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Andrew from Vista Financial

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Andrew from Vista Financial last won the day on January 20 2017

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About Andrew from Vista Financial

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    Financial (Pensions) Adviser

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  1. Hi Andrew,

    I have lived in Australia for 5 years, and am currently a permanent resident here, but will be applying for citizenship here in the coming months.

    I wish to transfer my pension from the UK, either to my existing super fund (AMP signature super) or to a new fund, with the intention of using it to purchase an investment property.

    What's the best way to do this, and is it worthwhile?

    Many thanks,


    1. Cross border Will issues

      Hello our UK Associates may be able to assist with this. If you wish to email me (email in my signature) I can provide you with their details. Regards Andy
    2. Uk Private pension

      Hello Fletch If you do not require the funds (or can perhaps arrange funds from elsewhere if you do for the interim) then you may wish to consider transferring the pension to Australia (from age 55). The reason I say this is that the tax treatment from an Australian perspective is as follows: Once a person accesses their UK pension this becomes known as a foreign super lump sum benefit payment in the eyes of the Australian Tax Office (ATO), this means that an assessment will be made on the lump sum to consider the growth that has occurred on it, for defined contribution schemes this is done by considering the value of the scheme on the date of Australian Residence against the value of the scheme on the date of access. This growth known as Applicable Fund Earnings is then assessed at the persons marginal tax rate. As a crude general example of this, the pension was worth £50,000 at date of residence and on the day the lump sum is accessed the scheme is worth £80,000 and there have been no contributions to the scheme within these dates. This is therefore growth of £30,000 and based on today's exchange rate ($1.73) that's an assessable amount $51,900. This amount is added to a person's marginal tax rate and taxed accordingly, so for a person with an MTR of 39% (once this amount has been added) then this is tax of around $20,241. If this scheme is transferred to an Australian (QROPS) scheme (allowable from age 55) then that tax can usually be mitigated to 15% so around $7,785 so a substantial saving (potentially depending on individual circumstances). Withdrawals from age 60 from Super are tax free in Australia. The downside of a transfer is that the monies become preserved under Australia rules and this means it's likely access will have to be deferred. Also there are some UK pension policy implications to consider. Essentially to access the full amount the way it is now done is that a lump sum of up to 25% is allowable known as a pension commencement lump sum and then the rest will go into what is termed drawdown. The lump sum is UK tax free however the remaining amount left in drawdown on withdrawal is recognised as income (even though effectively a full withdrawal of the remaining 75% is allowable in one go). The UK work on a PAYE system and so when the remaining 75% is withdrawn tax is deducted under that system. You may be able to arrange having that income paid gross if a tax resident of Australia as Australia typically have taxing rights on UK pension income under the DTA but would need to complete a HMRC form for this to occur, it used to be form FD2 but I'm not sure if this has changed now, the ATO also need to complete a section too I understand. Given that the remaining amount is then classified as income the ATO may then wish to look at taxing this accordingly even if it is being received as a lump sum as technically it is income and particularly if you have completed the above form (FD2?) requesting that the income is taxed in Australia. You may wish to explore these implications further prior to withdrawal (if you decide this is what you would prefer) and thus may wish to consider seeking a private ruling from the ATO in the first instance to ascertain their view on your situation. Regards Andy
    3. Transferring money made from UK property sale - tax advice

      You may have to pay CGT (Capital Gains Tax) but only if there is a gain of course. Whether there is a gain or not will depend broadly on the value of the property when you became Australian resident in Aussie Dollars (ie exchange rate at that date) against the value of the sale again in Aussie Dollars on that date. If there is a gain as Ken says above there then may be exemptions so that it is mitigated or even extinguished altogether. Have you also considered the UK side of things.....................capital gains tax was introduced on residential property for non UK residents from (I think) April 2015. I recommend that you seek UK and Australian Tax advice to discuss any gains that may apply to you and what potential exemptions may apply if a capital gain does exist. Regards Andy
    4. Tax implications, savings and moving money

      Hi Richard Looks like your questions have pretty much been answered when you posted this under the Money and Finance section. KR Andy
    5. Pension advice

      Hello Johnboy Yes the UK State Pension can be paid directly to an Australian Bank account, it is converted to dollars on arrival so if you need the income to cover your expenditure here that's all ok but if you do not necessarily require the income you may wish to consider having it paid to a UK account and converting at a later date (this is of course if you have a view on the exchange rates ie sterling becoming stronger than AuD going forward). Regards your private annuities, this should be taken up directly with the provider as some may transfer to Oz and others may not. Regards Andy
    6. Work Bonus (Age Pension)

