Returning to UK after aged 60

[Don QuayPoly]

Here I am at the ripe age of 60, and planning the big move back home to the UK. Like most people in this position I'm a sponge for any information I can absorb from others who are willing to help, and I thank you in advance for that.

I understand that now I've reached 60 (and retired) I can now access my superfund ,tax free. And if I were to withdraw all of my money and place it in my bank account in AU, it then becomes seen as my personal savings, which I can then transfer to the UK, tax free.

Sounds great, but is it really my best option ?

Once I transfer it into my UK bank, what do I do with it then ? I guess opening an ISA is one option but apart from that I'm lost. I have no experience of buying /selling shares etc, but I need to put in place a means to fund my UK retirement.

So I ask myself, - would it be better to leave some or all in the AU super fund, and draw down a monthly amount ? I realise that this would all form part of my UK income and be taxed accordingly, plus there would be monthly transfer fees. But still ... could it be worth thinking about, or this there a better option staring me in the face. ( Superfund is about $1m )

Thanks all 

 

Edited April 29, 2023 by Don QuayPoly
spelling

[Nemesis]

7 hours ago, Don QuayPoly said:

Here I am at the ripe age of 60, and planning the big move back home to the UK. Like most people in this position I'm a sponge for any information I can absorb from others who are willing to help, and I thank you in advance for that.

I understand that now I've reached 60 (and retired) I can now access my superfund ,tax free. And if I were to withdraw all of my money and place it in my bank account in AU, it then becomes seen as my personal savings, which I can then transfer to the UK, tax free.

Sounds great, but is it really my best option ?

Once I transfer it into my UK bank, what do I do with it then ? I guess opening an ISA is one option but apart from that I'm lost. I have no experience of buying /selling shares etc, but I need to put in place a means to fund my UK retirement.

So I ask myself, - would it be better to leave some or all in the AU super fund, and draw down a monthly amount ? I realise that this would all form part of my UK income and be taxed accordingly, plus there would be monthly transfer fees. But still ... could it be worth thinking about, or this there a better option staring me in the face. ( Superfund is about $1m )

Thanks all 

 

Can't advise you what is best for you, but I've just done what you describe in the first part of the post, including moving it all to the UK as personal savings, before I actually moved back in person. Part of it is now in an ISA, I am considering what to do with the rest as regards savings accounts etc. I have an appointment with an adviser next week to look at ins and outs and possibilities for inveting it.

Made sense to me to move it all, rather than take it as a pension, as it removes all the business of transfer fees, I won't need to do Aus tax returns, won't need to worry about exchange rates  Everything is in the same country, and after this year's tax return I can cut all monetary ties with Australia. Makes life simpler going forward. 

Your super fund is rather more than mine, and I'd say you need professional advice before you do anything with it. 

[Parley]

Do you need to buy a house in the UK? Are the funds needed for that or are you selling a house in Australia too.

A good idea to get advice depending on how savvy you are regarding investing yourself.

You don't want to just stick it all in a savings account I would not think. It should be invested for growth similar to what would occur in your super fund.

I would not rule out buying Australian shares either if you have been following the sharemarket here and are more familiar with the companies here than in the UK.

[Don QuayPoly]

Thanks very much for your replies. 
I take onboard that transfering the lot will indeed simplify my finances, i.e no ongoing transfer fees, and as we all get older, simplifying our finances becomes ever more important. 
I’m fortunate that I won’t need to purchase a house as I’ll move into my old home which has been rented out. 
 It certainly makes sense to get some financial advice once I’m settled. 
Thanks again all. 

[Marisawright]

I know exactly how you feel.  If I were you, I'd be getting financial advice before the move, from someone who understands both Australian and UK pensions and finances.  @Andrew from Vista Financial for instance. 

I gave this a lot of thought when we moved back to the UK in 2015.  At the time, we weren't sure if it would be a permanent move, so that influenced our decision to leave our money in the super fund and just convert it to an income stream when the time came.  However I think I would have done the same thing, even if I'd been sure about the move.

My reasoning was like yours.  I am not interested in investing or stocks and shares, I just want to park my money somewhere and let someone else look after it. A good superannuation fund does that for me, and its income stream will let me get a regular payment and adjust it when necessary, all with minimum effort and no mucking around with tax returns (since the income stream is tax-free in Australia, I don't believe you'd need to do Aussie tax returns).   Yes there's transfer fees but you can set up automatic payments and provided you don't use your bank, transfer fees are minimal these days.  

In sum, I wouldn't bring my lump sum to the UK unless I could set up a similarly hands-off investment/pension there.  I believe you can still start a private pension in the UK provided you're under 75, but how that works, I have no idea.

[Don QuayPoly]

5 hours ago, Marisawright said:

I know exactly how you feel.  If I were you, I'd be getting financial advice before the move, from someone who understands both Australian and UK pensions and finances.  @Andrew from Vista Financial for instance. 

