UK Pension Transfer (QROPS) Solution for over 55's

[Andrew from Vista Financial]

Hi all.

 

Further to the halted pension transfers situation: http://www.pomsinoz.com/forum/money-finance/235043-important-uk-pension-transfers-post-6-april-15-a.html it seems that there is some good news on the horizon as it appears HMRC have issued a new Australian scheme with a QROPS number and this fund will hopefully show on the ROPS list 17 August.

 

This fund is restricted to members age 55 and over as the reason HMRC essentially stripped Australian funds of QROPS was that they did not meet the 'Pensions Age Test' which is essentially access to monies is not permitted under age 55 therefore this solution gets around this.

 

It has also been suggested that other funds will re-appear but we are yet to know exactly which funds perhaps those with members over age 55.

 

At this stage it seems that the solution only exists for SMSF's however we will explore the list further on 17 August to ascertain this for certain.

 

If you are over age 55 and are looking into a pension transfer to Australia then please contact me directly: Andrew@vistafs.com.au

 

Regards

 

Andy

[Andrew from Vista Financial]

So it has appeared, of course this solution now means a door is open for UK Pensions to Australia in time for retirement:

 

https://www.gov.uk/government/publications/list-of-qualifying-recognised-overseas-pension-schemes-qrops/list-of-recognised-overseas-pension-schemes-notifications

Edited September 1, 2015 by Andrew from Vista Financial

[troy79]

HI Andrew

This is all getting a bit confusing. I transferred my UK pension to a QROPS scheme in 2010 but I have not yet fulfilled the 5 full tax years. I wish to transfer my funds to another QROPS provider or even a SMSF. (AGE ONLY 53) Does the new fund require the new ROPS label? or is it sufficient that they were QROPS before all this 'blew up'

Kind Regards

Troy

[Andrew from Vista Financial]

Hi Troy

 

Yes this has certainly caused a bit of a flurry.

 

In simple terms if you are to move from your existing provider elsewhere this could create some big issues for you as no other provider (public offer) exists with ROPS status (unless you are a member of the QLD local government).

 

A SMSF (ROPS) would also not be available to you as they are only available for members over age 55 currently.

 

Who is the super fund provider and what is the reason you wish to move super funds?

[Gbye grey sky]

Hi Andrew

 

I turned 55 last month and arrived in Oz 4 months ago. My personal pension pot unsurprisingly remains in the UK but I would like to transfer it soon.

 

I can see from the link above that the number of ROPS is slowly growing but I am concerned that (from an admittedly cursory examination) these appear to be brand new funds with no track record. Is there a danger that some of these will be elaborate scams set up solely for the purpose of attracting pension funds from overseas pensions. I need the security of knowing my funds are safe notwithstanding concerns about the performance of these funds. Are there any protections or safeguards or am I worrying unduly?

 

My wife has a Super Fund with AustralianSuper from the 1990s however I understand that she will not be able to transfer her UK pension over to consolidate her funds (she is 52) so at the moment her only option is to sit tight and wait for developments. That may be my best option too but is it the case that I will not be able to draw on my Super fund (without the UK tax authorities penalising me heavily) until 5 years has expired from transfer? I would like to be able to start taking my pension when I am 60 so the clock is ticking on this.

 

David

[Andrew from Vista Financial]

Hi David

 

I didn't realise that you were in Oz now, I hope you are settling in and enjoying it.

 

All of the Super Funds on the list are SMSFs other than the LGSS and CSS both of which are government schemes which are not public offer. Some of these are newly created and some are existing schemes that have members over age 55 only already and have amended their Trust Deeds to officially permit membership to over age 55.

 

SMSFs are not public offer and limit the amount of members to four, typically Husband and Wife or families arrange SMSFs and the reason that they may wish to open one may vary from buying property and/or investments not available through industry or retail funds such as collectibles to having more control but of course now an additional reason comes into play which is to create a ROPS Super Fund (for the purposes of transferring their UK pensions).

 

Essentially a person opening a SMSF becomes the Trustee (as well as a member) of course their is additional responsibility in having/running one over and above a public offer retail/industry Super but services can be outsourced for example administration, investment advice (Financial Planner), accounting (Accountant) etc. Typically it is said that the minimum balance to consider a SMSF should be around $250,000 but the higher the better as it becomes more cost effective.

 

We are in the process of setting up four SMSFs currently for over age 55 clients for the sole purpose of obtaining ROPS status so that their UK pensions an be transferred.

 

In terms of safeguards, bank accounts and investments will all be held in the name of the SMSF (for which the member is the beneficial owner) and therefore as Trustee you decide where to invest your retirement monies be that in direct shares, ETFs or managed funds, of course sticking to blue chip shares and well known (highly rated) fund managers clearly makes things less risky.

 

In terms of tax charges when drawing a transferred UK pension, my understanding is that the same freedoms that have been applied to UK pensions have also now been given to Australian ROPS and so for persons over the age of 55 looking to draw on UK transferred funds 100% access of the fund is allowable without creating an unauthorised payment, I have an email directly from HMRC advising me of this (however from a due diligence point of view this should be checked directly with HMRC on an individual basis).

 

Australian Treasury and HMRC continue to liaise and some Super Funds are still trying to understand if it will be possible to obtain ROPS again for all ages however it is seeming to look unfavourable, if this is the case I am sure that a retail offering will present itself but this will come down to commercial viability for the providers as it will be a limited space as for when/if this will happen it could take many months.

 

Hope this helps.

[troy79]

Hi Andrew

Thanks for the reply

I am with Perpetual. Not entirely happy with them - fees and service. My initial plan was to move to an industry super fund but the more research I've done the more I think an SMSF would suit me better as I am a reasonably experienced investor. An over 55 SMSF will probably be the way to go once I reach 55. That is only 18 months for me, so not much point in moving it now (buy and sell spread) even if I could. Meanwhile I will monitor the current QROPS situation for any change.

