If you’re moving from the UK to Australia with your UK Pension, you might be surprised, but it can mean you have a lengthy process to wait for funds to be available. There are many people who are from the UK (returning to Australia) and decided to permanently move there, so why not transfer that pension over to Australian currency where you can still retire and have access to your money. After all, you’ve earned it. There are numerous benefits to doing this, and we’ll get into those later.
How Old Do I Need to Be?
When it comes to figuring out if you’re old enough to transfer your pension, think about the minimum age to retire. If you’re 55 or older, you can legally transfer your UK pension over to Australia. There have been many different faction rules in the Qualifying Recognized Overseas Pension Scheme. If you are under 55, you can actually end up losing your pension if you plan on trying to do this too early, as it’s against the HMRC’s requirements. Fortunately, you can have certain special conditions that may result in someone being eligible to get their pension transferred a little earlier than that.
Transferring to QROPS/ROPS Fund
You may want to avoid a hefty HMRC tax penalty by transferring into a QROPS fund. This means that your scheme manager makes with the HMRC to continuously report for 10 years to ensure that they meet the HMRC requirements. More than anything, even though there’s no slack when it comes to this option, it’s for the best and more secure possibilities that your money will be there 10 years later.
When it comes to investing in the transfer, you do need to consider your options. You can get three different categories for your pension, and those are defined benefits, money purchases (defined contribution), or a hybrid category that combines the two of these.
Will Australia Allow the Transfer?
When it comes to transfers like a UK pension transfer to Australia, you need to realize that Australia is going to treat this as a brand-new contribution, and not a transfer necessarily of existing benefits. Therefore, it’s like cashing out and reinvesting into a new pension in Australia. You have to comply with all of the Australian rules for non-concessional contributions, which means that you can’t be 65 and take the Work Test and that you are allowed to pay a hundred thousand every year as a contribution. If you’re under 65 but over 55, you can contribute for three consecutive years at one time, but you are not allowed to contribute for the last two years of that run (So if you paid three hundred thousand on the first year, you can’t pay into the second or third years).
While you don’t have to necessarily convert your actual currency when converting your UK Pension to Australia, you do need to consider the consequences. In some ways, this can have benefits, and burdens when it comes to properly dealing with your money, especially if you’re living in Australia.