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Andrew from Vista Financial

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Everything posted by Andrew from Vista Financial

  1. Andrew from Vista Financial

    Private Pension transfer with DeVere

    Hi Glad you are happy so far, I also use the L&C SIPP for clients in circumstances where a SIPP is warranted, I believe though that they use an investment bond within the SIPP in a lot of cases (RL 360 tends to be the main one) and this typically pushes up the fees, in fact the FCA issued their concern yesterday about this: Information for consumers on transferring or switching UK pensions into international self-invested personal pensions (SIPPs) | FCA Could I ask where your Adviser is based please? Regards Andy
  2. Andrew from Vista Financial

    Retirement Planning

    We have been working with fellow UK expats here in Australia for over a decade now on helping them plan for their retirement. What does this mean and what do we do? A retirement plan is designed for you based on your desired retirement goals and objectives, for example you may wish to retire at age 65 and with an annual income of $61,909 annually after tax https://www.superannuation.asn.au/resources/retirement-standard This is done by firstly looking at your current financial situation to establish what assets (and liabilities) you have such as: · Superannuation; · Investments; · Savings; · UK Pensions (defined contribution) · Home Loans and other debt Then your income streams in retirement would be considered, such as: · Australian Age Pension (means tested); · UK State Pension (not means tested); · UK Private Pensions (defined benefit) A cashflow analysis is carried out to understand if a surplus income exists and your desired Investor Profile is ascertained. Once done comprehensive financial modelling is conducted so as to determine how things are looking for retirement and whether you are on track or if a gap exists. Following this appropriate recommendations are made on ways to either fill the gap or boost your retirement wealth and this would be by implementing strategies such as: · Making tax deductible contributions to super; · Investing to generate greater returns; · Possibly transferring UK Pensions to an Australian Super Fund or to an International SIPP; · Paying down debt quicker; · Spouse splitting superannuation contributions; · Changing your investment options so that they align to your correct Investor Profiles; · Buying back or topping up years for your UK State Pension; · Commencing a transition to retirement strategy with your superannuation money; · Reviewing current Super Funds/investments to ensure they are correctly invested and performing well. · Reviewing current Super Funds/investments to ensure that the fees are reasonable. After the initial financial (retirement) plan is constructed we will then work with you to implement our recommended strategies and will review your plan with you regularly to ensure it continues to remain on track and recommending any necessary adjustments if need be along the way. If you would like to start planning for your retirement and would like to work with a highly experienced and professional adviser then feel free to get in touch ( andrew@vistafs.com.au ). Thanks Andy
  3. Andrew from Vista Financial

    Retirement Planning

    We have been working with fellow UK expats here in Australia for over a decade now on helping them plan for their retirement. What does this mean and what do we do? A retirement plan is designed for you based on your desired retirement goals and objectives, for example you may wish to retire at age 65 and with an annual income of $61,909 annually after tax https://www.superannuation.asn.au/resources/retirement-standard This is done by firstly looking at your current financial situation to establish what assets (and liabilities) you have such as: · Superannuation; · Investments; · Savings; · UK Pensions (defined contribution) · Home Loans and other debt Then your income streams in retirement would be considered, such as: · Australian Age Pension (means tested); · UK State Pension (not means tested); · UK Private Pensions (defined benefit) A cashflow analysis is carried out to understand if a surplus income exists and your desired Investor Profile is ascertained. Once done comprehensive financial modelling is conducted so as to determine how things are looking for retirement and whether you are on track or if a gap exists. Following this appropriate recommendations are made on ways to either fill the gap or boost your retirement wealth and this would be by implementing strategies such as: · Making tax deductible contributions to super; · Investing to generate greater returns; · Possibly transferring UK Pensions to an Australian Super Fund or to an International SIPP; · Paying down debt quicker; · Spouse splitting superannuation contributions; · Changing your investment options so that they align to your correct Investor Profiles; · Buying back or topping up years for your UK State Pension; · Commencing a transition to retirement strategy with your superannuation money; · Reviewing current Super Funds/investments to ensure they are correctly invested and performing well. · Reviewing current Super Funds/investments to ensure that the fees are reasonable. After the initial financial (retirement) plan is constructed we will then work with you to implement our recommended strategies and will review your plan with you regularly to ensure it continues to remain on track and recommending any necessary adjustments if need be along the way. If you would like to start planning for your retirement and would like to work with a highly experienced and professional adviser then feel free to get in touch ( andrew@vistafs.com.au ). Thanks Andy
  4. Andrew from Vista Financial

