Dorset Posted June 22, 2013 Share Posted June 22, 2013 Hi, sorry if this has been asked already, but ... My wife and I both have final salary government pensions in the UK that we stopped contributing to last September. We also have a private pension scheme with just over £100K. We considered several possibilities regarding the pensions and what would be best, but due to low exchange rates we came to the conclusion that we were best off leaving all of them in the UK. I don't think we would want to move the final salary ones anyhow. Our latest thoughts are, that, if all works according to plan, we will continue to live and work in Australia until retirement and take citizenship when we are eligable. We will then go on an extended holiday in Europe/UK for a year or two, and become tax resident in the UK during this time. We would then take the highest lump sum we could from these pensions, and convert the remaining money in the private pension scheme into an annuity. On our return to Australia we would be able to transfer the money from the lump sums to Australia from our UK bank account, and pay the Australian tax as required on the income from the annuity and final salary schemes for the rest of our lives. Alternatively we could leave the private pension plan to accumulate until our deaths, and then it could become part of the children's inheritance - and as far as I understand there isn't presently inheritance tax in Australia. Would we be allowed to do either of these? Quote Link to comment Share on other sites More sharing options...
Skippy1 Posted June 22, 2013 Share Posted June 22, 2013 You obviously need prof advice but would it not be better to move the 100K private fund to Australia, leave it invested, and then take the benefits tax free on retirement in Australia. otherwise as you have already said you will be liable for UK and AUS tax on drawdown of this...............You could also draw down the complete fund on retirement in Aussie and rely on the other pensions as income......That would be my understanding as we are also in the process of looking at our options pension wise. Maybe wiser heads will add some comments... Quote Link to comment Share on other sites More sharing options...
Guest The Pom Queen Posted June 22, 2013 Share Posted June 22, 2013 You obviously need prof advice but would it not be better to move the 100K private fund to Australia, leave it invested, and then take the benefits tax free on retirement in Australia. otherwise as you have already said you will be liable for UK and AUS tax on drawdown of this...............You could also draw down the complete fund on retirement in Aussie and rely on the other pensions as income......That would be my understanding as we are also in the process of looking at our options pension wise.Maybe wiser heads will add some comments... As this is posted in the companies own forum I'm hoping he will be along soon to help Quote Link to comment Share on other sites More sharing options...
Dorset Posted June 23, 2013 Author Share Posted June 23, 2013 You obviously need prof advice but would it not be better to move the 100K private fund to Australia, leave it invested, and then take the benefits tax free on retirement in Australia. otherwise as you have already said you will be liable for UK and AUS tax on drawdown of this...............You could also draw down the complete fund on retirement in Aussie and rely on the other pensions as income......That would be my understanding as we are also in the process of looking at our options pension wise.Maybe wiser heads will add some comments... I think I am right in saying the lump sum is UK tax free, so at worst it would only be Aus tax. However if we had (as we intended anyhow) a year over in the UK we would receive this money whilst under UK tax, and would then move anything remaining over after our holiday. Most of our UK cash is still in UK banks, and we don't get taxed to move this over, but get taxed only on the interest that we earn. The low exchange rate is in any case almost like another tax. Cost of living here compared to the UK would suggest to me that the pound is underpriced. If the exchange rate was still $3, or even over $2 to the pound it would be a no brainer. At $1.60 it is effectively a tax of 40c in the £, so I am not convinced it is the best idea. Quote Link to comment Share on other sites More sharing options...
Andrew from Vista Financial Posted June 24, 2013 Share Posted June 24, 2013 (edited) Hi Sorry for delay! I think that between you and Skippy1 you have covered most of it off. Dorset you are right in thinking what is possible with your options i.e leave the money in UK and maybe take 25% lump sum and then to buy an Annuity or use the funds for income drawdown (which can essentially be left to accrue) if that is your choice). Generally the 25% pension lump sum is tax-free in the UK. Alternatively there is the possibility to transfer to Oz, with Superannuation it is generally possible to withdraw up to 100% subject to meeting a full condition of release (also subject to any HMRC regulations). Generally withdrawals on Superannuation in Australia are tax free if over age 60. Just a couple of further points for you to think about. A Pension Transfer can happen at pretty much anytime up to retirement so if you strongly believe that the exchange rate will improve in favour of sterling you could consider transferring in the future. Also whilst there is currently no death duty as such in Australia the UK may levy a tax charge on a pension lump sum. See here as it is quite a good piece of info especially around death benefits http://www.pensionsadvisoryservice.org.uk/media/939485/spot005incomeddvsannuitypurchase.pdf Regards Andy Edited June 24, 2013 by Andrew from Vista Financial Quote Link to comment Share on other sites More sharing options...
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