UK Pensions – Frequently Asked Questions
What type of pensions are there in the UK?
Defined Benefit (Company Final Salary Pension Schemes)
Defined Contribution schemes (personal pensions like Legal & General, Standard Life)
What is a Cash Equivalent Transfer Value (CETV)?
UK Defined benefits schemes use an actuary to calculate your transfer value, this is normally calculated using complex formulas factoring in your length of service and last pensionable salary. The CETV from your UK Defined Benefit/Final Salary Scheme, is guaranteed for 90 days.
For UK Defined Contribution schemes, the transfer value is not guaranteed. It is based on contributions made by the employer, employee or both and any future benefits fluctuate based on the investment earnings.
Are there restrictions on where I can transfer my pension to?
UK pension transfers to Australia can only be made to an approved scheme. Approval for schemes is granted by Her Majesty’s Revenue and Customs (HMRC). Once approved these schemes are classed as Recognised Overseas Pension Schemes (ROPS).
How is pension income from the UK treated in Australia?
Any income or lump sums you receive from the UK would be subject to exchange rate fluctuations and added to your assessable income in Australia and therefore taxed at your marginal rates. This pension income will also be included in the test that determines how much Age Pension you will receive from Centrelink.
How is income from Australian superannuation treated in retirement?
At retirement age (from age 60) a lump sum cash benefit is available tax free, and any growth or income from your pension assets are also not taxed (up to $1.6m in pension funds based on current legislation).
In the event of my death, what happens to my UK fund?
If you die whilst your benefits remain in the UK, the amount payable to a spouse or dependant would depend on the rules of the scheme. Generally, a scheme will pay a spouse’s pension equivalent to 50% of your original benefit. In addition, a refund of contributions you made to the scheme would be payable if you died before retirement.
Some schemes may have a dependant’s pensions payable until up to the age of 21.
What happens if I die and my money is invested in Australian superannuation?
You may direct how the full value of your fund is distributed at death and make it available to your family or beneficiaries as part of your estate.
Is there a limit on how much I can transfer to an Australian ROPS fund?
Funds transferred must not exceed the Australian Contribution Caps. We specialise in UK pension transfers, calculating assessable growth and transferring your UK funds within the caps.
What are the fees involved with transferring my UK pensions?
We will conduct research into your UK fund(s) and provide a free no obligation consultation which outlines all associated fees for the transfer.