    NHS Pension Lump Sum and Tax

    Hi ozni Yes assuming you are a permanent resident/citizen here then typically this lump sum will be assessed for tax based on the growth since you arrived (known as the Applicable Fund Earnings (AFE)). Regards reducing your tax liability by contributing money to Super, possibly (this is not just a strategy available for someone receiving a foreign super lump sum benefit payment it is available to most people looking to reduce their tax liability and maximise their superannuation fund). You may be able to make a voluntary contribution to Super and claim a tax deduction, see here: https://www.ato.gov.au/individuals/super/in-detail/growing-your-super/claiming-deductions-for-personal-super-contributions/ You need to be aware of the concessional contribution caps surrounding this strategy: https://www.ato.gov.au/super/self-managed-super-funds/contributions-and-rollovers/contribution-caps/#:~:text=Concessional contributions also include personal,all individuals regardless of age. There is now also potential to catch up on some previous years concessional contributions if these were not fully used in certain circumstances: https://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/?page=3 There are other potential implications to consider also therefore I would suggest you consider seeking professional financial advice for your circumstances. Regards Andy
  5. Andrew from Vista Financial

    Private Pension transfer with DeVere

    Hi there. I'd suggest that you do some googling on DeVere to get some background, they are now based in many countries over the world and work on pretty aggressive marketing tactics (cold calling, trawling through LinkedIn to search for UK expats etc). They usually use an Investment Bond in the SIPP and may also be using funds that they have either an association with or receive some remuneration from (this would be in addition to any Adviser fees and ultimately comes from your money). I am not saying that the actual strategy is not legitimate, many people transfer to SIPPS for various reasons but do your homework (this is obviously one form of that for you). Is Husbands pension currently a defined benefit scheme? If not then it should also be accessible at age 55. Do you really need to access a lump sum at age 55? This is retirement money after all. Were the tax implications of accessing the 25% explained and covered off? Whilst it is UK tax free it certainly isn't Australian tax free (if perm or citizen), the lump sum will be assessed for tax and the amount of tax paid will then depend on the size of pot (not just the 25% lump sum), how long you have been in Australia and your Husbands marginal tax rate. How does accessing this 25% impact on your overall retirement planning? Have you ensured that you will remain on track to meet your retirement goals and objectives (after accessing this so early). Was a transfer to an Australia Super Fund considered (possible at age 55)? Withdrawals from Australian Super are tax free (after age 60) so it should have been explored at the very least as part of your overall retirement plan. Has the Australian tax implications of eventually drawing the pension (income) been explained? Typically pension income from SIPPs are taxed at a persons marginal rate in Australia. That's my input to get you thinking anyway, I'd say if none of the above has been worked through with you then think again because the transfer of a UK Pension should be built on retirement planning as the foundation however if it has then great. Regards Andy.
  6. Andrew from Vista Financial

    Paying voluntary NIC to obtain a UK pension

    Hi So the form is attached to my second reply above. You will need to apply for HMRC to assess you first and then if accepted they will send you a list of all of the previous years you are entitled to top up at class 2. Just be careful though when paying for years prior to 2015/16 IF you were close to the old 30 years (which was the full amount required at that time) as paying these does not always benefit you as they may not be allocated to your record. We are aware of this happening on a few occasions. We have found in cases like this paying one at a time to make sure it is credited is the way to go. Post 15/16 years though never seem to be an issue and we have found that they have always been credited. Andy
  7. Andrew from Vista Financial

    Paying voluntary NIC to obtain a UK pension

    Now attached Class 2 NIC Application (last 2 pages only).pdf
  8. Andrew from Vista Financial

    Paying voluntary NIC to obtain a UK pension

    Hello So to be able to receive any UK State Pension benefits you need a minimum of 10 years of contributions nowadays however it is possible to buy back years and as previously suggested pay years as you go. You should in the first instance apply for a State Pension Forecast: https://www.which.co.uk/money/pensions-and-retirement/state-pension/your-state-pension-forecast-explained-a24r12y9jt41#:~:text=You can call the Future Pension Centre (0800,You'll get your statement within 10 working days. Once you receive this you will know how many years short you are, next you apply to buy back (top up) missed years. You may be able to buy these years at class 2 rates which are ridiculously cheap (typically you need to have been working in the UK immediately prior to leaving and for the year you wish to top up at class 2 working in Australia). Application form for this attached. You used to only be able to buy back 6 years however of late we are seeing offers to buy back much more than this, 13 years for our latest client case. Once you have done this HMRC automatically send you every year an offer to buy the current years contributions. If you have an in date UK passport you are able to set up an account online and see your record which makes life a lot easier. Hope this helps. Andy
  9. Andrew from Vista Financial

