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suzywong

Australian super and private uk pension help

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Hi everyone, 

Hope you can help

I am an Aussie citizen and transferred two private pensions (NPI AND SCOTTISH WIDOWS) to Australia (ASTERON OPTIMUM/SUN CORP SUPER) on 4.8.2006. .  I was self employed in Australia and did not make any contributions to this Super.  In 2012 on my 55th birthday I cashed in the whole of my Super tax free.

I have now been informed that I am due a small work pension from Barclays bank in the UK.  I would like to take the full lump sum (around 25000 pounds). 

My question is, does the fact that I cashed in my Aussie super in 2006 affect my LIFETIME ALLOWANCE ?  

Its all very confusing...

I look forward to a reply

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I'm interested in how you managed to transfer your UK pensions to Australian superannuation, as I thought most Australian super funds couldn't accept a transfer.  

I'd say you need to tread very carefully as you could lose a large chunk in tax if you take it as a lump sum.  


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

My new novel, A Dance With Danger, is due out August 2022

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Hi Marisa

This was done in 2006 by a financial advisor.  The pensions we transferred from the uk were personal pensions set up by ourselves as we were self employed.

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I don’t think it will affect the lifetime allowance. It will be treated as income here. On the lump sum you will be taxed only on the growth of that lump sum since leaving UK, subsequent pension payments will then be treated as income.

You might need to speak to both an accountant and a pension specialist to be absolutely certain.

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9 hours ago, suzywong said:

Hi everyone, 

Hope you can help

I am an Aussie citizen and transferred two private pensions (NPI AND SCOTTISH WIDOWS) to Australia (ASTERON OPTIMUM/SUN CORP SUPER) on 4.8.2006. .  I was self employed in Australia and did not make any contributions to this Super.  In 2012 on my 55th birthday I cashed in the whole of my Super tax free.

I have now been informed that I am due a small work pension from Barclays bank in the UK.  I would like to take the full lump sum (around 25000 pounds). 

My question is, does the fact that I cashed in my Aussie super in 2006 affect my LIFETIME ALLOWANCE ?  

Its all very confusing...

I look forward to a reply

Hi Suzy

Your financial adviser should have completed as part of the transfer in 2006 a LTA questionnaire and the values of the pensions being transferred would have been counted toward the LTA at that time (as this is essentially a benefit crystallisation event).

 You will then be tested on your Barclays Pension against the lifetime allowance as follows:

·         you normally calculate the total value by multiplying your expected annual pension by 20.

·         You also need to add the amount of any separate tax-free cash lump sum.

For example, if the annual pension you will receive is £8,333 a year and you will get a tax-free lump sum of £25,000 as well, the value of that pension for lifetime allowance purposes is £191,660 (20 x £8,333 + £25,000).  

The lifetime allowance currently sits at £1,073,100 so it seems to me as though this will not be an issue for you.

Andy

 

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Financial Adviser (FPA Member AFP ®) / Tax (Financial) Adviser (TPB)

SMSF Specialist Advisor™ (SSA™) / UK SIPP Authorised Adviser 

Specialising in UK Expat Retirement Planning Advice and Pension Transfers 

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

AR-322874 /AFSL-234951

 

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

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17 hours ago, Andrew from Vista Financial said:

Hi Suzy

Your financial adviser should have completed as part of the transfer in 2006 a LTA questionnaire and the values of the pensions being transferred would have been counted toward the LTA at that time (as this is essentially a benefit crystallisation event).

 You will then be tested on your Barclays Pension against the lifetime allowance as follows:

·         you normally calculate the total value by multiplying your expected annual pension by 20.

·         You also need to add the amount of any separate tax-free cash lump sum.

For example, if the annual pension you will receive is £8,333 a year and you will get a tax-free lump sum of £25,000 as well, the value of that pension for lifetime allowance purposes is £191,660 (20 x £8,333 + £25,000).  

The lifetime allowance currently sits at £1,073,100 so it seems to me as though this will not be an issue for you.

Andy

 

Thank you for your reply Andy. The annual pension is a mere 1166 pounds per annum or a lump sum  of about 25000 pounds. So you are basically saying the fact that I cashed in the whole of my super in 2012 (around 130000 Aud$) . This will not affect my lifetime allowance and I should be able to take the lump sum of 25000 pounds from barclays.  Do I have to declare that I took the super in Australia on the lifetime allowance reckoner?

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On 17/12/2021 at 04:31, suzywong said:

Thank you for your reply Andy. The annual pension is a mere 1166 pounds per annum or a lump sum  of about 25000 pounds. So you are basically saying the fact that I cashed in the whole of my super in 2012 (around 130000 Aud$) . This will not affect my lifetime allowance and I should be able to take the lump sum of 25000 pounds from barclays.  Do I have to declare that I took the super in Australia on the lifetime allowance reckoner?

I recommend you factor in the tax consequence personally of the decision to take a lump sum or a pension.

There may be an Applicable Fund Earnings component in Australia if you take a lump sum.

Best regards.

 

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

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

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On 17/12/2021 at 04:01, suzywong said:

Thank you for your reply Andy. The annual pension is a mere 1166 pounds per annum or a lump sum  of about 25000 pounds. So you are basically saying the fact that I cashed in the whole of my super in 2012 (around 130000 Aud$) . This will not affect my lifetime allowance and I should be able to take the lump sum of 25000 pounds from barclays.  Do I have to declare that I took the super in Australia on the lifetime allowance reckoner?

Hi Suzy

Essentially the value of the pensions when they were transferred to Australia in 2006 should be the figure that counts to your lifetime allowance (there should be a question around previously crystallised benefits (meaning the 2012 figure is not required)) along with the current barclays pension. 

These figures are well under the LTA so you should have no cause for concern.

Regards

Andy


Financial Adviser (FPA Member AFP ®) / Tax (Financial) Adviser (TPB)

SMSF Specialist Advisor™ (SSA™) / UK SIPP Authorised Adviser 

Specialising in UK Expat Retirement Planning Advice and Pension Transfers 

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

AR-322874 /AFSL-234951

 

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

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