What happens to super when I return to the UK?

[Rosiehome]

This is my first post so I apologise if this is covered elsewhere. I am planning to head back to the UK after 20 years in Brisbane. I understand that by going back I forgo any right to an Australian pension. Do those years count towards a UK pension though?

Also what happens to the super I have sitting in Australia? I can't access it until I am 58, but does that then get paid as a lump sum or a weekly amount? I've read somewhere that I should cancel the life insurance component of the super as it won't be paid whilst I am in the UK. Any recommendations about who to speak to about this?

Thank you

[AJ]

I read on somewhere last week that any after I think it was 2001 dont count so you may need to make extra payments

[Rosiehome]

Thanks AJ...that's a bit tough, but I suspected as much.

[Marisawright]

This is my first post so I apologise if this is covered elsewhere. I am planning to head back to the UK after 20 years in Brisbane. I understand that by going back I forgo any right to an Australian pension. Do those years count towards a UK pension though?

 

Yes, you can apply to have some of your Australian work record count towards the UK pension. You'll need evidence such as written references, group certificates etc. Unfortunately the agreement lapsed in 2001, so only work years before 2001 will be counted. If that doesn't give you enough years to get the full UK pension, you can make some extra NI contributions.

 

Also what happens to the super I have sitting in Australia? I can't access it until I am 58, but does that then get paid as a lump sum or a weekly amount?

 

If you access that super before you reach retirement age, you will pay tax on it, whether you're in Australia or in the UK - so if you're thinking of withdrawing it at 58, make sure you understand how much tax you'll lose. On balance it's better to wait until you reach retirement age before you access it.

 

Even if you wait till retirement age to take a lump sum, the UK government may take a whack of tax, so make sure you know the implications before you do it. The other alternative is to turn it into a pension - your super fund will help you sort that out. If you do that, you will have to declare it on your UK tax return and you will be taxed on it as part of your normal income.

 

I've read somewhere that I should cancel the life insurance component of the super as it won't be paid whilst I am in the UK. Any recommendations about who to speak to about this?

You write a letter to your superannuation fund and tell them to cancel all insurances.

Edited July 12, 2015 by Marisawright

[scuffythetugboat]

I have a letter from the Future Pensions Centre dated April of this year on the subject of the years living in Australia prior to 2001. It does not state that you must have worked in Australia, only that you have lived there. It goes on to say that evidence of the time spent living in Australia can either be tax certificates, employers references, wage slips, travel documents OR letters from two people, who can be friends or relatives. So the way I understand it, from this letter, is that living here qualifies you rather than working here.

[Rosiehome]

Thanks Marisawright. Looks like I will have to wait until retirement to access the super then to avoid the tax hike.

Scruffythetugboat, thanks for the heads up. I will get on to the future pensions centre myself

[Marisawright]

Thanks Marisawright. Looks like I will have to wait until retirement to access the super then to avoid the tax hike.

 

 

That's certainly what I would recommend. Also, when you are ready to access the super, be sure to investigate the tax position again as things may have changed by that time.

[Rainman]

I'm also concerned about my Super should I move back to the UK. I did think to continue paying into my Aussie Super rather than starting from scratch in the UK. Or is that a false economy and can I even do that if I'm not a resident in Australia?

[Gbye grey sky]

I'm also concerned about my Super should I move back to the UK. I did think to continue paying into my Aussie Super rather than starting from scratch in the UK. Or is that a false economy and can I even do that if I'm not a resident in Australia?

Not sure if I answered elsewhere but the answer is that you can continue to contribute but I would definitely recommend against especially if you are expecting to retire in the UK. If you contribute to a UK pension you get tax relief on the contributions and, as things stand, you will be able to draw 25% of the fund tax free on retirement. There are no advantages to making Super contributions from your UK earnings.

[Marisawright]

I'm also concerned about my Super should I move back to the UK. I did think to continue paying into my Aussie Super rather than starting from scratch in the UK. Or is that a false economy and can I even do that if I'm not a resident in Australia?

 

I'd say it would be false economy. Assuming you're not running a self-managed fund, just cancel all the insurances on the super (they're not valid anyway if you're living overseas) and make sure you're in a fund with good returns. Then just leave it alone to accumulate until retirement age, at which time you'll need to research what tax will be payable (it all might have changed by then!), and from that, decide whether to take it as a lump sum or as a pension.

 

If you've got a self-managed super fund, you'll have to close it as it will be subject to maximum tax once you're overseas. You'll have to transfer the balance to a retail or industry fund.

 

You're probably aware that you'll get no Australian state pension, and the UK goverment will recognise only the years before 2001 as counting towards the UK one.

[GFinOZ]

This is my first post so I apologise if this is covered elsewhere. I am planning to head back to the UK after 20 years in Brisbane. I understand that by going back I forgo any right to an Australian pension. Do those years count towards a UK pension though?

Also what happens to the super I have sitting in Australia? I can't access it until I am 58, but does that then get paid as a lump sum or a weekly amount? I've read somewhere that I should cancel the life insurance component of the super as it won't be paid whilst I am in the UK. Any recommendations about who to speak to about this?

Thank you

 

Hi. I spoke to my Super provider today and they said that, as an Australian citizen, I can keep my Oz super account when I return to UK and I have two options (once I reach retirement age). Take a lump sum or convert to their pension account which would pay a monthly amount. HOWEVER, they would only pay into an Oz bank account.

Also, interesting post saying that life insurance should be cancelled! I hadn't thought of that so thanks for the tip.

[Melbpom]

Hi, does anyone one know what happens to the age pension if you move back to the UK. I understand that if you are already age pension age and receiving it before you leave that it is still payable in the UK, but does it remain at the same rate? is it reduced if your UK pension increases?

[Marisawright]

Hi. I spoke to my Super provider today and they said that, as an Australian citizen, I can keep my Oz super account when I return to UK and I have two options (once I reach retirement age). Take a lump sum or convert to their pension account which would pay a monthly amount. HOWEVER, they would only pay into an Oz bank account.

Also, interesting post saying that life insurance should be cancelled! I hadn't thought of that so thanks for the tip.

@GFinOZ - I missed this post. Just be aware that if you take the lump sum while you're resident in the UK, you could be absolutely hammered for tax (whereas if you were resident in Australia, it would be tax-free). So if you're leaving Australia before you reach retirement age, you'd be mad to take that option - better to convert it to a pension.

[Marisawright]

Hi, does anyone one know what happens to the age pension if you move back to the UK. I understand that if you are already age pension age and receiving it before you leave that it is still payable in the UK, but does it remain at the same rate? is it reduced if your UK pension increases?

 

Firstly, it depends how long you lived in Australia.

 

To get the full Australian pension in Australia, you only need 10 years' residency. To get the full Australian pension overseas, you need at least 25 years' residency (it was supposed to go up to 35 years but I'm not sure if that's happened yet). So if you were in Australia for less time than that, your pension will reduce when you leave the country.

 

Secondly, I'm sure you know the Australian pension is means-tested - so yes, if your UK pension goes up, then your Australian pension will be reduced accordingly.

 

The (only?) good news is that it's not frozen like the British pension.

 

Here are the maximum rates etc:

http://www.humanservices.gov.au/customer/enablers/outside-australia-pension-rates-payable#a3