Pension Transfer FAQ's
Collected below are a series of common questions and answers related to pension transfers into Australia. They are not intended to supplant professional advice in this area, but rather to provide people with background material so that they can have a balanced discussion with advisors both about the pros and cons of transferring pensions, and about the process.
Can I transfer my UK pension(s) to Australia?
Almost all private sector pensions and money purchase schemes have been capable of being transferred to Australian superannuation funds, subject to that receiving fund being a Qualifying Recognised Overseas Pension Scheme (QROPS). Unfunded public sector final slary schemes, such as NHS pensions, are now not available for transfer. Individual public sector funds which are fully funded may continue to be transferrable but you will need to seek confirmation from the Fund trustees. Note that no transfer of the UK state pension is possible and no transfer of any pension fund is possible once you have start receiving a pension.
What about pension from other countries, such as the US, Canada, South Africa and Europe?
There is usually no problem in a pension transfer being accepted by a complying Australian superannuation fund, regardless of source. Most issues revolve around whether it is appropriate to transfer the funds bearing in mind home country factors; such as early release penalties (eg. withholding tax), the lump sum valuation and size of the fund; and issues such as to what extent the funds might be taxable in Australia. Tax advice should almost always precede any decision to transfer these funds. The relative complexity attaching to these transfers usually means that it will not be economic to consider the transfer of small balances.
What sort of Super Fund can I transfer my Funds into?
There is no limitation on what sort of funds you can transfer your pension fund into; including a Self Managed Superannuation Fund (SMSF). It is recommended that you take financial advice in terms of what sort of fund suits your personal requirements.
How much can I transfer into Australia - are there any restrictions?
Currently, you may transfer up to $180,000 per annum as non-concessional contributions, or you can bring forward up to two years contributions and submit $540,000 over a period of three year. Once you 65 years of age or older you may no longer bring forward contributions and your contributions are limited to $180,000 per annum, subject to your meeting a "work test".
For a variety of reasons, pension transfers in excess of AUD540,000 are considerably more complex than single transfers; requiring specialist financial planning and tax advice.
Is any tax levied on my transfer to Australia?
We address this in a separate page but it largely depends upon whether the sending fund qualifies as a "foreign superannuation fund" (FSF) for Australian tax purposes and if any transfer takes place within 6 months of your becoming resident in Australia. If the overseas fund meets the definition of a FSF and the transfer takes place withion 6 months of your becoming resident again, then generally no Australian tax will apply. If the transfer occurs later then you will be taxed on the growth in your funds from the date you became resident, but you can elect for the pension fund to pay the tax at the rate of 15%. If you do not make this election then you will be taxed at your marginal tax rate. In general this means you are better off completing a transfer within the 6 month period.
If your fund does not meet the definition of a FSF you may be liable for Australian taxation on the entire gain made within the fund, even prior to residency. As mentioned elesewhere, tax advice is a prerequisite to any decision on making a transfer.
What happens if I leave my Pension overseas?
In general, once you start receiving your pension it will form part of your income for Australian taxation purposes and you will pay tax at your marginal rate. If the pension is subject to withholding tax in the country in which it based, then you will probably qualify for a tax credit in relation to the tax paid in your Australian tax return.
What if I leave Australia, can I transfer my pension with me?
There are very few situations where you can have early access to an Australian superannuation fund and normally your pension funds would not be available for transfer out of Australia and accessible normally on retirement. One exception is people in Australia on certain temporary resident visas, they can gain access to superannuation, but a tax charge of 38% currently applies.
If you have decided to move permanently overseas and your superannuation is significant in size then we recommend you see a financial planner with a view to ensuring that your investments match your requirements. There may be an argument to bias your investment profile towards the currency/region in which you intend to retire, in order to better match your requirements and to limit your currency risk.
Who gets my superannuation when I die?
In the event of death, your superannuation fund will usually be paid out to your nominated beneficiaries either as a lump sum or pension - unless other parties make claims on the Trustees. This can be one of the benefits to transferring a fund to Australia in some other countries, such as the UK, your qualifying beneficiaries would often receive only a partial pension. The taxable component of your fund will be tax free if paid to a dependant (a spouse is always a dependant) but may be subject to a 16.5% tax if paid to a non-dependant.
What are the Fees for transferring my funds to Australia?
Our fees are not based on the value of funds transferred, as happens with many other firms. In terms of single UK transfers, they comprise a fee of $AUD1500 to cover the actual, physical transfer process. Fees for tax and actuarial advice, if needed, will be quoted separately in advance. Fees will also be separately quoted in advance for large transfers; those involving multi-years transfers are considerably more complicated than single transfers.
For transfers from other countries such as the US, Canada, South Africa and Europe circumstances can vary quite considerably and we would provide a fixed fee quotation on request.
Is my money safe while being transferred?
The pension funds being transferred are remitted directly, usually by telegraphic transfer and sometimes by cheque, from your current pension fund into your Australian superannuation fund. They are not, and should not, be paid into any adviser's trust account and they are consequently entirely secure. Fees applicable for the Actuarial report and transfer process are not deducted from any transfer - they are invoiced directly to clients for payment.