I gave this a lot of thought when we moved back to the UK in 2015.  At the time, we weren't sure if it would be a permanent move, so that influenced our decision to leave our money in the super fund and just convert it to an income stream when the time came.  However I think I would have done the same thing, even if I'd been sure about the move.

My reasoning was like yours.  I am not interested in investing or stocks and shares, I just want to park my money somewhere and let someone else look after it. A good superannuation fund does that for me, and its income stream will let me get a regular payment and adjust it when necessary, all with minimum effort and no mucking around with tax returns (since the income stream is tax-free in Australia, I don't believe you'd need to do Aussie tax returns).   Yes there's transfer fees but you can set up automatic payments and provided you don't use your bank, transfer fees are minimal these days.  

In sum, I wouldn't bring my lump sum to the UK unless I could set up a similarly hands-off investment/pension there.  I believe you can still start a private pension in the UK provided you're under 75, but how that works, I have no idea.

Thanks Marisa, 

It's certainly a case of swings and roundabouts. On one day , it seems plan A is the way to go, on the next day, its obvious that plan B is the way. I will look into getting some advice though. ( If I can force myself to open my wallet)

I think I might end up doing a mixture of both. i.e take a large chunk of AU super over to the UK, and leave a chunk in AU to draw down.

So just typing as I think ....If I take it all tax free to UK, I could invest it there, and only pay tax on the growth. But if I leave it here in AU, I will pay (UK) tax on everything (capital and growth) that I draw down.

WARNING - I am about to have a miserable old man rant.

Sometimes I think how lucky my parents were, not having all these retirement investment decisions to make. They just went to work till 60\65, paid their taxes and NI contributions, and received quite a good old age pension for life. It seems unfair that these days. Everyone from road sweepers to librarians to car mechanics, needs, not only to make a living, but also study for a degree in economics! It also seems very unfair that just when our brain is going down hill (rapidly in my case), we are tasked with understanding investment strategy!

Rant over  

 

 

[Marisawright]

4 hours ago, Don QuayPoly said:

Sometimes I think how lucky my parents were, not having all these retirement investment decisions to make. They just went to work till 60\65, paid their taxes and NI contributions, and received quite a good old age pension for life.

Yes, but when the aged pension was introduced, most people didn't live past 70, so the NI contributions were enough to fund that.  Blame the politicians for being too chicken to increase NI contributions, so the pot now falls far, far short of providing retirement income, especially as people are now routinely living into their 80s and beyond.  

[Don QuayPoly]

You are absolutely correct. The politicians were too chicken. But unfortunately, the public ( me, you and the vast majority of others) are surprisingly primitive when it comes down to it. Given the choice “Do you want high taxes or low taxes” ? Most would all bleat in unison baaaaa …. “Low taxes”

[Marisawright]

2 hours ago, Don QuayPoly said:

You are absolutely correct. The politicians were too chicken. But unfortunately, the public ( me, you and the vast majority of others) are surprisingly primitive when it comes down to it. Given the choice “Do you want high taxes or low taxes” ? Most would all bleat in unison baaaaa …. “Low taxes”

Indeed, but then you shouldn't complain when the state pension is inadequate, because it's your own fault, see?

[Don QuayPoly]

8 hours ago, Marisawright said:

Indeed, but then you shouldn't complain when the state pension is inadequate, because it's your own fault, see?

See

[InnerVoice]

19 hours ago, Don QuayPoly said:

I think I might end up doing a mixture of both. i.e take a large chunk of AU super over to the UK, and leave a chunk in AU to draw down.

So just typing as I think ....If I take it all tax free to UK, I could invest it there, and only pay tax on the growth. But if I leave it here in AU, I will pay (UK) tax on everything (capital and growth) that I draw down.

@Don QuayPoly I'm just a couple of years behind you and not planning to retire in Australia either (probably Europe as opposed to the UK), so I've also been considering all the options too.

First off, I'd definitely get some professional financial advice. Initial consultations are often free, and whatever you pay in fees will be a drop in the ocean compared with the amount you could lose by making poor investment decisions. $1m is a substantial sum of money, and one assumes there will also be the proceeds from the sale of your home in Australia?

The following doesn't constitute any kind of advice and are just my observations based on your previous comments.

You have the option of accessing your super tax-free before you leave Australia and investing it in Australian funds, then you'd only pay tax on any future growth, and not a pension income stream. It would also make sense to move at least £20,000 back each year to put in an ISA (or £40,000 if you have a partner), but it will still need to be invested wisely. There isn't much point in having it sat there as cash earning 4% interest while inflation is raging at 10%. Again, these are all discussions to have with an independent financial adviser who will also assess your appetite to risk, and ascertain what forms of investment are best for you.

