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UK Pensions – Transfer or Leave?

Categories: Accounting & Tax
7 February 2019

There are many things to consider when deciding whether to transfer your UK pension funds to Australia or leave your funds in the UK.

If you transfer funds to Australia:

  • Tax advantage: you will have the flexibility of full access to your pension, when you retire from age 60, giving you greater control over how you manage and invest your money, up to $1.6m in pension funds based on current legislation will be tax free
  • By not receiving funds from overseas your pension payments will not be affected by exchange rate fluctuations
  • You can pass the full value of your super to your family or beneficiaries as part of your estate, whereas many UK pension funds pay a reduced benefit to a spouse and often nothing to dependants
  • Depending on market conditions the value of your pension in retirement may grow

If you leave your funds in the UK:

  • Any lump sum, or subsequent pension payments are subject to Australian tax at your marginal rates
  • The full value of your fund, or pension, is often not passed onto your estate in the event of your death and in many cases is totally forfeited
  • The dollar value of the pension you receive will fluctuate with exchange rates
  • You cannot increase the value of your pension assets during retirement
  • Security of the UK schemes funding status

Transferring your UK pension to a non-compliant overseas fund structure could result in a penalty tax by Her Majesty’s Revenue and Customs (HMRC) of up to 55% of the value of the transfer.

In 2006, the UK made many changes to UK pension legislation. One of the changes was that UK pensions could be transferred abroad provided that the individual had left the UK on a permanent basis and the receiving pension scheme had been registered in the UK as a Qualifying Recognised Overseas Pension Scheme (QROPS) now known as ROPS schemes.

Due to the age restrictions relating to the transfer of UK pensions to Australia, imposed by HMRC, and ROPS schemes only being available to those aged 55 and over, if you are under 55 years of age and have a UK pension then you can consider transferring this to a (UK SIPP) Self Invested Personal Pension, until you turn 55.

Benefits of transferring to a UK SIPP for the under 55’s

  • Consolidation of your funds and greater control on how these are invested
  • Secure your Cash Equivalent Transfer Value (CETV) into a UK SIPP
  • Invest and grow the funds and then at age 55, withdraw 25% UK tax free lump sum and roll the remainder of the fund to Australia
  • Secure, upon death, a full refund of death benefits, 100% to your nominated family members or beneficiaries as part of your estate
  • Safeguard against UK legislation changes as we do not know if some UK transfers made be prohibited in the future. For example, the changes introduced by HMRC on 6 April 2015 restricted members of all unfunded UK Public Sectors schemes who no longer have the option to transfer
  • Eliminate the 25% Overseas Transfer Charge OTC for transfers to New Zealand, Malta, Guernsey and Isle of Man which now incur a tax charge on the total transfer value if the individual does not reside in the same country as the ROPS fund
  • Invest in GBP or AUD whichever your preference

Working in conjunction with our UK affiliated office we can provide you with the full wholistic service incorporating UK advice (if required), UK Self Invested Personal Pension (SIPP) set up ROPS compliant Self-Managed Super Fund (SMSF).

UK pension transfers can be complicated and time consuming and everyone’s situation is unique. By seeking professional advice from us, we will guide you to make the decision that is right for you and support you throughout the process.

Transferring your pension can be a minefield so engaging our professional transfer services can save you time and potentially thousands of dollars. We specialise in large transfer values, ensuring your transfer is completed in a compliant, tax efficient manner.

If you require any further information, then please do not hesitate to call 0447 086 946 or email



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