Ban on UK Pension Transfers

[Andrew from Vista Financial]

I have been thinking about this subject for the last two weeks. I have 18 years pension payments in a UK fire service pension. It is a defined benefits scheme. I have done my homework and if I transfer it over now to a OZ QROPS and draw on it when I am 60, the yearly figure I have been given is just under what the Fire service pension people say they will pay me BUT the fire service pension figure is at todays rates. In 13 years time when I am 60 it will have gone up as it is index linked. I won't pay a lot of tax on it as I will be entitled to a full tax allowance in the UK despite living in Oz. I also have a Super account over here so in my mind I have the best of both worlds. The main reason that a pension transfer to Oz appealed to me is that I can have full access to it when I am 60. But I intend on living a full and long retirement so have decided not to transfer. Just my thoughts.

 

Hello mr luvpants

 

You say" the yearly figure I have been given is just under what the Fire service pension people say they will pay me "

 

Do you think you could clarify what you mean by this?

 

Did you have an Adviser run some figures for you?

 

Is this based on the transferred funds (if transferred) growing between now and age 60 and then paying out the minimum legislated amounts from an Account Based Pension (the common option for superannuation to be transferred into at retirement in Oz)?

 

Also as above please note David's (Gbye grey sky) comments, the pension income is assessed in Australia if a permanent resident and taxed accordingly.

 

lastly, if you like the idea of an income for life an option could be using the funds pension at retirement to purchase a Superannuation Annuity in Oz, benefits of this then are tax-free income and income for life.

 

 

Regards

 

Andy

[mr luvpants]

Hello mr luvpants

 

You say" the yearly figure I have been given is just under what the Fire service pension people say they will pay me "

 

Do you think you could clarify what you mean by this?

 

Did you have an Adviser run some figures for you?

 

Is this based on the transferred funds (if transferred) growing between now and age 60 and then paying out the minimum legislated amounts from an Account Based Pension (the common option for superannuation to be transferred into at retirement in Oz)?

 

Also as above please note David's (Gbye grey sky) comments, the pension income is assessed in Australia if a permanent resident and taxed accordingly.

 

lastly, if you like the idea of an income for life an option could be using the funds pension at retirement to purchase a Superannuation Annuity in Oz, benefits of this then are tax-free income and income for life.

 

 

Regards

 

Andy

 

Of course. If I put my CETV figure into the Qsuper retirement calculator, it gives me a figure that my super pot will be worth at aged 60 and a yearly figure that I can expect to have from that pot. The yearly figure is less than what my UK Fire service pension will pay me at todays rates and in 13 years time (when I retire) it will (hopefully) be even more.

 

My UK pension forecast has grown 1000 pounds since I left the UK 4 years ago. If it carries on that way, the tax I have to pay here in Oz would still make leaving the pension in the UK worth while. Question: Why would I be taxed here on my UK pension if my Oz super retirement payments are tax free? Surely I would be entitled to an Oz tax allowance?

 

JOHN

[winter1]

Andrew,

 

Am I right in assuming that as I don't have to declare my Australian Super payments any amount of pension received from the UK being the only other income I receive would be subject to the $18000+ tax free allowance before any tax is deducted in Australia?

This may also be a factor for people considering a transfer to a QROPS fund. Particularly defined benefit pensions.

[Lindor]

I would be very grateful for some pension advice. I have an NHS pension, lump sum on retiring 3 years ago and a monthly payment. It goes into my account in the UK and pays my mortgage. I use my visa debit card here for cash at an ATM. How will these changes affect my payment and what should I do?

[Keith and Linda]

I would be very grateful for some pension advice. I have an NHS pension, lump sum on retiring 3 years ago and a monthly payment. It goes into my account in the UK and pays my mortgage. I use my visa debit card here for cash at an ATM. How will these changes affect my payment and what should I do?

 

Lindor are you still using your English debit card for cash withdrawal's here in OZ?

[Lindor]

Lindor are you still using your English debit card for cash withdrawal's here in OZ?

 

I am and also in shops.

[Keith and Linda]

I am and also in shops.

 

I thought we had sorted you out:frown::policeman:. You should not be worried about paying tax it will be chicken feed compared to what you are paying now in fees charges and exchange rates!:wacko::cry: Go and open an Oz bank account ensuring you have internet banking NOW please, and if not already, then get your UK bank on internet, and start transferring larger sums each time either through the banks or better still via some other transfer company the likes of the ones mentioned before on previous threads.:smile:

Only thinking of your best interests here lindor.

[Lindor]

Thank you K&L. I've do have a Australian bank account K&L........:embarrassed: I will sort out internet access to it! I opened it with a Moneycorp account before I moved here with the intention of transferring money. My UK account is with the Nationwide and I just left it because I have my mortgage with them. Do you know about pensions? I don't know if mine will be affected in any way with the changes!

As you've gathered, I'm crap with money.......:embarrassed:

[Andrew from Vista Financial]

My partner has a police pension (only for a couple of years service). Apologies for my ignorance, but does a transfer ban mean he loses this pension (small that it would be) altogether if he does not transfer before the ban or does it just mean he will be paid from the UK when he retires?

