DIY UK Pension Transfer

[Wonderer]

Hi

 

Does anyone have experience of moving UK pension pots (...sadly not defined benefits) to Oz without using agents? I have been quoted 3% of the total sum, before taking out the 25% tax-free lump-sum, to arrange for (1) the consolidation of all my pension pots into a UK SIPP, (2) getting a QROPS-approved fund ready to receive the money and (3) arranging the transfer. This includes the agent dealing with the Pension Funds in the UK and besides filling out various forms I do "not have to do anything". I just want to check if the DIY approach is feasible and the level of hassle involved.

[Andrew from Vista Financial]

Hi Wonderer

 

A few questions if I may:

 

 

 

• Where do you currently live?
  
• Are you looking to withdraw these funds anytime soon i.e are you about to reach retirement age?
  
• When you refer to Agent do you mean Financial Planner/Advisor?
  
• What does 3% of your funds look like in dollar terms?
  
• How many Pensions do you have?
  
• Does this include advice on the implications of transferring out of your current pensions?
  
• Does this include advice on, once the pensions arrive, how the money should be invested and recommendations for the funds to be invested into and placed?
  

 

 

 

 

Thanks

 

Andy

[Wonderer]

Hi Andy

 

Thanks for the response. Answers below:

 

 

• Where do you currently live? UK at the moment but looking at emigrating late 2014 / early 2015;
• Are you looking to withdraw these funds anytime soon i.e are you about to reach retirement age? I am hoping to retire formally in Sept/Oct when my current employment ends;
  
• When you refer to Agent do you mean Financial Planner/Advisor? Yes;
  
• What does 3% of your funds look like in dollar terms? A lot....about AU$25,000;
  
• How many Pensions do you have? Two - both are defined contribution schemes with no extra guarantees about annuity rates or anything else for that matter;
  
• Does this include advice on the implications of transferring out of your current pensions? Yes but as I do not have a final salary scheme I believe my situation is relatively simple;
  
• Does this include advice on, once the pensions arrive, how the money should be invested and recommendations for the funds to be invested into and placed? Yes.
  

 

 

 

 

Thanks

Wonderer

[Andrew from Vista Financial]

Hi Wonderer

 

Yes I agree that $25,000 does seem to be a lot of money for this and at first glance I would tend to agree.

 

However based on this fee then your pot is valued at over $800,000 and this in itself brings extra complications to the point whereby a transfer would have to occur over a number of financial years so as to avoid you breaching the contribution caps in Australia. A breach of the contribution caps will result in a tax charge of 46.5%!

 

Not only this but already from the responses you have given there is likely to be extra complications with your situation. You mention that you are hoping to retire formally at the end of this year therefore if your objective is to draw an income from the pension then there are strict guidelines as to the amounts that can be withdrawn from a HMRC point of view.

 

However those amounts are not the same as in Australia and therefore a withdrawal that is over and above what would have been allowed had the money remained in the UK could then cause an unauthorised payment which again could result in a penalty charge by HMRC this time of up to 55%!

 

Further still, generally the Australian system works on age based contributions and depending upon you age it may be that you are not able to transfer in your pension or make a subsequent transfer at some future point.

 

So as you can see it would most definitely be in your interests to take professional advice in relation to this.

 

Does the fee proposed take into account all of the above including managing your funds whilst the transition takes place (could be several years) both here and in Australia and not charging an additional annual fee to manage them as well as ensuring that the withdrawals you make are not only inline with Australian rules but also UK rules (a combination of Superannuation Funds and Account Based Pension may be required in Australia to accommodate this) whilst you are still within the UK breach time line (generally 5 full tax years of being a non uk tax resident)?

 

If it does perhaps the fee does not seem so ghastly however from experience I doubt it will (I may be wrong) but firms that tend to quote a percentage basis fee (with no other fee structure ie minimums and maximums based on work involved) are quoting just in relation to transfer.

 

I am also not sure why a SIPP is required (if your market linked schemes allow partial transfers) it may be that they will recommend a number of SIPPS to manage potential tax liabilities on transfer into Australia. However I am still not sure that this is necessary especially since a big part of it is likely to be able to be transferred tax free in the first 6 months.

 

Regards

 

Andy