winter1

I agree with what Marisa has said above, that is the position as I understand it after calling HMRC several times. The only concession that is given is that you are taxed on 90% of a regular pension payment I mentioned the other reliefs that are implied in sa 106 but was told this did not apply as it would be an income stream( I was hoping when I posed the original question that someone else had tested this). However as I am not in the position yet I haven't had to file a tax return to test it. So the option of a purchased life annuity is a possibilty this is also mentioned in the first link as it is regarded as capital and only the interest is taxed. It may be possible to buy one in Australia with higher yields. However as I stated before the exchange rate could vary the payment far more than tax or interest. Therefore bringing it to the UK as a lump sum could actually protect the value of capital if the AUD were to drop even further. https://online.hmrc.gov.uk/information/help?helpcategory=selfAssessmentFiling1011&affinitygroup=&helpid=PensionsAndOtherBenefits https://www.gov.uk/government/publications/self-assessment-foreign-sa106

Just to clarify I was advised by my super fund that starting an income stream before the 1st Jan this year would not save me from new rules to include it in the aged pension Deeming calculations as you already have to have been old enough to receive the aged pension before the 1st of January. Unless you know different, if so I would be making representation to my fund for incorrect advice.

Hi fizzybangs, It is not for everyone, but is an option to protect a capital amount. I agree the returns in an Australian super fund are superior strictly on a dollar basis but you also have to take into account exchange rates. For example my Aus super has risen in dollar terms but has gone down by around 17% in pound terms since mid 2012 despite adding 20% in dollars in the same time. It is now worth a lot less now than in mid 2012 in pounds. However if the AUD recovers it will be worth more. Also the Deeming rules would make no difference if you reached aged pension after this date regardless of when you started drawing a super stream.

I contacted the DWP by phone and can confirm that I was told that as per current regulations that any time in Australia prior to 28th February 2001 can be counted towards a UK pension and each year increases the amount payable. However the lady could not tell me how many years of UK work years were required for this to kick in. I was told to ring Revenue and Customs as this was under their remit. I will try and do this with my wife very soon as I cannot make an enquiry on her behalf. I was also informed that they expected that arrangement to continue however as the "New pension" which comes in after 2016 has not yet been passed totally by parliament this could change. The other thing that is of note from the "New Pension" is their is no spouse pension all pensions from April 2016 will depend on the individuals NI record taking no account of a spouses contribution.

I have just found this on another forum which gives a clue that the years in Australia may well count towards your payment of UK age pension. http://www.expatforum.com/expats/france-expat-forum-expats-living-france/125698-uk-state-pension-not-fully-payable-france.html

I agree it is a bummer if this is indeed the outcome. However I am not sure if the rules for Australia are different with the now defunct agreement. When we asked for a forecast for my wife from the DWP they said this was not possible till she reached age pension age as she had only worked in the UK for 1 year. I got my forecast as I had nearly 30 from age 16 (despite having paid NI since 14 from a part time job). My wife was led to believe that Australian work years prior to 2001 would add to the pension amount. It is very difficult to find a defintive answer.

Hi Bill, I think that Marisawright has answered this quite well the official site of the Director of Work and pensions shows the new rules. https://www.gov.uk/new-state-pension/living-and-working-overseas It indicates that a minimum of 10 years NI contributions are required but gives examples of people with only 7 years NI contributions made up allow the ten year entitlement with recipricol agreements. The caveat is that the pension is based on the seven years of NI. I had wrongly made the assumption that you had previosly worked in the UK. However if you are going soon and working you should be able to build up years. the full pension is now based on 35 years of contributions so on the current estimate of the new full pension of around £155 ten years would give around £44 a week.

Bill, Certainly agree with your sentiments re not doing it just for tax minimisation. The original question was to see if there was any concessions on the fact that tax had already been paid in Australia. Will you be entitled to a UK aged pension at age 65 or your pension age? if so this MAY add another potential £8000ish to the mix each. (remember that time worked in Australia up until July 2001 when the reciprical agreement ended. It could give you an entitlement to the non means tested pension if you have already had a number of years working and paying national insurance in the UK or maybe if you work in the UK till the day you retire. You only get the estimate for this when you reach retirement age. This could be a plus that will give a net gain on the whole deal. Good luck Winter

Hi Pam, If you have already reached 60 then as a female you will already be able to claim your UK pension and I am assuming also the NHS pension. I note in another post you were already aware of the reciprocal agreement that ended in 2001. You may also like to have a look at this link that shows the UK chancellor has announced the intention to allow anyone retiring before 2016 the ability to top up their UK Basic state pension with a one of payment of £700 for £190 per year increase. This is a one off for a short window. http://www.telegraph.co.uk/finance/personalfinance/pensions/10497646/Autumn-Statement-2013-Over-60s-offered-cheap-state-pension-boost.html I also paid class 2 voluntary contributions for a few years till I reached the 35 year National insurance level for a full pension. not sure what that costs now but it only cost me around £400 in total to get an extra worth around £835 per year in pension at today's rate. may be worth investigating. Good luck