You don't need a degree in economics but a basic understanding of how the DTA between the UK and Australia is going to help. I appreciate managing finances isn't everyone's cup of tea, but there are far worse problems in life than not quite knowing what to do with a million bucks 

[Marisawright]

29 minutes ago, InnerVoice said:

You have the option of accessing your super tax-free before you leave Australia and investing it in Australian funds, then you'd only pay tax on any future growth, and not a pension income stream.

This is interesting.

I assumd a pension income stream would be better because it's tax-free in Australia.  The catch being that it would be treated as income in the UK.  

I think you're saying that if you withdraw the money and invest in an Australian managed fund (outside superannuation/pension) instead, then you'll have to pay Australian and UK tax on any profits, but if you periodically withdraw money from the fund, those withdrawals wouldn't be treated as income.  So the tax might work out to be lower.  Is that right?

[InnerVoice]

1 hour ago, Marisawright said:

This is interesting.

I assumd a pension income stream would be better because it's tax-free in Australia.  The catch being that it would be treated as income in the UK.  

I think you're saying that if you withdraw the money and invest in an Australian managed fund (outside superannuation/pension) instead, then you'll have to pay Australian and UK tax on any profits, but if you periodically withdraw money from the fund, those withdrawals wouldn't be treated as income.  So the tax might work out to be lower.  Is that right?

Yes, that's right. And I think the OP would also be entitled to his CGT allowance of £6,000/annum on any profits, assuming he remained a UK resident for tax purposes.

[Don QuayPoly]

On 01/05/2023 at 11:16, InnerVoice said:

$1m is a substantial sum of money, and one assumes there will also be the proceeds from the sale of your home in Australia?

Yes InnerVoice, I am fortunate enough to also have the proceeds of the AU house. I will certainly look at getting some pro advice, and thank you for your input. 

[Alan Collett]

I recommend you have a chat with a financial planner with experience (and regulatory approval) in the UK.

Start with Andy at Vista.

Consider also my colleagues at bdhSterling who are in the UK as well as in Australia:

https://bdhsterling.com/who-we-help/moving-between-the-uk-and-australia/

Good luck!

[Parley]

You don't need the state pension. You have over $1 million in superannuation for your retirement.

More than enough for a comfortable retirement.

[Don QuayPoly]

1 hour ago, Parley said:

You don't need the state pension. You have over $1 million in superannuation for your retirement.

More than enough for a comfortable retirement.

I certainly hope you’re right Parley. But I back paid my NI contributions a few years back, so I should get the OAP too. 
Every little helps (says Tesco)

[Don QuayPoly]

23 hours ago, Alan Collett said:

I recommend you have a chat with a financial planner with experience (and regulatory approval) in the UK.

Start with Andy at Vista.

Consider also my colleagues at bdhSterling who are in the UK as well as in Australia:

https://bdhsterling.com/who-we-help/moving-between-the-uk-and-australia/

Good luck!

Thanks Alan. I have done as you advised.

[Don QuayPoly]

Well …. Todays  my big birthday … The Big 60. It could be an age thing, but I’ve  noticed liquidity in my portfolio! 
should I see a doctor or a financial advisor?

[Marisawright]

30 minutes ago, Don QuayPoly said:

Well …. Todays  my big birthday … The Big 60. It could be an age thing, but I’ve  noticed liquidity in my portfolio! 
should I see a doctor or a financial advisor?

Make the most of it, it's all downhill from here .... (I'm 70 this year)

[Alan Collett]

As Barry Humphries would have said - you're approaching 60, but from the wrong direction ... !

Have a great day!

[InnerVoice]

On 04/05/2023 at 08:29, Don QuayPoly said:

Well …. Todays  my big birthday … The Big 60. It could be an age thing, but I’ve  noticed liquidity in my portfolio! 
should I see a doctor or a financial advisor?

@Don QuayPoly congratulations and enjoy your retirement - you've done well!

[Bobj]

On 04/05/2023 at 08:29, Don QuayPoly said:

Well …. Todays  my big birthday … The Big 60. It could be an age thing, but I’ve  noticed liquidity in my portfolio! 
should I see a doctor or a financial advisor?

The day you were born, I was preparing to emigrate to Australia. I went from Bradford to London to Australia House to query why they had given my mate his sailing orders, but not mine as we applied the same day. Upshot was we left England in September that year. And I am still loving life in this wonderful country.

Cheers, Bobj.

[Don QuayPoly]

Having invested in some great advice, I feel a lot more confident. However if anyone can just clarify exactly what this sentence means  - “I must dispose of my Australian residence whilst still resident in Australia”.

Does this mean that I must be resident in Australia on settlement day of my house sale, or could I get a flight prior to settlement once contracts are signed, and be in the UK on settlement day ?

I guess it comes down to just what “dispose” means from a tax perspective.

thanks all

 

[Alan Collett]

Can I suggest that you might revert to the person that gave you the advice to flesh out this issue for you?

Best regards.