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Kpnuts

Pension exchange rates

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I am just about to receive my UK State Pension.

I can either have this paid into my existing UK bank for transfer at my will at the best available rate or I could have the pension paid directly into my Aussie account through City Bank WorldLink service.

I have been trying to establish what exchange rates WorldLink use and how much they differ from the actual bank rate on the day.

At the moment, I use Currency Fair to exchange my income as their rates tend to be .01 cent below the actual exchange rate. Is there anyone on this site that is using the WorldLink service who has compared the WorldLink rate to another FX such as Currency Fair or TransferWise? Is it worth transferring through WorldLink or to stick with my original plan?

I am told that WorldLink do charge a standing monthly fee of £2.74.

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Hi @Kpnuts have a chat with @Andrew from Vista Financial He may be able to help. Or If you click on the banner above for Moneycorp you can sign up for an account with them and they will always try and beat any rates quote, plus for Pomsinoz members it is fee free


If you are depressed you are living in the past. If you are anxious you are living in the future. If you are at peace you are living in the present.

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17 hours ago, Kpnuts said:

I am just about to receive my UK State Pension.

I can either have this paid into my existing UK bank for transfer at my will at the best available rate or I could have the pension paid directly into my Aussie account through City Bank WorldLink service.

I have been trying to establish what exchange rates WorldLink use and how much they differ from the actual bank rate on the day.

At the moment, I use Currency Fair to exchange my income as their rates tend to be .01 cent below the actual exchange rate. Is there anyone on this site that is using the WorldLink service who has compared the WorldLink rate to another FX such as Currency Fair or TransferWise? Is it worth transferring through WorldLink or to stick with my original plan?

I am told that WorldLink do charge a standing monthly fee of £2.74.

Hi Kpnuts

We just went along with having it paid into our Australian bank, so I suppose it is done through City Bank WorldLink service. Any savings by going elsewhere soon pale into insignificance once your pension stays frozen for a year or two, plus so far it has been 100% reliable although it does seem to take between 3 and 6 days to get here, especially if there is a weekend involved.  I guess their computers must be turned off at weekends.

Mike

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I also have it paid into my Australian bank,.  I know I might save a pound or two by having it paid into my UK bank, but it hardly seems worth the hassle. I have it paid in quarterly so that if there are any fees, I only pay them once a quarter. But I have never investigated.

WorldLink is a service that's provided to corporations and businesses, so they can process large numbers of overseas transfers easily.  It's the corporation (in this case, the Pension Service) who pays the monthly fees and I'd say they'd have a hard time trying to apportion that fee over all the transfers in each transaction.

Citibank's exchange rates are usually pretty good but of course, I don't know whether they offer the same rates to WorldLink clients.


Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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1 hour ago, Mike@Bonbeach said:

Hi Kpnuts

We just went along with having it paid into our Australian bank, so I suppose it is done through City Bank WorldLink service. Any savings by going elsewhere soon pale into insignificance once your pension stays frozen for a year or two, plus so far it has been 100% reliable although it does seem to take between 3 and 6 days to get here, especially if there is a weekend involved.  I guess their computers must be turned off at weekends.

Mike

I have received my UK state pension for 13 years and although not a large sum, don’t dismiss it as insignificant, it all helps.

I/we have it paid into a UK bank account, for 2 reasons:

a) we go back to UK most years and it’s nice to have a reasonable extra amount saved to use while there.

b) It’s also nice to have a bit of extra money saved if not needed for day to day living, to pay towards anything you want.

If we didn’t go regularly back to UK and the only reason to keep a UK bank was to have the state pension paid into, would probably just have it paid into a bank here, but we have other UK income so we need our UK banks for convenience.

We use transferwise to transfer money from UK, can’t fault them and money is usually in our account the next day.

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As an aside, remember to claim the 8% UPP tax deduction when including the State Pension on your Australian tax returns.

Best regards.

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Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com

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On ‎08‎/‎08‎/‎2018 at 11:13, ramot said:

I have received my UK state pension for 13 years and although not a large sum, don’t dismiss it as insignificant, it all helps.

I/we have it paid into a UK bank account, for 2 reasons:

a) we go back to UK most years and it’s nice to have a reasonable extra amount saved to use while there.

b) It’s also nice to have a bit of extra money saved if not needed for day to day living, to pay towards anything you want.

If we didn’t go regularly back to UK and the only reason to keep a UK bank was to have the state pension paid into, would probably just have it paid into a bank here, but we have other UK income so we need our UK banks for convenience.

We use transferwise to transfer money from UK, can’t fault them and money is usually in our account the next day.

Hi Ramot

I didn't mean to say the pension was insignificant, just any savings made by going to different "broker". I too have been having my pension paid here since 2007 and certainly don't consider it insignificant. I probably could have worded it better.