 

Thank you

 

Hello

 

Absolutely not, he will still retain his accrued benefits and they will increase with inflation each and every year until he starts to take them.

 

Once retired and the pension becomes in payment they will also increase with inflation each and every year.

 

The changes announced do not affect the pension he has built up at all.

 

 

 

Of course. If I put my CETV figure into the Qsuper retirement calculator, it gives me a figure that my super pot will be worth at aged 60 and a yearly figure that I can expect to have from that pot. The yearly figure is less than what my UK Fire service pension will pay me at todays rates and in 13 years time (when I retire) it will (hopefully) be even more.

 

My UK pension forecast has grown 1000 pounds since I left the UK 4 years ago. If it carries on that way, the tax I have to pay here in Oz would still make leaving the pension in the UK worth while. Question: Why would I be taxed here on my UK pension if my Oz super retirement payments are tax free? Surely I would be entitled to an Oz tax allowance?

 

JOHN

 

John, it would seem in that case that you may have misinterpreted the projections, the two points that stand out are:

 

 

• If you have based it on rolling super to a pension and taking the minimum legislated amount, this is only the minimum you must take, there is no maximum once a full condition of release has been met and therefore it could be possible to increase what you take each year.

 

 

 

 

• Having looked through their disclaimer and assumptions it states “Results are presented in today's dollars”. Therefore the actual future dollar amounts will be much higher than you seem to have understood them to be, the projections are being presented on the basis of what the income would be worth in today’s dollars similarly to your Fire Service Pension benefits.

 

 

Quite an important statement made by QSuper before entering the calculators is:

 

“The calculators are not intended to be relied on for the purposes of making a decision in relation to a financial product, including a decision in relation to a particular product, fund, or strategy. Consumers should consider obtaining advice from a suitably qualified adviser before making any financial decision”.

 

I would whole heartedly agree with this for anyone looking to understand what their retirement position might look like with UK Defined Benefit Schemes considering transferring to Australia.

 

Regards tax, Super is a tax efficient environment and part of this is that income over the age of 60 is tax free, UK Pension income is not a tax efficient/tax free income stream and is assessed and taxed accordingly.

 

Also anyone that has money in superannuation will be paying tax on earnings and pre-tax contributions whilst in accumulation phase whereas your UK Pension has not been paying tax to the ATO.

 

 

 

Andrew,

 

Am I right in assuming that as I don't have to declare my Australian Super payments any amount of pension received from the UK being the only other income I receive would be subject to the $18000+ tax free allowance before any tax is deducted in Australia?

 

This may also be a factor for people considering a transfer to a QROPS fund. Particularly defined benefit pensions.

 

 

In your case yes if you have no other income......for some it could be an even higher amount than $18,000 tax-free taking in to account tax offsets. This may change when/if you start to receive the UK State Pension and Australian Age Pension.

 

It most certainly is a factor and I think too many people are coerced to transfer based on ‘Having to pay tax if they do not transfer’ by transfer companies and banks without fully understanding what the tax may look like in their situation, like you say it could be 0% for some.

 

We point it out to John based on him suggesting that it is not declarable in Australia, my statement to him is that "it is assessable in Australia and taxed accordingly" be that 0%, 19%, 32.5%, 37% or 47% plus Medicare.

 

I am very clear about this and have always been, when I provide advice before giving my professional opinion I have a full understanding of someone’s position and future goals and objectives so that I can run forecasts on both scenarios ie leave in UK or transfer and give them a detailed position of their retirement which factors in UK State Pension, Tax, Australian Age Pension, required retirement income and any other assets/income streams that may have an impact.

 

 

I would be very grateful for some pension advice. I have an NHS pension, lump sum on retiring 3 years ago and a monthly payment. It goes into my account in the UK and pays my mortgage. I use my visa debit card here for cash at an ATM. How will these changes affect my payment and what should I do?

 

Thank you K&L. I've do have a Australian bank account K&L........:embarrassed: I will sort out internet access to it! I opened it with a Moneycorp account before I moved here with the intention of transferring money. My UK account is with the Nationwide and I just left it because I have my mortgage with them. Do you know about pensions? I don't know if mine will be affected in any way with the changes!

As you've gathered, I'm crap with money.......:embarrassed:

 

The changes being discussed here have no impact on you whatsoever.

 

 

Kind regards

 

Andy

[Keith and Linda]

Thank you K&L. I've do have a Australian bank account K&L........:embarrassed: I will sort out internet access to it! I opened it with a Moneycorp account before I moved here with the intention of transferring money. My UK account is with the Nationwide and I just left it because I have my mortgage with them. Do you know about pensions? I don't know if mine will be affected in any way with the changes!

As you've gathered, I'm crap with money.......:embarrassed:

 

Hi Lindor, Andrew has answered your question, I think it was more about transferring you whole pension scheme rather than the money you already receive from a pension. Please get your bank thing sorted out better in your pocket than the banks profits, is there somebody that could maybe help you with the initial sorting out?

