Can Expats Transfer a UK Pension Scheme to a QROPS in Australia?
Since the changes in April 2015 to the UK pensions law regime, transfers from UK Pension Funds to Australian Superannuation funds have become more difficult to complete leaving many expats living in Australia asking whether they can still transfer their UK pension scheme to a QROPS in Australia or whether they need to set up a Self-Managed Superannuation Fund (SMSF) to get around these changes.
As an international financial advisory and pension transfer specialist, our experienced team of advisors at Prism Xpat can support and guide you through all aspects of transferring your UK pension scheme to a QROPS in Australia. There are however some requirements, restrictions and limitations of QROPS in Australia.
What are the Limitations and Restrictions of QROPS in Australia?
The changes to the UK pensions law in April 2015 effectively closed transfers from UK pension schemes into QROPS in Australia, unless the Australian superannuation fund disallowed a payment of a pension before the member reaches the age of 55 on the grounds of ill-health as defined by UK law.
In the majority of cases superannuation funds do allow withdrawals in certain circumstances, such as extreme financial hardship, permanent or complete disablement and on compassionate grounds, this means that many Australian superannuation funds including SMSFs did not comply with the UK pensions law.
Requirements for Expats to Transfer a UK Pension Scheme to a QROPS in Australia
With new changes to the rules set to be implemented this year, there are some considerations that need to be made including the amount of your UK pension transfer which will count against your non-concessional cap and those caps will depend on whether you make the transfer before or after the new rules are implemented from 1st July 2017. The current and new rules are as follows:
Current rules / pre 30 June 2017:
- The Government has confirmed non-concessional contributions will continue to be subject to a yearly cap of $180,000 for members 65 or over, but under 75. A bring forward rule applies to members under age 65 for the amount of $540,000 over a three-year period.
New rules / post 1 July 2017:
The 1 July 2017 Super changes mean:
- A yearly cap of $100,000 per annum for members 65 or over but under 75. A bring forward rule applies to members under age 65 for the amount of $300,000 over a three-year period.
- A lifetime contribution limit of $1.6 million will also apply. If your total super balance is over $1.6 million you may be restricted on contributions to super from 1 July 2017.
- Prescribed reporting and compliance requirements to the HMRC as part of the QROPS requirements. This obligation continues until 10 years has lapsed from the date of the transfer of UK sourced monies into the SMSF.
If you are moving to or already living in Australia and are looking for advice on transferring your pension to Australia and QROPS, our specialist team can advise you on your options and provide a formal recommendation on your optimal course of action. Get in touch to discuss transferring your UK pension scheme to a QROPS in Australia.