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Guest Swisstony

Before you return to UK consider your pension options

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Guest Swisstony

If you have lived outside of the UK for five full UK tax years and intend returning to blighty, consider your UK pension options carefully. It could be worth hanging on for a few days/weeks to be able to benefit from some significant facilities. In theory it should be possible to transfer UK pension schemes to a Qualifying Recognised Overseas Pension Scheme of any country. NZ QROPS are the most flexible in the world, bar none. If you can get your UK funds into an NZ QROPS, many will allow you to withdraw the entire fund as a tax free lump sum once you are ex-UK for the five years and non-NZ resident. Thus, somebody who has lived in Aus for the required five year period satisfys both these rules and if you are a few months short it might be worth staying on for even a few days to meet the five year requirement. The transferred funds can be held in the QROPS and be payable to you in Sterling so you can take them back to the UK with you! It may seem unbelievable but you can effectively unlock your UK pension fund/s and have them paid entirely UK and NZ tax free at any age, into a UK bank account. Even more hard to believe is the fact that you can take the released funds back to the UK with you and pay them back into a UK pension fund and get upto another 40% tax relief on top! This is all totally possible under the QROPS and UK legislation.

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If you have lived outside of the UK for five full UK tax years and intend returning to blighty, consider your UK pension options carefully. It could be worth hanging on for a few days/weeks to be able to benefit from some significant facilities. In theory it should be possible to transfer UK pension schemes to a Qualifying Recognised Overseas Pension Scheme of any country. NZ QROPS are the most flexible in the world, bar none. If you can get your UK funds into an NZ QROPS, many will allow you to withdraw the entire fund as a tax free lump sum once you are ex-UK for the five years and non-NZ resident. Thus, somebody who has lived in Aus for the required five year period satisfys both these rules and if you are a few months short it might be worth staying on for even a few days to meet the five year requirement. The transferred funds can be held in the QROPS and be payable to you in Sterling so you can take them back to the UK with you! It may seem unbelievable but you can effectively unlock your UK pension fund/s and have them paid entirely UK and NZ tax free at any age, into a UK bank account. Even more hard to believe is the fact that you can take the released funds back to the UK with you and pay them back into a UK pension fund and get upto another 40% tax relief on top! This is all totally possible under the QROPS and UK legislation.

Could you please provide more details. How do you transfer UK pensions to NZ QROPS and how do you then claim that back in cash after 5 years in Australia.

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I was under the impression that it is actually quite difficult to take your super out of Australia especially if you are a permanent resident - it has to stay in there until you hit preservation age. If you are a temporary resident and take it out then they slug you a significant amount of tax for the privilege.

 

If there is any chance that you would be returning to UK, I'd be leaving pensions where they are in the first place

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Guest Swisstony

Hi Quoll. You may have misread the first line of my blog, which states "UK pension options". Your query relates to Australian pension options.

 

I am not an Australian pensions expert, but think you might also be misinformed about taking funds out of them. I agree that it is likely that there will be a tax charge if you access them early, if indeed that is even possible at all (I do not beleive it is), but if you emigrate from Aus on a permanent basis, it may be that Aus schemes allow the entire fund to be transferred to schemes of another jurisdiction, as is the case with NZ schemes.

 

As an aside, if it were possible to transfer an Aus scheme to say the UK, depending on your individual circumstances, particular scheme/s and ignoring any other benefits that there might be, a significant reason would be the exchange rate which is at one of its most favourable positions ever.

 

Which Cambridge are you at? - I'm from the UK one.

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Guest Swisstony
Could you please provide more details. How do you transfer UK pensions to NZ QROPS and how do you then claim that back in cash after 5 years in Australia.

Hi t4top.

 

I understand your question, but am curious because you seem to be located in the UK.

 

Basically, once you have been ex-UK for five full UK tax years, the UK rules and restrictions attaching to your UK pension scheme can be superseded/overruled if the funds are in a Qualifying Recognised Overseas Overseas Pension Scheme (QROPS). You can transfer the funds from your UK pension scheme to a QROPS either during or after the five year period, but it is not until the end of the period that the UK rules no longer apply and the rules of the QROPS take over. Thus, depending on the rules of the QROPS that your funds are sitting in at the end of the five year period, it is possible that you can access your entire proceeds in one go. NZ QROPS are amongst the most flexible in the world in that they allow a) residents of other countries to contribute to them (ie. those living in Aus or even the UK!), b) withdrawals of the entire proceeds as a lump sum, entirely NZ tax free and c) transferred funds to be held in Sterling indefinitely and converted to almost any other currency when required. The Aus Inland Revenue are likely to want to tax the growth on the funds whether they are in a UK scheme or an NZ one, so they may as well be in the latter, awaiting the five years threshold so that they can be withdrawn. Let me know if you need more info.

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Guest Swisstony

Hi t4top.

 

I forgot to mention that I do not work for any of the pension transfer companies who seem to be sponsoring this blog. They don't have British advisers working for them and are invariably 'tied' to particular product providers, thereby preventing them from doing what I have just outlined to you. I have 18 years experience as a UK IFA and 6 years in NZ as a Certified Financial Planner and Authorised Financial Adviser - I believe there is nobody else in the country with these credentials.

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Hi Quoll. You may have misread the first line of my blog, which states "UK pension options". Your query relates to Australian pension options.

 

I am not an Australian pensions expert, but think you might also be misinformed about taking funds out of them. I agree that it is likely that there will be a tax charge if you access them early, if indeed that is even possible at all (I do not beleive it is), but if you emigrate from Aus on a permanent basis, it may be that Aus schemes allow the entire fund to be transferred to schemes of another jurisdiction, as is the case with NZ schemes.

 

As an aside, if it were possible to transfer an Aus scheme to say the UK, depending on your individual circumstances, particular scheme/s and ignoring any other benefits that there might be, a significant reason would be the exchange rate which is at one of its most favourable positions ever.

 

Which Cambridge are you at? - I'm from the UK one.

 

Sorry, you did say that if you had been living in Aus for 5 years then you could take your money out and transfer it back to a UK pension. If you have been in Aus for 5 years then you would likely be a PR in which case you wouldnt be allowed to transfer your pension anywhere else in the world until you had hit preservation age. Super has to stay in Australia unless you are a temporary resident in which case you are advised to take it with you but you get a big tax hit in the process. I have no idea what NZ says and does but it would be a little foolhardy to try and transfer in and out of an Australian super IMHO.

 

Now, thankfully in the UK Cambridge!

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Guest Swisstony

Hi Quoll.

 

As explained before, what I mentioned relates to UK schemes and not Aus schemes. In order to give you some context, somebody who has arrived from the UK with a UK scheme, who has yet to transfer that scheme anywhere else, will be able to transfer it to an NZ scheme at any time. Depending on which NZ scheme the UK funds are transferred to, will allow that individual to withdraw the entire funds at the end of five years so long as they have not returned to the UK beforehand. These funds, once encashed, could then be taken back to the UK as cash (as opposed to an investment or fund of any kind). Hence, the funds could then be used to fund a new UK pension scheme of the now, UK resident individual.

 

I hope this clarifies matters.

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