UK Pension Transfers

This is Majenda Insights number seven in the series. And my name is Geoff Taylor. I’m an Australian tax accountant and financial planner. I’ve been looking after Australian expats for the last 20 years. And the topic of this video is ‘UK pension transfers’. Before I go into the detail, I will say that this is just general advice. I haven’t taken into account your personal circumstances, goals, objectives, any of those things. If you want personalised advice, I’d be happy to provide it. You just need to connect with me and we can set up a Zoom call. You can find a lot of material on UK pension transfers on the internet.

And the purpose of this insights video is just to explain what it is that’s going on. In order to provide UK pension advice, you need to know about the UK pension rules, UK tax rules, the Australian superannuation rules, and the Australian tax rules, and the interplay between all of those. This is where people will say to me, I can just take the 25% once I’ve reached a certain qualifying age, and it will be tax-free. And what they’re quoting is a UK tax rule, but what if they’re a tax resident of Australia? What are the tax implications then? I see people quoting bits and pieces of the rules and not really understanding how they interconnect.

The qualifying recognised overseas pension scheme (QROPS) arrangement that the UK has in place is quite unique and allows money to be transferred to a number of countries, but Australia is obviously one of those countries. It is effectively a way to take money out of your UK pension account and bring it into the Australian superannuation system.

You can only do that once you’re above a certain age, and that age is actually going to increase in the next little while. You’ve got to work out whether you qualify and then you’re looking at the whole gamut of the Australian contribution rules, superannuation contribution rules, because the money comes in as a non-concessional contribution. What happens and how does that all work? What are the tax implications? Tax may apply to applicable fund earnings on the transfer. You’ve got to understand what that amount is.

In effect, you will need a UK advisor to help you with your UK pension and tax advice. You will also need an Australian tax advisor like myself who is familiar with the UK pension rules and can provide you with the necessary advice. We basically partner with other firms in the UK to provide the UK component. I have an international tax degree, so I understand how the UK rules work and the interplay between the two. I’m an Australian financial planner, so I can actually provide advice to clients when they’re physically in Australia and they’re ready to do a pension transfer.

QROPS provides a pathway out of one system and into the other. This arrangement is unusual and complex. It’s important to get the right advice and make sure you know how it’s all going to work and avoid falling foul of the HMRC rules because an inadvertent error could result in an additional charge. That’s just a bit of a heads-up. There’s a lot of material that you can find on the specific rules on the internet and I will include some of them below this video. But really what you’ve got to be aware of is that there’s a level of complexity there and you really need to be talking to tax practitioners and financial planners who understand this area.

I hope we can meet again at some point in the future and hopefully this video was of some benefit to you.