    Super query - over 60

    Hello Probably not the reply you want however I understand that as a temporary resident typically (some exclusions may apply, for example a New Zealand Citizen) you are not able to claim your superannuation under the same conditions of release as a permanent resident or citizen (for example at retirement) and instead there are only limited conditions that would enable access, such as disability or death/terminal illness and (the one that you would be likely to have to apply under) the Departing Australia Superannuation Payment (DSAP). This article covers it off quite well: https://www.publicaccountant.com.au/features/temporary-residents-and-superannuation Regards Andy
  10. Andrew from Vista Financial

    Income Protection Insurance - do I need it?

    All pretty valid points above Just to let you know though that Australian regulated Financial Advisers are banned from taking commissions on Super and Investments and have been for quite some years, so if providing advice in these areas an upfront fee does have to be disclosed and agreed upon prior to any advice being provided. Regards Andy
  11. I would encourage anyone with a private UK Defined Benefit Pension Scheme (sometimes referred to as a final salary pension) to obtain a transfer value. Values have been increasing steadily over the years and it is believed that they have now perhaps peaked. We are seeing values on average standing around 25x the current annual pension benefits. This means that if you have a UK pension and the current benefit gives you a yearly pension of £10,000 the transfer value could be £250,000. So if you are a deferred member of a Defined Benefit (final salary) UK Pension Scheme and live in Australia we strongly believe that you should be proactive in this area and we (Vista Financial Services) can request the relevant transfer values and information for you. We can then if required provide advice around whether these benefits are best placed where they are OR whether they are going to work better for you in retirement elsewhere we can then if appropriate carry out a transfer for you. Our solutions include being able to transfer to an Australian Super Fund (QROPS) where applicable which is a solution only open to people above age 55 currently (due to HMRC legislation). We are also able to provide advice on transferring into an International SIPP (perhaps as an interim measure if under age 55 until it can be transferred to an Australia Super Fund) where the money can be appropriately invested as advised by us into UK and Australian currency dominated investments (I will expand more on this solution in another post). Please note that government pensions such a NHS and Police Pension cannot be transferred neither can the UK State Pension.
  12. Andrew from Vista Financial

    Taxation on a transferred pension

    Hi Dilby You could potentially enjoy a more tax efficient retirement in Australian than the UK regards your pension from the sounds of it however as Alan mentions the transfer regime is tighter nowadays, this is generally down to age and contribution caps for private pensions. Regards age, you would have to be over age 55 in the first instance to consider a transfer and secondly a person can only contribute typically $300,000 in one go without breaching (excluding growth (AFE)), this is based on using up the current financial year plus two future years of allowance. Therefore in cases such as these (assuming pot size greater than $300,000 and age 55 and above) a strategy to consider could be to access the 25% and then progressively transfer the residual amount within the contribution cap allowance every three years (depending on pot size and age etc). There's obviously still a lot more to it than mentioned above and professional advice is always recommended in this area but should offer some food for thought. Regards Andy
  13. Andrew from Vista Financial

    Retirement Planning

    You (like many others) may be feeling unsure about how your retirement is looking financially and how far your superannuation/investments will extend throughout retirement. You might be wondering what to do with your superannuation when you get to retirement……do you take it all out and put in the bank or do you move it to an Account Based Pension? What about a Lifetime Annuity, you may have heard these mentioned before but how do they work? You may be uncertain about your entitlements (if any) in relation to the Australian Age Pension and how the Assets and Income Test works and whether anything you receive is taxable? If you are a UK Expat you might also be wondering what happens to any private UK Pensions you might have and what options are available and when you can access them. Also have you considered the UK State Pension? Are you eligible to receive anything, what about buying extra years as you may have heard this is possible but is it worth it and will it affect your Australian Age Pension entitlements? What about in the time leading up to retirement? Is there anything you can or should be doing to prepare? Should you make extra contributions to Super and if so, how much and how should these be contributed? What about salary sacrifice? What are the limits? Can I use previous years allowances? If these are questions that you have and you wish to speak to someone that can help you answer them you should think about contacting us. We can provide answers to these questions and build you a solid Retirement Plan so you have a clear path mapped out for the lead up to retirement and ensure you are maximising strategies that may be available to you. Vista Financial Services are highly trusted, professional, experienced and transparent Financial Advice Practice who specialise in Superannuation and Retirement Planning. You may never have taken financial advice or no longer have an Adviser available to you or indeed have had advice but did not feel you received value. You can be rest assured that we only provide advice to clients where we firmly believe we can add value and be of benefit and we are able to advise on all of the major Industry Superannuation Funds as well as all of the major Retail Superannuation Funds. We do this by offering an initial consultation with no charge which helps both us and you understand if we can assist you and whether there is merit in working together to plan your future. You can reach here on PomsinOZ (simply drop us a message) or: Phone: 08 8381 7177 Email: info@vistafs.com.au
  14. Andrew from Vista Financial