We kept a UK bank account open just to receive premium bond winnings, and it helped subsidise our trip back in 2016.

Mike

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On 08/08/2018 at 12:50, Alan Collett said:

As an aside, remember to claim the 8% UPP tax deduction when including the State Pension on your Australian tax returns.

Best regards.

Thanks Alan, I was unaware of this. I have had a look at UPP online and have downloaded the form. It is all gobbledygook to me but I assume the ATO makes an allowance for the part of the pension I paid in the first place? If that is so, I am wondering whether the same would apply to my police pension where I paid in 13% of my salary to fund it?

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The UPP deduction for the UK aged pension is quite straightforward, my accountant did it without being prompted. Our private UK pensions were a different matter altogether.

Neither my long term employer nor my wife's long term employer (Worcs County Council) had records held long enough to give us all the info needed to claim. We gave it up as a bad job in the end after seemingly endless emails to and fro, and it all came down to not having the records, apparently (so they said) they were only obliged by UK law to keep records for so long.

In my case I was trying to get information back as far as 1972.

Good luck with the claim.

Mike

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On 10/08/2018 at 17:36, Kpnuts said:

Thanks Alan, I was unaware of this. I have had a look at UPP online and have downloaded the form. It is all gobbledygook to me but I assume the ATO makes an allowance for the part of the pension I paid in the first place? If that is so, I am wondering whether the same would apply to my police pension where I paid in 13% of my salary to fund it?

Possibly.

If you made the contributions personally I anticipate a UPP is available.

This should be contrasted with a salary sacrificed arrangement - though I'm not certain the ATO sees the two scanarios differently.

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com

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In the light of all this Common Reporting Standard stuff, I've decided I'd better be super honest and declare a UK Pension fund full pot lump here - even though much of it got hit for 40% tax  by HMRC. I can see that the component earned prior to becoming an Australian resident is tax free, so I think I should just need to declare the element that has accrued since that point. Then I think I should work out pro rata how much of the UK tax was levied on the Australian residency element and claim that amount as an income tax offset ( deduction ) on the Australian tax return. Does this logic make sense ? All Forum Reader thoughts would be appreciated ! Thanks 

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10 minutes ago, Currumbin Keith said:

In the light of all this Common Reporting Standard stuff, I've decided I'd better be super honest and declare a UK Pension fund full pot lump here - even though much of it got hit for 40% tax  by HMRC. I can see that the component earned prior to becoming an Australian resident is tax free, so I think I should just need to declare the element that has accrued since that point. Then I think I should work out pro rata how much of the UK tax was levied on the Australian residency element and claim that amount as an income tax offset ( deduction ) on the Australian tax return. Does this logic make sense ? All Forum Reader thoughts would be appreciated ! Thanks 

If you are in receipt of a pension you might be able to leverage the Tax Treaty such the tax paid in the UK on the lump sum is reduced to nil.

Best regards.

 

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Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com

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21 hours ago, Alan Collett said:

If you are in receipt of a pension you might be able to leverage the Tax Treaty such the tax paid in the UK on the lump sum is reduced to nil.

Best regards.

 

I agree with Alan here...the first 25% (PCLS) should be UK tax free anyway and then the remaining amount classified as income (this is where the tax treaty exists with pension income). So this could potentially be paid all tax free from UK however would need to be declared in Australia.

However I understand that there would then be two parts to the Australian tax assessment of this money, firstly the (PCLS) 25% lump sum to be treated as you have described above and this is done under a foreign super lump sum benefit payment so effectively growth of whole pot but only to the extent of it not exceeding the 25%. Secondly the remainder (75%) as income under your MTR.

As it's possible now for individuals other than just those self-employed to make tax deductible contributions to super there could then be merit in using some of these proceeds to do so and reduce the overall tax liability (this depends on your individual circumstances though).

The above said it seems that you have already initiated this transaction therefore I feel that it would be prudent for you to seek qualified tax advice on this matter so as to ensure that you are not going to pay too much tax unnecessarily.

Regards

Andy


Financial Adviser (FPA Member AFP ®) Specialising in UK Expat Advice and Pension Transfers / AR-322874 /AFSL-234951

Accredited Mortgage Adviser (MFAA Member)

Director  - Vista Financial Services – www.vistafs.com.au 08 8381 7177

Vista Financial Knowledge Centre: www.vista.financialknowledgecentre.com.au  

 

Please note that my advice is general advice only and professional financial advice should be sought for your own personal situation.

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Thanks for that info Andy. I've used all my super contributions for the financial year. Fortunately it looks like the tax offsets from HMRC will virtually cancel out the Australian income tax liability. Kind Regards Keith

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