Transfer UK Pension to Australia | Advice for Expats
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We’re passionate about providing free, high quality and up-to-date information to British Expats in Australia.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
The benefits of transferring to an Australian Super Scheme
Potential drawbacks of moving your UK pension to Australia
How the different schemes are taxed as a British Expat
The most tax-efficient time to move your pension pot
Important factors to consider when taking advice
Australia is one of the most popular retirement destinations for British Expats, with over 1.2 million Brits relocating there.
For many, retiring in Australia is a dream, but navigating the complexities of transferring UK pensions can seem daunting. In a world with contrasting advice, opinions and often intricate regulations, keeping up can be incredibly challenging, especially without professional support.
In this article, we'll explain the best practise for British Expatriates in Australia, and detail the options available to secure peace of mind in retirement.
Can I Transfer my UK Pension to Australia?
In short, yes, providing you have reached age 55. This is known as the retirement benefits age in the UK, and the age at which you can legally take benefits from a UK pension.
Once you reach this age, you can technically transfer your UK pension scheme to an Australian Superannuation Funds (Australian equivalent of a UK pension). However, note you can only do so providing the scheme you wish to transfer to is part of the HMRC approved list of QROPS providers and you have been fiscally resident in Australia for over 5 years. Finding an Australian scheme that aligns with these specific UK pension criteria can be limited.
If you move to a scheme that does not meet the above conditions, then transferring your UK scheme could trigger large tax penalties from HMRC upon transfer.
Be sure to take regulated financial advice before proceeding with any recommendation or transfer of funds to ensure you do not fall into this tax scenario.
Should I Transfer my UK pension to Australia?
Now that we've covered the conditions in which a British Expat can transfer their private pensions to Australia, let's cover the question of whether it should be done.
Benefits of Transferring to an Australian Super Fund
The main benefit of an Australian Superannuation Fund is that any proceeds taken from the fund after age 60 are generally free of income tax providing you are retired. This is the case whether you take the funds as a lump sum, or via an income stream.
Using this type of scheme means your retirement pot is also based in your country of residence, which can provide many administrative benefits in terms of the ease of use and taking benefits.
You can also benefit from taking benefits in AUD, the local currency in Australia, which can help mitigate currency risk as you take benefits from your pension. This is particularly beneficial if you're concerned with the value of Sterling, and would prefer security over currency fluctuations.
However, it's also important to understand the drawbacks associated.
Potential Disadvantages of moving your UK Pension to Australia
Investment growth within Superannuation Funds are taxed at 15% in the accumulation phase of your account. This is unlike UK pensions, which attract zero taxation when left within the account wrapper.
You may also be exposed to far greater fees in an approved QROPS/Super fund. These pension accounts are typically much more expensive than alternatives, such as SIPPs and International SIPP accounts.
Furthermore, you lose the strict regulation of the Financial Conduct Authority in the UK, as well as having your pension pots fully covered by the Financial Services Compensation Scheme (FSCS).
Finally, investment options may be more restrictive and cost more on an ongoing basis. With UK SIPPs built for Australian residents, you can access funds and low cost ETFs from companies such as Vanguard, Blackrock etc, and diversify your pension into top performing funds that cost close to nothing.
UK Pension Transfer to Australia | Best Practise
If you are over the age of 60, you should consider your options of transferring your UK pension to an Australian Super scheme. The tax benefits associated with this scheme will likely outweigh the greater costs involved in accessing the account.
However, the above may not be for everyone depending on your position.
Many investors like the financial security of the UK system, and may prefer to leave their pensions in this safe environment.
For these individuals, as well as British Expats under the age of 60, an International SIPP, or non-resident SIPP should be looked at.
The International SIPP
An International SIPP is a purpose built pension account that is still based in the UK, but tailored for Expats around the world. Benefits include:
Full-flexible access draw-down
Wide, whole of market investment options
Ability to hold in multi-currency, including AUD
Having funds paid out free of UK taxation
Portability, should you ever decide to move elsewhere
Possibility to transfer to an Australian Superannuation once reaching age 60
Consolidating multiple UK pensions into one manageable account
Our Verdict | Taking Expat Financial Advice
Retiring abroad is complex and careful consideration is required when taking action on something as important as your pension pots.
Be sure to conduct thorough due-diligence on any company you choose to work with, and be sure not to rush the process. Check their regulations, and be sure to know exactly what you will be charged for the transfer service, both initially and ongoing.
The Wealth Genesis is the first Expatriate Financial Adviser to charge all clients the same one off flat-fee regardless of the advice provided, or the size of the investments. This zero commission approach ensures no conflicts of interest in the advice process.
To see how we can help, schedule an initial consultation with a member of our team using the form below.
Get Started with The Wealth Genesis.
FAQs
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Simply put, it is because UK and Australian pension schemes operate under different laws and taxation treatment.
This is a common theme for UK Expats, as UK pension legislation is famously tricky to understand -
Again, this comes down to the rules in place.
Generally speaking, if you are of the age of 60 and above, and you’ve lived in Australia for over 5 years, you should probably transfer to an Australian Super scheme.
However, this may not always be the best option, especially given the increase cost of these schemes when coupled with the lack of investment options when compared with UK SIPPs.
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The majority of advisers internationally will charge a fee between 5% and 1% of the pension pot to transfer the funds.
At The Wealth Genesis, we charge all our clients the same flat-fee of £3,000, with zero commissions or hidden fees in the process. -
We would currently recommend the Novia Global SIPP, as it is the lowest cost pension available to Expats at just £216 per annum plus the platform fee of 0.30% per annum.
You can read our unbiased review of the Novia SIPP here.