    Taking my Super out

    Hi Lee The Departing Australia Superannuation Payment (DASP) is only as mentioned available to temporary residents as mentioned above: https://www.ato.gov.au/individuals/super/in-detail/temporary-residents-and-super/super-information-for-temporary-residents-departing-australia/ Can I ask how old you are please? Thanks Andy
  15. Andrew from Vista Financial

    Final Salary Pension from UK

    Hi I'm assuming that you have a defined benefit scheme (that was my thoughts when I mentioned another option), so let's start there. The UK tax free lump sum will be assessed for tax in Australia (assuming your a a permanent resident/citizen here) and this will be based broadly on the growth of the lump sum since arrival into Australia which is then typically taxed at your MTR. The reason as Tulip mentions that I suggested considering another option is that if it is as assumed a defined benefit scheme then a transfer to a defined contribution scheme would give you unlimited access to the pot (with of course taxation considerations) and or the ability to access an enhanced annuity given your health situation. Happy for you to reach out off line if you want to have a chat ( andrew@vistafs.com.au ). Regards Andy
  16. Andrew from Vista Financial

    Final Salary Pension from UK

    Hi Kev Is there a third option to consider as well which may be a transfer away from this scheme? Given what you have said I feel that this would definitely need to be explored! Regards Andy
  17. Andrew from Vista Financial

    Transfer Values for UK Pensions - Defined Benefit/Final Salary

    Hi Jessica In a nutshell it's predominantly due to how they are calculated and their correlation to government gilt yields, put simply the lower gilt yields go the higher transfer values go. There's not much room left for gilt yields to go lower. Take a look here: https://www.xpsgroup.com/news-and-views/transfer-values-continue-to-rise-to-a-new-record-high/ Regards Andy
  18. Andrew from Vista Financial

    Transfer Values for UK Pensions - Defined Benefit/Final Salary

    Hey Sue Going well here thanks, the office number is 08 8381 7177 Andy
  19. Andrew from Vista Financial

    Transfer Values for UK Pensions - Defined Benefit/Final Salary

    Hey rammygirl The local government pension schemes are usually ok as they are funded schemes: https://www.bbc.com/news/business-11446833 It's the government un-funded defined benefit schemes that had the ban put in place. I'd suggest it would be worth at least obtaining a cash equivalent transfer value. Andy
  20. Andrew from Vista Financial

    Consolidate super

    Sounds like a plan.
  21. Andrew from Vista Financial

    UK Frozen Pensions

    Hi Ross There should be no issue in posting the link, its a project to assist British expats it really isn't a commercial venture and I understand it to be run by volunteers. I believe that the Chariman Jim Tilley is a member on here, this is the site for other interested in the work they are doing: https://www.bpia.org.au/index.php/about
  22. Andrew from Vista Financial

