Transferring UK Pensions To Australia

If you’re planning on enjoying your retirement overseas, then Australia is a fantastic place to unwind and discover a brand-new lifestyle. However, as with any big financial move, it’s worth brushing up on some of the regulations, legislative requirements, and rules needed to process your UK pension fund. 

Making the choice to transfer to an overseas pension scheme

When it comes to deciding what to do with your pension pot, opting for an overseas transfer is a popular choice for expats. 

A popular feature of overseas pension transfers are the potential benefits of a lower tax charge and protections against certain charges, but you may still be liable for inheritance tax in Australia. To avoid getting caught out, it’s a good idea to check which fees and taxes you might be subject to before making a transfer – which is something your financial adviser can help you with.

So if you are looking to take control of your retirement savings, an overseas pension transfer could be a viable option – especially if you have accrued a large fund. 

This could also be of interest if you have a defined benefit scheme (final salary). However, it is important to note that this is considered a higher risk transfer, so make sure to talk to a financial adviser to work out whether this is a suitable option.

Is it possible to transfer my pension fund to Australia?

To transfer your pension savings to an Australian scheme, it has to be classified as a QROPS – a qualifying recognised overseas pension – and meet a number of eligibility requirements in order to be accepted.

It is important to remember that you are not allowed to move an existing UK pension to an Australian QROPS until you are 55, due to the Australian superannuation regime. This applies to wherever you are living or working.

Notably, Australian rules do not permit people to have access to their funds until they reach ‘preservation’ age, meaning that expats must be 55 or over – but not yet drawing from their current pension – to meet regulatory requirements.

Your pension pot must also be valued at a minimum of £20,000.

What if I want to take early retirement in Australia before
I'm 55?

In some cases, you may be able to transfer your pension to an Australian Superannuation Fund if you are under 55. However, this may have financial consequences. 

Within an Australian Pension Scheme, exceptions allowing people to access their ‘super’ early are only made in very special circumstances. This could lead to potentially high charges and additional taxes if the transfer is not completed within six months of moving.

Which rules should I know before transferring pension funds to Australia?

At Brite, we align all our financial advice with the current legislative requirements and best practices within the UK and Australia. This ensures that you can make informed decisions about your pension and investments. 

Your current pension arrangement will be transferred to an Australian QROPS (also known as an ROPS) – which allows British expats to move money to an overseas jurisdiction. This gives you the potential to maximise your income, enjoy the full extent of your funds and, in some cases, benefit from tax efficiencies. 

These are schemes that are recognised by HMRC and are regulated by the local financial authority. 

If your existing pension is part of a defined benefit scheme, an occupational pension scheme, a small self-administered scheme (SSAS), or defined contribution schemes – even multiple – can be transferred to an Australian QROPS or SIPP if you are under 55 years old.

What are the benefits of transferring my pension
to Australia?

Transferring existing personal or private pensions to Australia through a QROPS or ROPS can offer expats a number of potential benefits. 

A QROPS is usually not subject to income or inheritance tax in the UK and is often situated in countries that have a lower tax rate, such as Malta, Hong Kong, Gibraltar, Australia, New Zealand, and Guernsey.As such, benefits can be utilised in your new place of residency, meaning your pension is now under local tax rates –  which may be more favourable. 

However, it is important to take note of ‘double tax agreements’, which may specify that the pension is taxable solely in the UK or only within the country where you are retiring. 

In financial planning, the location of the trustee chosen usually depends on where you currently reside, the double tax agreement between the country where the trustee is located and where you are planning to retire.

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