My wife now gets a small uk Gov pension, it too like yours is banked in UK but it is there for our spending money when on holiday, until such a time I retire.

[Lindor]

The changes being discussed here have no impact on you whatsoever.

 

 

Kind regards

 

Andy

 

 

Thank you Andy.

[Lindor]

Hi Lindor, Andrew has answered your question, I think it was more about transferring you whole pension scheme rather than the money you already receive from a pension. Please get your bank thing sorted out better in your pocket than the banks profits, is there somebody that could maybe help you with the initial sorting out?

My wife now gets a small uk Gov pension, it too like yours is banked in UK but it is there for our spending money when on holiday, until such a time I retire.

 

I will sort it out K&L, I'll sort out a figure and transfer one large sum a month. I've always thought it doesn't cost much but over the 20 months I've been here, the total costs of my withdrawals could've been a night out! :shocked: Thank you.

[Keith and Linda]

I will sort it out K&L, I'll sort out a figure and transfer one large sum a month. I've always thought it doesn't cost much but over the 20 months I've been here, the total costs of my withdrawals could've been a night out! :shocked: Thank you.

 

A damn big night out I would guess too. Good luck.

[Lindor]

A damn big night out I would guess too. Good luck.

 

 

Go on...make me feel worse.....:laugh: Thank you

[Gbye grey sky]

Andrew,

 

Am I right in assuming that as I don't have to declare my Australian Super payments any amount of pension received from the UK being the only other income I receive would be subject to the $18000+ tax free allowance before any tax is deducted in Australia?

This may also be a factor for people considering a transfer to a QROPS fund. Particularly defined benefit pensions.

 

I will leave Andrew to answer that but I believe the answer to be yes. In my case the Civil Service pension alone will be well above the tax free allowance. But one very real concern is that this is UK income and subject to UK tax and there is a very real prospect that the tax free allowance will be removed from non residents with UK income in the future. This would cut the pension immediately by up to 20%. Also bear in mind if, like me, you have eligibility for the UK State Pension. This will be added to your private pension and both are deemed taxable in the UK and Australia making it highly likely that you will be liable to tax regardless.

 

It is simply not clear cut and is one area where professional advice particular to own situation may be worthwhile so at least a fully-informed decision can be made one way or the other. There is a limit to what can be gleaned on an open forum as all our circumstances are different.

[Gbye grey sky]

I will leave Andrew to answer that but I believe the answer to be yes. In my case the Civil Service pension alone will be well above the tax free allowance. But one very real concern is that this is UK income and subject to UK tax and there is a very real prospect that the tax free allowance will be removed from non residents with UK income in the future. This would cut the pension immediately by up to 20%. Also bear in mind if, like me, you have eligibility for the UK State Pension. This will be added to your private pension and both are deemed taxable in the UK and Australia making it highly likely that you will be liable to tax regardless.

 

It is simply not clear cut and is one area where professional advice particular to own situation may be worthwhile so at least a fully-informed decision can be made one way or the other. There is a limit to what can be gleaned on an open forum as all our circumstances are different.

 

Oops. Just noticed Andy already has answered. Should have read the whole thread first. :swoon:

[mr luvpants]

I will leave Andrew to answer that but I believe the answer to be yes. In my case the Civil Service pension alone will be well above the tax free allowance. But one very real concern is that this is UK income and subject to UK tax and there is a very real prospect that the tax free allowance will be removed from non residents with UK income in the future. This would cut the pension immediately by up to 20%. Also bear in mind if, like me, you have eligibility for the UK State Pension. This will be added to your private pension and both are deemed taxable in the UK and Australia making it highly likely that you will be liable to tax regardless.

 

It is simply not clear cut and is one area where professional advice particular to own situation may be worthwhile so at least a fully-informed decision can be made one way or the other. There is a limit to what can be gleaned on an open forum as all our circumstances are different.

 

Can I ask where you heard that? And also if you pay tax in the UK you won't get taxed over in oz as you dont pay tax twice.

Edited September 17, 2014 by mr luvpants

[Gbye grey sky]

Can I ask where you heard that? And also if you pay tax in the UK you won't get taxed over in oz as you dont pay tax twice.

 

See links below. The second link contains a link to the consultation document.

 

http://www.bbc.co.uk/news/uk-politics-28769969

 

http://www.ion.icaew.com/TaxFaculty/post/Should-the-UK-personal-allowance-be-available-to-non-residents--48C32C9528FF4B22B0CB5683671501FE

 

You do not get taxed twice but this may be the difference between being taxed and not being taxed at all if the money is within Super. It could potentially mean that the State pension is taxed at basic rate in the UK so as well as not uprating it for non-doms it could be cut by 20%.

 

Just another thing to throw into the mix.

[Gbye grey sky]

Have just read the consultation document and it is apparent from this that non-resident landlords should be more concerned than those who only receive pensions in the UK (whether private or state) however it is an indication that public policies can change making planning tricky.