UK pension transfers
Historically, the majority of overseas superannuation transfers came from UK pension schemes.
However, on 6 April 2015 new rules came into effect in the UK which introduced a number of restrictions on UK pension transfers including:
- unfunded public service defined benefit super scheme are no longer able to be transferred
- defined benefit members (other than members of unfunded public service defined benefit schemes mentioned above) must receive advice from an 'authorised independent adviser' before transferring or cashing out their defined benefit. An exception applies where the transfer value of the member's benefits is less than £30,000.
- Qualifying Recognised Overseas Pension Schemes (QROPS) must comply with the UK pension age test. This test requires the payment of benefits to members under the age of 55 to be prohibited other than in the case of incapacity. Unfortunately, this disqualified most large funds in Australia from being able to qualify as a QROPS fund as there are a range of conditions of release under the SIS Act, such as financial hardship and the release of benefits on compassionate grounds, which do not comply with the pension age test. However, it appears some SMSFs have subsequently been able to qualify as QROPS by restricting fund membership to people over age 55 only. Trustees wishing to explore this possibility should seek specialist legal advice.
The above Australian tax rules apply to transfers and withdrawal of foreign super from any country.
Last modified: Tuesday, May 2, 2017