TheBellMan Posted July 29, 2012 Share Posted July 29, 2012 Wifey and I are in our early 40s and are going to Oz on a 457 at end of August. The Company are going to sponsor for the Perm Emp Sponsored visa too once we arrive. So, we're just trying to tie up the financial side of things and we've just had a statement from the revenue about credits towards state pension. Both of us have 24 qualifying years, so 6 short of the 30 required. We were thinking that we'd pay voluntary contributions to bring us up to the 30 qualifying years. I know that UK state pension is frozen at whatever it is at the time you move. So in 25 years time we'll be able to afford a loaf of bread a week. So, what to do??? Wifey's job will pay $11,000 into a Super fund. Are we better off putting the money that we'd used for the voluntary contributions into a private pension in Oz? Or should we pay HMRC so we have the 30 years, even though it's going to be next to no money in 25 years? Alternatively, the Mrs would rather spend it on shoes. Anyone had experience in this area? Link to comment Share on other sites More sharing options...
Guest The Ropey HOFF Posted July 29, 2012 Share Posted July 29, 2012 Private pensions pay little return I had one and they aren't worth having, you are better off putting your money into a high interest savings account, there isn't any worth investing in here in the UK, but I think Australia is better, I personally would pay the last six years UK pension credits, contact them and ask how much it will be, best of luck. Link to comment Share on other sites More sharing options...
Tarby777 Posted July 29, 2012 Share Posted July 29, 2012 I took professional advice when I emigrated and was strongly encouraged to keep on paying. You should be able to pay class 2 NICs, which are only tuppence ha'penny in the grand scheme of things (only around 10GBP per month). It's a low-cost investment for a guaranteed return. I guess everyone's situation is different... as things stand, you'd still get 24/30 of the basic UK state pension even if you stopped paying, and so I suppose you have to think about how much you will be relying on HMRC for your retirement income, and whether the extra that you will pay now justifies the extra return. Personally, I think it's more important to think about any personal/company pensions you have, and to get them transferred over to Oz quick sticks under the QROPS scheme once you are granted PR. UK pension income is taxable in Oz, whereas income from super is generally tax-free, and you can access it sooner. You get a 6-month grace period on pension transfers after which any growth in a UK pension becomes taxable in Oz when you transfer it over, so it's best not to hang about... Link to comment Share on other sites More sharing options...
TheBellMan Posted July 29, 2012 Author Share Posted July 29, 2012 We've already got things underway on our personal pensions. It was just the state pension we were wondering about. It's about £400 per year so I think we'll probably go ahead and get the 30 years paid up. Link to comment Share on other sites More sharing options...
flag of convenience Posted July 29, 2012 Share Posted July 29, 2012 We've already got things underway on our personal pensions. It was just the state pension we were wondering about. It's about £400 per year so I think we'll probably go ahead and get the 30 years paid up. That is the way I'd go in your position. Probably too late now to ever build up a substantial super fund over here and Aussie aged pension is low and means tested. Bank interest rates wat better than UK and EU but the direction is downwards..... Link to comment Share on other sites More sharing options...
Perthbum Posted July 29, 2012 Share Posted July 29, 2012 Wifey and I are in our early 40s and are going to Oz on a 457 at end of August. The Company are going to sponsor for the Perm Emp Sponsored visa too once we arrive. So, we're just trying to tie up the financial side of things and we've just had a statement from the revenue about credits towards state pension. Both of us have 24 qualifying years, so 6 short of the 30 required. We were thinking that we'd pay voluntary contributions to bring us up to the 30 qualifying years. I know that UK state pension is frozen at whatever it is at the time you move. So in 25 years time we'll be able to afford a loaf of bread a week. So, what to do??? Wifey's job will pay $11,000 into a Super fund. Are we better off putting the money that we'd used for the voluntary contributions into a private pension in Oz? Or should we pay HMRC so we have the 30 years, even though it's going to be next to no money in 25 years? Alternatively, the Mrs would rather spend it on shoes. Anyone had experience in this area? PAY PAY PAY.....6 YEARS SHORT on todays pension is a shortfall of about £160 a month, x2 which is a shortfall for you pair of £320 a month...who says you will not be back in the UK in 10 years time? you get far more out of a pension that you put in. Link to comment Share on other sites More sharing options...
Andrew from Vista Financial Posted July 30, 2012 Share Posted July 30, 2012 We've already got things underway on our personal pensions. It was just the state pension we were wondering about. It's about £400 per year so I think we'll probably go ahead and get the 30 years paid up. It is possible to backdate for up to 6 years and as someone has already mentioned class 2 is a much cheaper option and worth applying for when you are ready. Regarding your UK Private Pensions, are you aware of the risks of transferring them whilst on temporary visas? Regards Andy Link to comment Share on other sites More sharing options...
Andrew from Vista Financial Posted August 8, 2012 Share Posted August 8, 2012 Hi, I will give a heads up on the risks of transferring UK Pensions if temporary resident in any event as you may not be aware and also this may help other forum members who are temp and considering transferring UK Pensions. When transferring a UK Pension to Australia the transfer must be made to a Qualifying Recognised Overseas Pension Scheme (QROPS) to avoid tax/penalty charges of between 40% - 55%. This is the same regardless of whether one is a temporary resident or permanent resident. To further avoid tax/penalty charges these monies must remain in a QROPS Superannuation fund until the person has been a non UK tax resident for at least 5 full UK tax years. This is where the danger lies for temporary residents, if a person who is temporary resident does not obtain permanent residence within this time period and thus has to leave Australia they have 2 options with their Superannuation monies: A) Withdraw the money less any applicable withholding tax; or B) Do not claim the money and the Superannuation Fund will transfer the money to an ATO holding account. In both scenarios essentially a breach will occur as an unauthorised payment as far as HMRC are concerned will now arise. The consequences of this breach are that HMRC can levy a tax/penalty charge of between 40% - 55%. Therefore clearly there is a very big risk in transferring unless someone is a permanent resident. Regards, Andy Link to comment Share on other sites More sharing options...
fairystar32 Posted August 8, 2012 Share Posted August 8, 2012 My hubby has a NHS pension and a private pension and the state pension in the UK on hold, we never even considered it when we moved here, he had paid contributions for roughly 25 yrs. it never crossed our mind when we moved. We have no idea what to do with them now, he needs to try and track the NHS one and update details. Link to comment Share on other sites More sharing options...
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