Pension Advice When Moving to Australia

UK Pension Transfer to Australia for the Over 55’s

Pension Advice When Moving to Australia

13:05 05 May in UK Pension Transfer to Australia

Many Brits leave the UK for the warmer climate and outdoor lifestyle which Australia offers, so it is no surprise that Australia is a popular retirement destination. If you are thinking of retiring to Australia you may have wondered what will happen to the pension pots you have worked hard to build up in the UK and how you can get the most from them.

You may be asking yourself what you should do with your private UK pension schemes and workplace pension schemes, is it worth transferring them to an Australian QROPS or whether you will still be eligible to claim your UK State Pension.

What Can you do With Your Private and Workplace Pensions?

There are many options available to you, including:

  • Leaving your pensions in the UK and drawing them
  • Transferring your UK pension to an Australian QROPS to then be drawn

Leaving your pension in the UK could mean that your pension pot will not provide the retirement income you expected. This is due to your UK pension being paid in Sterling, as it is paid in Sterling you will have to pay currency conversion costs and could be affected by unfavourable exchange rates. Also, your tax liability could be greater under UK pension rules compared to those of Australian QROPS.

If you were to transfer your UK pension to an Australian QROPS, not only would you avoid currency conversion costs and remove losses from unfavourable exchange rates, you may benefit from:

  • Increased flexibility of pension income
  • Greater tax efficiency

To determine how you could benefit from an Australian QROPS and to make an informed decision that is based on your unique personal circumstance and financial goals it is imperative to seek independent expat financial advice before making any changes to your pension.

An independent financial adviser that specialises in expat pension advice, such as Prism Xpat will be able to provide you with tailored advice to ensure you have the most effective strategy in place. Our advisers provide advice on all aspects of expat pension advice and have extensive knowledge and experience of Australian QROPS.

Requirements for Transferring a UK Pension to an Australian QROPS

There are new changes to the rules in Australia that will come into force on 1st July 2017. The new rules mean you will need to consider the amount of your UK pension transfer which will count against your non-concessional cap and those caps will depend on whether you make the transfer before or after the new rules are implemented from 1st July 2017.

The current and new rules are as follows:

Current rules / pre 30 June 2017:

  • The Government has confirmed non-concessional contributions will continue to be subject to a yearly cap of $180,000 for members 65 or over, but under 75. A bring forward rule applies to members under age 65 for the amount of $540,000 over a three-year period.

New rules / post 1 July 2017:

    The 1 July 2017 Super changes mean:

    • A yearly cap of $100,000 per annum for members 65 or over but under 75. A bring forward rule applies to members under age 65 for the amount of $300,000 over a three-year period.
    • A lifetime contribution limit of $1.6 million will also apply. If your total super balance is over $1.6 million you won’t be able to make any further non-concessional contributions to super from 1 July 2017. Any super monies you have in your retirement income account is included towards this threshold.
    • Prescribed reporting and compliance requirements to the HMRC as part of the QROPS requirements. This obligation continues until 10 full UK tax years has lapsed.


Will I Still Get My UK State Pension in Australia?

To qualify for a UK State pension in Australia you must have paid at least 10 years of National Insurance Contributions and you will need to have contributed for 30 years to receive a full pension. The UK State pension is separate to private pensions schemes or workplace pension schemes and a UK State pension cannot be transferred to an Australian QROPS but may be drawn and paid into your bank account in Australia.

If you are moving to Australia or are already living there and are looking for independent expat pension advice, our specialist team can advise you on your options and provide a formal recommendation on your optimal course of action. Get in touch to discuss your requirements and options for transferring your UK pension to an Australian QROPS.