the OPs in Australia in those general super funds.

And if there is any possibility they might come back to the UK later (many do) and rejoin the NHS, then transferring out would not look sensible unless there was some serious penalty at the Aus end.So what taxes (if any) would they have to pay if they left the NHS pension where it is?

sleepybear_2

EdInvestor wrote: »

Can you give more details?As far as I can see the tax issue relates to transferring the fund over in the first six months of residence (it is not taxed) or later than that ( it is taxed on arrival but you can possibly avoid it).

Hi
That is absolutely right. The problem we face at the moment is which way to go with this. So far the super anns we have looked at are not final salary schemes. Our new employer is final average salary however they are not members of QROPS. Some of the wraps we've looked at look quite attractive but with so much money involved we're thinking professional advice is needed.
Can we really ask if our new employer if they would join QROPS?
Thankyou for all your info so far.

EdInvestor

You can, but IMHO more important is to find out what consequences there might be (if any) if you leave the pensions here - they will escalate by 5% or inflation per year to retirement age anyway.

You may also wish to keep paying into your UK state pensions after you leave - it costs only about 2 quid a week for expats, has to be the bargain of the century.Under the new rules from 2010, you only need 30 years NI contributions to get the full pension, so could be well worth it.:)

jonathon_hart

Becoming a QROPs is just filling out a few forms, which can be found on the Inland Revenue website. It is not that onerous or costly for the receiving scheme. Not sure how long registration takes. This may complicate matters as to any tax.

See here for a list of schemes that are already QROPs http://www.hmrc.gov.uk/pensionschemes/qrops.pdf

Here are a link to the forms and notes that the receiving scheme would have to go through to becaome a QROPs
http://www.hmrc.gov.uk/pensionschemes/overseas.htm

Cook_County

jonathon_hart wrote: »

Becoming a QROPs is just filling out a few forms, which can be found on the Inland Revenue website. It is not that onerous or costly for the receiving scheme. Not sure how long registration takes. This may complicate matters as to any tax.

See here for a list of schemes that are already QROPs http://www.hmrc.gov.uk/pensionschemes/qrops.pdf

Here are a link to the forms and notes that the receiving scheme would have to go through to becaome a QROPs
http://www.hmrc.gov.uk/pensionschemes/overseas.htm

Just because HMRC in the UK agree that the documents match UK requirements does not mean that the trustees in the other country will be willing to accept the transfer. It is almost certain you'll need professional advice as the trustee will want to be certain s/he is not assuming risk.

There are hundreds of advisers who specialise in this area, either ask a friend/employer for a good referral or play on Google a little!

This is why - for example - UK plans can never be transferred to US plans.