    Nutmeg

    Thanks Marisa Hi Nutmeg To try and give some guidance, broadly UK pension income payments are assessed for tax in Australia and taxed accordingly at a persons marginal tax rates (MTR). Any initial lump sum (pension commencement lump sum also referred to in the UK as the 25% tax free lump sum) will also be considered for tax here in Australia and this is typically based on the growth of the lump sum since arrival. An alternative that should be explored is a transfer of the pensions to an Australian Super (QROPS) scheme, as Marisa pointed out there may be some tax to pay with such as transfer in Australia however withdrawals from Super for people over age 60 are tax free so the initial tax impost may be outweighed over time. If you would like to explore potential transfers to Australia we do specialise in this area so feel free to reach out to me offline if you wish: andrew@vistafs.com.au Regards Andy
  23. Superannuation can be used to start an account based pension once a person retires (or meets another condition of release). This allows income to be received as a series of regular payments (usually monthly, quarterly, half yearly, or yearly). If over preservation age but still working, the person may not have full access to superannuation but may be able to start an account based pension under the Transition to Retirement (TTR) rules. A TTR pension may also be referred to as a Transition to Retirement Income Stream, or TRIS. Once a person reaches 65, or informs their super fund that they have met a condition of release before turning 65, their TTR pension becomes a ‘TTR pension in retirement’. This means their pension is subject to the same conditions that apply to an account based pension. Income Payments The person can select how much income to receive each financial year. This allows flexibility to meet individual needs. The only rules for how much pension must be taken are: · An income payment must be made at least once each financial year. · A minimum level of income must be paid each year based on a percentage of the account balance at commencement and each 1 July. If the income stream commences part-way through a financial year, or is commuted before the end of a financial year, the minimum income payment is pro-rated for that year. Age Income Factor(2019/20 & 2020/21) Under 65 2% For a TTR pension, the maximum income is 10% of the account balance and no lump sum withdrawals can be made. The pension will cease when the account balance reduces to nil or the person requests the money be rolled back to accumulation phase or another pension account. The pension can be commuted (stopped) at any time with the money rolled back to accumulation. Withdrawals cannot be made in cash unless a condition of release has been met. Taxation of Income from a TTR Pension Every withdrawal (income or lump sum or death benefit) from a pension is split into taxable and tax-free components in the same ratio that applied when the pension commenced. The tax on each component depends on the person’s age as shown in the table below. Component Taxation Treatment Any age Tax-free No tax 60 or older Taxable – taxed element No tax Taxable – untaxed element Marginal tax rate*, less 10% offset Under age 60 Taxable – taxed element Marginal tax rate*, less 15% tax offset Taxable – untaxed element Marginal tax rate* * Plus Medicare Levy Earnings added to a pension account are taxed at the same rate as applies to the accumulation phase of superannuation.
  24. Andrew from Vista Financial

    Drawing from a UK SIPP

    Hello again Thanks for confirming your residency status. In relation to the tax to pay on the pension income when in draw-down, the taxing rights are held by the ATO on this due to the DTA. The pension should be paid gross from the UK and declared here and will then be taxed in accordance with your marginal tax rate (MTR). You may (or may not) be able to deduct some of the pension payment using the 'Undeducted Purchase Price, there are a few threads on here that cover this (just do a search in the search box), here is one such post: In relation to engaging an Adviser to assist then this is not a Financial Planners domain but an Accountant, if you have an Accountant here they will probably be able to assist as many Accountants have clients who receive UK pensions (just make sure the UPP is explored). IF you have not already drawn on the SIPP then you could explore a transfer to an Australia Super (QROPS) as there may also be merit in that although you may not be able to access the funds if they are transferred at the same time as you can with the SIPP money (however if the overall tax savings are of significance then there might be other strategies to consider to bridge the cash-flow deficit). Hope this helps. Andy
  25. Andrew from Vista Financial

    New financial year to bring new rules for super

    For the 2020–21 financial year, the two main changes are the abolition of the work test for those aged 65 and 66 years old and the extension of spouse contribution for those aged between 70 and 75 years. We are still waiting for a change in legislation that will allow access to the “bring forward” rules. Work test changes Up until 30 June 2020, there was no need for an individual to satisfy a work test for personal concessional and non-concessional contributions before reaching the age of 65. However, once they reached 65 years of age in the financial year, a work test of 40 hours in 30 consecutive days was required to be met at any period during that year, and prior to the contribution being accepted. “Providing the work test is met in a financial year, personal concessional or non-concessional contributions can be accepted up to 28 days after the month in which the person reaches the age of 75. However, there are exceptions to the work test where personal contributions are made in the year after ceasing work, or for purposes of downsizer contributions.” From 1 July 2020, it will be possible for those under the age of 67 years to make personal contributions without needing to satisfy a work test. In the financial year a person reaches the age of 67, personal contributions can be made prior to reaching 67 years old. However, a work test must be met at any time during the financial year prior to the contribution being made. Spouse contributions Up until 30 June this year, it was only possible to make spouse contributions up until the age of 70 years. Between the ages of 65 and 70 years, the spouse was required to meet the work test of 40 hours in 30 consecutive days for the year in which the contribution was made. However, from 1 July 2020, this has now been extended to apply to spouse contributions made between the age of 67 years, and 28 days in the month after the spouse reaches 75 years old, which puts it in line with other personal superannuation contributions. “The work test must be met prior to the spouse contributions being made to the fund.” Reduction in minimum pensions for account-based pensions In late March 2020, the government amended the minimum percentage required to be paid for account-based pensions by 50 per cent. “This meant that account-based pensions, transition to retirement pensions, and market-linked income streams would have their minimum pension percentage reduced by 50 per cent for the 2019–20 and 2020–21 financial years. Read full article here
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