      Work Bonus The Work Bonus provides an incentive for pensioners over Age Pension age to participate in the workforce by allowing them to keep more of their pension when they have earnings from working. How does the Work Bonus affect pension rates? The Work Bonus increases the amount an eligible pensioner can earn from employment before it affects their pension rate. The first $250 of fortnightly employment income is not assessed and is not counted under the pension income test. The Work Bonus operates in addition to the pension income test free area. From 1 July 2015, for single pensioners, the pension income test free area is $164 a fortnight and for couples combined, it is $292 a fortnight. For example, this means a single pensioner over Age Pension age with no other private income could earn up to $414 a fortnight from employment and still receive the maximum rate of pension. Work Bonus Income Bank Pensioners over Age Pension age accrue any unused part of the $250 fortnightly Work Bonus exemption amount in a Work Bonus income bank, up to a maximum of $6,500. The income bank amount offsets future employment income from the pension income test. The income bank amount is not time limited; if unused, it carries forward, even across years. The Work Bonus income bank is useful for pensioners who wish to work, particularly those who undertake intermittent or occasional work. How does the new Work Bonus work for single pensioners? Example 1: Bob is an age pensioner working as a school crossing supervisor, earning $300 a fortnight. He has no income other than the Age Pension. Under the Work Bonus, the first $250 of Bob’s employment income is not assessed, and only $50 is counted under the pension income test. This is less than the pension income test free area of $164 a fortnight for a single pensioner, and Bob will still receive the maximum rate of Age Pension. Example 2: Maria is an age pensioner who works for three fortnights as an accountant. She has no other income. As Maria has not worked in the previous 12 months, she has accumulated the maximum income bank amount of $6,500 (26 fortnights x $250). During the three fortnights that she works, Maria earns $2,000 a fortnight, a total of $6,000. As Maria’s income bank amount is more than her employment income, none of the $6,000 is assessed under the income test and she will still receive the maximum rate of Age Pension. In addition, Maria will retain $1,250 in her income bank to offset any future employment earnings ($6,500 - $6,000 earnings + $250 Work Bonus concession for each of the three fortnights that Maria works). How does the Work Bonus affect the employment income of your partner? The Work Bonus applies to individual pensioners. It cannot be shared by a pensioner couple. Example: Mary and Jim are a couple who both receive the Age Pension. Mary has employment income of $550 a fortnight and Jim has employment income of $200 a fortnight. They have no other income. Under the Work Bonus, the first $250 of an individual’s employment income is not assessed. Only $300 a fortnight is assessed as income for Mary and nothing is assessed as income for Jim. Under the pension income test, pension is reduced by 50c for every $1 of income over the income test free area. Mary and Jim’s combined assessed income of $300 a fortnight is $8 higher than the income test free area ($292 a fortnight for a couple) and their combined pensions are reduced by $4 a fortnight ($2 a fortnight each). If Jim was under pension age, he would not be eligible for the Work Bonus and all of his earnings of $200 a fortnight would be assessed as income. Who is eligible for the Work Bonus? All pensioners over Age Pension age are eligible for the Work Bonus if they have employment income. This includes: Age Pension, Carer Payment, Bereavement Allowance, Disability Support Pension, Widow B Pension and Wife Pension recipients. Employment income Employment income is income from paid work undertaken by the person as an employee in an employer/employee relationship. This includes but is not limited to salary, wages, leave payments, commissions, employment-related fringe benefits, bonus payments, supported wages and casual loading. Employment income does not include income from self-employment or business income. Pensioners who are self-employed or running a business are not entitled to the Work Bonus, but are able to make business deductions from their income. Application for the Work Bonus Pensioners do not need to apply for the Work Bonus. If you are a pensioner with variable fortnightly employment income, you must keep Centrelink informed of your income. The Work Bonus can only be applied to employment income that has been reported. Pensioners can report over the phone (including Voice Recognition), in person at a Centrelink office or by using the internet. For more information For more information about the Work Bonus, contact the Department of Human Services (DHS) on 13 2300 or visit the DHS website.
    7. Moving money from UK to Aus

      Sorry for the delay. You should consult with your Accountant about this so they can advise you appropriately. See here from the ATO website on gifts: https://www.ato.gov.au/Individuals/Income-and-deductions/Income-you-must-declare/Amounts-not-included-as-income/ Also from the site (seems to contradict itself a little): Receiving a gift of money is not considered assessable income. This is because it is not from an income producing activity. To determine whether or not it should be included as assessable income you would have to consider: The motive of the donor How often you receive it If the gift is used to replace income Regards Andy
    8. Some good news for pension transfer to Oz

