Government Response to UK Pension Ban to Australia (QROPS)

[Swamps]

Hi,

 

My wife and I are moving to Melbourne in April and I know we've left this a little late but need to get our pension sorted. I know I'm OK with private pensions (and will likely look into this properly when settled in Australia) but we both also have an NHS pension (although only 4 years worth for me so I don't think it's a lot of money). One question, does this only impact central government pensions? My wife works as part of the admin staff at a local college and she has a local government pension, will this also be impacted?

 

I know it's impossible to give sound advice without all the facts, but given the costs involved, is it worth it to move 4 years of NHS pension?

[Andrew from Vista Financial]

Hello

 

It affects all government un-funded defined benefit schemes such as NHS, Police etc, generally local government pensions are funded schemes and there is no ban coming into play for funded defined benefit schemes.

 

Regards the costs outweighing the benefits of advice.....possibly as you say it is hard to say exactly without knowing the full extent of the situation but it could well do so.

 

Hope this helps a bit.

 

Regards

 

Andy

[Andrew from Vista Financial]

So latest correspondence from HM Treasury (in bold) to my email below:

 

"Hello.

 

Following on from our previous email interchange I wonder if you are able to clarify yet whether people living overseas will fall under the limited circumstance definition so as to allow them to continue to be able to transfer?

 

As said previously I am involved with the UK expat community all over Australia and it is becoming very apparent that people are panicking about:

 

 

1. The fact that they will not be able to transfer after April 15; and
   
2. Believe as are being told by many banks and transfer companies that if they do not transfer they will lose their pension (this is a common theme on forums and facebook groups for UK expats across Australia).
   

 

 

We have also recently spoken to NHS England and Scotland and have been told that there is a major backlog of enquiries to send transfer values from people in Australia and New Zealand looking to transfer (Before it is too late!!!)

 

Surely this is not what was intending when the announcement was made and is probably going against the very reason that decision was made to ban transfer for fear of people transferring out and costing the Government monies they do not have??

 

Finally is it possible to confirm that if a ban does also apply to people living overseas, does the ban mean that:

 

 

• monies will have to be paid prior to this date? or
  
• authority to transfer received prior to this date?
  

 

 

Many thanks and I look forward to your reply".

 

 

 

Governments response as follows:

 

 

[TABLE]

[TR]

[TD]Dear Mr Williams

[/TD]

[TD][/TD]

[/TR]

[/TABLE]

Thank you for your email in relation to the restrictions on transfers out of unfunded, defined benefit, public service pension schemes to schemes from which is possible to obtain flexible benefits and the implications of these restrictions on Qualifying Recognised Overseas Pension Schemes (QROPS). I would like to apologise for the delay you have experienced in receiving a response to your correspondence.

 

Government is still considering the detail and implications of any exceptions to the transfer restrictions which are being introduced and appreciates that the changes to the tax and transfer rules will have implications for QROPS. As I mentioned previously, the Government will set out in legislation in due course the limited circumstances under which transfers out of unfunded, defined benefit, public service pension schemes to schemes from which flexible benefits can be obtained, will be allowed.

 

Thank you for keeping in touch on this issue and I hope that this response has been helpful.

 

 

So unfortunately still none the wiser and I do not think that they could really leave it any later, could we take from this a positive that it does not specify that QROPS will not be seen under the limited circumstances definition (not sure)??

 

 

Andy

[Gbye grey sky]

So latest correspondence from HM Treasury (in bold) to my email below:

 

"Hello.

 

Following on from our previous email interchange I wonder if you are able to clarify yet whether people living overseas will fall under the limited circumstance definition so as to allow them to continue to be able to transfer?

 

As said previously I am involved with the UK expat community all over Australia and it is becoming very apparent that people are panicking about:

 

 

1. The fact that they will not be able to transfer after April 15; and

2. Believe as are being told by many banks and transfer companies that if they do not transfer they will lose their pension (this is a common theme on forums and facebook groups for UK expats across Australia).

 

 

We have also recently spoken to NHS England and Scotland and have been told that there is a major backlog of enquiries to send transfer values from people in Australia and New Zealand looking to transfer (Before it is too late!!!)

 

Surely this is not what was intending when the announcement was made and is probably going against the very reason that decision was made to ban transfer for fear of people transferring out and costing the Government monies they do not have??

 

Finally is it possible to confirm that if a ban does also apply to people living overseas, does the ban mean that:

 

 

• monies will have to be paid prior to this date? or

• authority to transfer received prior to this date?

 

 

Many thanks and I look forward to your reply".

 

 

 

Governments response as follows:

 

 

[TABLE]

[TR]

[TD]Dear Mr Williams

[/TD]

[TD][/TD]

[/TR]

[/TABLE]

Thank you for your email in relation to the restrictions on transfers out of unfunded, defined benefit, public service pension schemes to schemes from which is possible to obtain flexible benefits and the implications of these restrictions on Qualifying Recognised Overseas Pension Schemes (QROPS). I would like to apologise for the delay you have experienced in receiving a response to your correspondence.

 

Government is still considering the detail and implications of any exceptions to the transfer restrictions which are being introduced and appreciates that the changes to the tax and transfer rules will have implications for QROPS. As I mentioned previously, the Government will set out in legislation in due course the limited circumstances under which transfers out of unfunded, defined benefit, public service pension schemes to schemes from which flexible benefits can be obtained, will be allowed.

 

Thank you for keeping in touch on this issue and I hope that this response has been helpful.

 

 

So unfortunately still none the wiser and I do not think that they could really leave it any later, could we take from this a positive that it does not specify that QROPS will not be seen under the limited circumstances definition (not sure)??

 

 

Andy

 

I love the last line of their communication. It is hard to see how their reply could have been any more unhelpful. Could have summed up their reply in 8 words "We haven't a clue what we're doing mate". :no:

[le petit roi]

I may have missed it but what are the disadvantages and/or consequences of doing nothing and simply leaving it in the UK and collect the pension on retirement?

[Gbye grey sky]

I may have missed it but what are the disadvantages and/or consequences of doing nothing and simply leaving it in the UK and collect the pension on retirement?

 

There are pros and cons. In a nutshell (there may be more)..........

 

The pros to transferring are potentially a more favourable income tax treatment for Super over a 'foreign' pension. Better protection for my dependents should I pre-decease them and not being at the mercy of future exchange rate fluctuations.

 

Cons are giving up an index-linked secure pension, and less favourable position should I retire outside Australia.