From A-Day (6th April 2006) the UK Her Majesty’s Revenue and Customs (HMRC) has permitted unsecured pension funds to be transferred to another pension scheme after income drawdown has commenced. For migrants looking at a pension transfer to Australia, where income drawdown has commenced on their UK schemes, the option to transfer is still available.
The main restriction, for those looking at an unsecured pension transfer to Australia, is that the receiving scheme has to be an Australian QROPS (Qualifying Recognized Overseas Pension Scheme). There are, however, many superannuation schemes that are approved as QROPS by HMRC so, with the appropriate advice, this should not be a problem.
A second restriction would be on the benefits that can be taken during the QROPS reporting period. Should an unsecured pension transfer to Australia be completed, any benefits paid from the Australian QROPS would have to be in line with the UK GAD (Government Actuary Department Rates). Any payments to the member, in access of UK maximums during this period, would be subject to an unauthorized payment charge.
After the QROPS reporting period, which is 5 complete UK years tax years of a member’s overseas residency, payments made from the scheme can revert to the local Australian rules. UK pension members should, therefore, be aware of all benefits and restrictions before they affect a pension transfer to Australia – especially if they are already drawing an income or tax free cash from their UK pension fund.
