UK Budget Announcement Affects UK Pension Transfers To Australia For Public Sector Pension Members
Posted by Simon Harvey on 28/03/14 13:14
The UK Budget statement, announced on 19th March 2014, contained serious implications for UK Public Sector Pension members looking at a UK pension transfer to Australia.
In the announcement, the Government have stated that they intend to introduce legislation to remove the option for members to transfer out of public sector schemes (except in very limited circumstances). Further details from the Government are to follow.
The Effect on Australian Residents
Currently, a UK pension transfer to Australia is still possible for members of public sector pensions (such as the NHS, Teacher’s and Civil Service schemes) and there are many positive reasons to transfer.
One of the main attractions of an Australian Superannuation scheme is the tax free nature of the benefits.
An Australian Superannuation scheme will allow pension benefits, both income and lump sums, to be paid tax free to an Australian resident at retirement. This is a major advantage to the alternative of having pension benefits paid from the UK scheme – as these benefits are assessed for tax.
There is also the issue of the exchange rate. A pension paid from a UK pension, to a retiree in Australia, will be paid in pounds sterling. This means that any regular income paid from the UK pension scheme would effectively fluctuate with the exchange rate with the Australian dollar. Completing a UK pension transfer to Australia and paying benefits from an Australian superannuation scheme, eliminates the uncertainty of income levels in retirement, as the Australian superannuation will pay benefits in Australian dollars.
Another point to compare, between the UK and Australia, is death benefits. If a retiree dies whilst receiving income from a UK public sector scheme, there are limited widow’s benefits available. If there is no spouse, there may be nothing for any beneficiaries. In an Australian superannuation scheme, however, any remaining fund can be paid out, as a lump sum, to any beneficiary nominated.
Global QROPS Advice
Anyone living or planning to move to Australia, who is a member of a UK Public Sector pension scheme, should speak to Global QROPS immediately. There could be a limited opportunity to complete a UK pension transfer to Australia and take advantage of tremendous tax advantages available. Our team is here to guide you through the transfer process – whilst it is still possible.