      So on the hypothetical you give above the strategy could look like this: $300k Age 58 $300k Age 61 $300k Age 64 $100k Age 67 (Assuming that the works test is met). There is the $1Mill..................................however it will not be as straight forward as this, this $1Mill will fluctuate significantly along the way due to exchange rates and earnings so will need to be accounted for at each juncture (as well as potential indexation increases to the cap over this time). Also any growth on the monies along the way will be taxed in Australian upon transfer AND for this growth to be taxed most optimally the from scheme will need to be closed at the time of transfer (an ATO rule) therefore further (Pensions/SIPPS) may be required to be opened down the track to manage this. You will also need to take care when considering the strategy of withdrawing the lump sum, if you do take it and then do not structure your UK Pensions correctly you may find you are unable to transfer any funds to Australia. We understand that if the PCLS (up to 25%) is taken then the remaining fund would need to be transferred in full and to a scheme with no other assets (a UK rule) however if there is more money in the scheme after taking the lump sum than the Australian contribution cap this could create difficulties. Therefore your suggestion of taking the $250k lump sum and immediately moving $300k of the remaining $750k is unlikely to be viable without pre-planning and correct structuring from the UK side. Finally in relation when monies can be withdrawn from superannuation, firstly preservation age needs to be met which is as follows: Date of birth Preservation age (years) Before 1 July 1960 55 1 July 1960 – 30 June 1961 56 1 July 1961 – 30 June 1962 57 1 July 1962 – 30 June 1963 58 1 July 1963 – 30 June 1964 59 After 30 June 1964 60 Once preservation age is met it is possible to draw up to 10% of the balance each year under a Transition to Retirement Pension (Income Stream) if still working OR if retired from the workforce (or age 65 is reached) then up to 100% is accessible. It might be tempting to try and undertake this process on your own however given the sum of money involved and the potential for error I would strongly advise seeking professional advice at the time. Regards Andy
    9. Some good news for pension transfer to Oz

      Not very easily unfortunately, progressive transfers are likely to have to occur strategically to avoid unnecessary implications from both a UK and OZ perspective.
    10. Some good news for pension transfer to Oz

      Hello Unfortunately what you are describing in terms of changes to contributions does not relate to UK pension transfers. The changes above are in relation to concessional contributions however UK pension transfers fall into the non-concessional contribution category (other than the growth amount (Applicable Fund Earnings)) which essentially fall into neither category. Therefore these changes have no impact on the amount that can be transferred for UK pensions I'm afraid. Regards Andy
    11. NHS pension

      Hello As above, there is no option for you with this scheme now in terms of transferring it out of the NHS (to Australia for example) instead you will be able to start to take your accrued benefits at the scheme retirement age in the form of a pension income for life. KR Andy
    12. Small pensions

      Hi Unfortunately that's also not possible until UK retirement age (currently age 55). Andy
    13. Voluntary NI contributions

      Hello A) It is possible to receive both. B) Not necessarily, it completely comes down to individual circumstances, you are right in that the OZ Age Pension is means tested however it is tested under both an income and an assets test and whichever gives the lower result is the amount received. As an example of this a person could have assets over the max threshold and therefore would not be eligible to receive any OZ Age Pension so the UK State Pension in that case has no impact whatsoever on any OZ benefits (whilst they have those assets anyway). Also even if a person/couple are receiving the full State Pension they could still receive a very generous amount from the OZ Age Pension, as an example of this ( I have literally just run this scenario on my software to be able to demonstrate): A couple with combined assets of $300,000 (excluding the home) and both receiving the full UK State Pension currently around $28,000 annually and no other income could qualify for around $25,000 from the OZ Age Pension. There are many other scenarios that could occur of course but typically I would not discount topping up the UK State Pension on the basis of it losing/reducing the OZ Age Pension IF someone is able to top up at class 2 rates, Hope this helps. Andy
    14. Investing100k in UK

      Hello Playghirl Given that it is only a short term you wish to invest for then typically on cash would be advisable (unless you are prepared to take some risk) therefore cash accounts such as Term Deposits and Online Savers usually fit the bill in cases like this. That said Australian residents looking to open these types of accounts in the UK do seem to find it quite difficult being non UK resident as a lot of institutions have policies in place that can restrict them from doing so. Hope this helps. Regards Andy