Once again thanks for your input - it is always very helpful.

Regards

Troy

[Andrew from Vista Financial]

No problem Troy.

 

Yes if it is the Perpetual Wealthfocus (wholesale or retail) fund then being a pooled super fund (as is an industry fund) it does not carry the same tax treatment as an SMSF for the individual investor neither the investment choice.

 

Updates on the situation will continue to be posted in any event.

 

KR

 

Andy

[janinewhiteley]

So it has appeared, of course this solution now means a door is open for UK Pensions to Australia in time for retirement:

 

https://www.gov.uk/government/publications/list-of-qualifying-recognised-overseas-pension-schemes-qrops/list-of-recognised-overseas-pension-schemes-notifications

 

 

Hi , I am not very good at understanding the transfer of pension funds.

I have a pension in the UK and would like to transfer it to OZ after being here 4 year and feel we are now settled enough to make this final transition. I do work for a state government of Victoria. Is it possible to transfer ? I am 49 years of age and wanted to keep adding to it here and at present I feel that it is not earning enough for me in the UK. I worry that i will lose the pension if I do not add to it and the UK government will claim it. Is this the case or do I just have to wait till I am 55 ?

 

thank you in advance

Janine

[Andrew from Vista Financial]

Hi Janine

 

What type of pension do you have, is it a defined benefit scheme (final salary) or defined contribution scheme and who is it with?

 

Also what is the name of your superannuation fund in Australia?

 

Thanks

 

Andy

[janinewhiteley]

Hi Janine

 

What type of pension do you have, is it a defined benefit scheme (final salary) or defined contribution scheme and who is it with?

 

Also what is the name of your superannuation fund in Australia?

 

Thanks

 

Andy

 

Hi Andy

 

I have a final salary scheme.

Royal Bank of Scotland

My superannuation in Oz is VicSuper.

 

Thanks Janine

[Cambel]

Hi Janine

 

If you happen to be under 55 do you realise you can transfer your pension to a New Zealand QROPS given there are no under 55 options in Australia? Also SMSF's are not suited to everyone, you might want to check this out from the ATO website https://www.ato.gov.au/super/self-managed-super-funds/thinking-about-self-managed-super/

Also when you look at the numbers being set up in Australia there are very few being added to the ROP's list each moth when you consider the number of Ex pats with UK pensions.

 

cheers

 

Cambel

 

Hi Andy

 

I have a final salary scheme.

Royal Bank of Scotland

My superannuation in Oz is VicSuper.

 

Thanks Janine

[Andrew from Vista Financial]

Hi Andy

 

I have a final salary scheme.

Royal Bank of Scotland

My superannuation in Oz is VicSuper.

 

Thanks Janine

 

 

Thanks for your response Janine.

 

The VicSuper does not seem to be QROPS registered therefore this would not seem to be an option for you.

 

To note that as this is a Defined Benefit (DB) scheme advice from a UK regulated Adviser will be required in the first instance (mandatory for DB schemes valued at over 30GBP).

 

Therefore your options:

 

 

 

• Leave your DB scheme in the UK and take the benefits at retirement (since it is a DB scheme your annual pension benefits will be locked in at the date you left the scheme and will increase with indexation each year, once you reach the schemes normal retirement age you can start receiving your annual pension and again whilst in receipt the amount will increase with indexation each year until you pass away).

 

 

 

 

• Transfer your DB scheme to a UK Defined Contribution scheme (DC), the money will then be invested and grow in relation to your investment choices, at retirement you will then have the ability to withdraw the funds as you require and what you do not withdraw can remain invested. The money will last until such a time as you have withdrawn it all. (alternatively you could use the money at retirement to purchase an Annuity (an income for life).

 

 

 

 

• Transfer your DB scheme to an Australian QROPS when you reach age 55 (by this time there may be public offer funds not just SMSFs with QROPS status), Australian Super schemes work like UK DC schemes in that the money will be invested and will essentially last until such time as you have withdrawn it.

 

 

 

 

• Transfer your DB scheme to a UK DC scheme now with the intention of transferring to an Australian QROPS at age 55 (a reason this might be considered is that DB scheme transfer values are seemingly very high currently measured against historic values).

 

 

 

 

• Transfer now to a QROPS in a different jurisdiction, these scheme will be similar to UK DC schemes therefore this in my view would be an interim step ie a sideways move until such time as you could transfer to an Australian Superannuation scheme (this might be at age 55 (as a QROPS) or after a certain period of non UK tax residency).

 

 

Note that there are different death benefit characteristics with each of these options and that typically income from anywhere other then an Australian scheme will be taxed by Australia as will lump sum benefits at the persons marginal tax rates.

 

 

So obviously a number of options and all with different outcome and implications therefore sound financial advice should be sought from registered and qualified UK and Australian Advisers.

 

Kind regards

 

Andy

[Andrew from Vista Financial]

Hi Janine

 

If you happen to be under 55 do you realise you can transfer your pension to a New Zealand QROPS given there are no under 55 options in Australia? Also SMSF's are not suited to everyone, you might want to check this out from the ATO website https://www.ato.gov.au/super/self-managed-super-funds/thinking-about-self-managed-super/

Also when you look at the numbers being set up in Australia there are very few being added to the ROP's list each moth when you consider the number of Ex pats with UK pensions.

 

cheers

 

Cambel

 

Agreed Cambel

 

SMSFs are not for everyone hence the need for regulated Australian financial advice to ensure their suitability.

 

Out of interest what would be the benefit of moving a UK pension to a New Zealand scheme for an Australian tax resident when taking retirement benefits?