1. I think the point is here that an Australian Occupational Superannuation scheme has tax deducted when you or your employer contribute.. so any money going in is taxed albeit at 15% on concessional contributions. However if you put any money in from a something like a sale of a house or car then you will be putting money in from funds that have been fully taxed. 2. If you remain in Australia this super fund can pay you an income once you turn 60 totally free of income tax. 3. If you move to the UK then it will be taxed as an income stream at normal rates. 4. If instead of putting that money in super you had put it in the bank then you could draw it down whenever you want without it incurring tax. 5.OK you will have received some concessional tax relief on some of it but will still have paid at least 15% on it and may well have paid 30% on it and then you get taxed again in the UK at at least 20%. 6. If you have paid into a UK pension fund whilst working in the UK you get full Tax relief at your highest rate up to 50% so yes it would be fair to pay tax on this as you have already had your tax relief. 7. There are financial instruments in the UK that recognize you have paid tax on certain investments i.e. Purchased Life Annuities (not to be mixed up with common or garden annuities). the question I put was to see if anyone knew if there were certain exemptions on Australian Occupational super. If you have an Australian state pension then I would expect to pay tax on it or any other pension for that matter it is just the way that Australian super is taxed. Maybe it would be fairer to tax it at a sliding scale from 5%.

I am aware of that but there are differences between standard annuities and Purchased Life Annuities. read this link http://www.investmentsense.co.uk/retirement-centre/thinking-about-retirement/purchase-life-annuities/# It may also be wise to get proper advice but this could be an option if you want to protect your capital and unlike standard annuities if you haven't drawn all the money in your pot then your estate will get the balance.

Hi Thistle13, I fully understand how you feel. As I mentioned previously if I decide to leave Oz permanently one of the options would be to draw all the super out after retiring tax free which I believe you can, and take it to the UK and purchase a product in the UK called a "Purchased Life Annuity". This can be drawn down part of the income is recognized as capital and is Tax free only the earnings component is taxed IE interest. The only downside is if you do decide to return to OZ then it becomes taxable in OZ, so you have to be pretty sure the move is permanent.

Thanks for this information

Thanks to fizzybangs and Thistle13 for the considered responses.

If you were to put £20000 in a building society you would expect to pay tax on the interest but you would not expect to pay tax on the capital in the account. This is because you have already paid tax on this when you earned it. This is the same principal as Australian Super is taxed when you contribute to it. You cannot choose which tax regime you obey it is done on residence tests etc. I don't understand the premise "but would get a higher tax free allowance in the UK" is this on contributions or on receipt of income. This either assumes I would be contributing to a pension in the UK, which I won't or that the tax free allowance is greater in the UK which it no longer is under the $18000 dollar tax free threshold from last July. There are vehicles in the UK which recognise this called Purchased life annuities, this is where part of the draw down is deemed capital and is tax free only the investment earnings ie interest is taxed. The original question asked if anybody knew about the tax treatment or had had experience of this situation. many thanks

The Difference here is you received Tax relief when you put your Money in the UK Super. I didn't, I paid tax some at 30% and some at 15%. Surely this is Double Taxation?

Rupert, The point is that it has already been taxed in Australia when it was put into super some at 15% and some at 30%. There is no tax relief for such as in the UK. Also if it is drawn in Australia after the age of 60 it is Tax Free. For example 15% tax going in in Australia 20% tax when taken out in the UK therefore 35% tax on a modest income. The money that was paid in at 30% would then attract 20% on the way out in the UK therefore 50% tax on a modest income. Hardly fair I am looking to see if there are any concessions. I can understand tax on the earnings but not on the Capital.

If I decide to return to the UK and draw my Australian Super from my Australian occupational scheme in the UK, will it be fully taxed in the UK even if I am over 60? I have tried to look for answers to this, but I struggle to find any. The Super Fund I have has some contributions that were taxed at the 15% concessional rate and other contributions that were from fully taxed income. Also a lump sum from the sale of a house which is deemed as taxed income. I believe that taken as a Lump sum it would be tax free but maybe not as an income stream and it might not be wise to remove it from a scheme with a good investment history. If it is taxed in the UK then surely this would be tantamount to Double Tax if it were taxed at the full rate? Also as contributions to a UK Super would attract tax relief at Marginal rates this is doubly unjust. Any thoughts or anyone else done this? Thanks Winter1