FAQ

What type of pension do I have in the UK?

Pensions held in the UK can be held in a Defined Benefit (sometimes also referred to as a Final Salary scheme) or Defined Contribution scheme. A Defined Benefit scheme offers the future promise of a regular income, a Defined Contribution scheme doesn’t and will have a varying value on any given day.

What is a transfer value?

UK Defined Benefit schemes use an actuary to calculate the value they are prepared to offer as a lump sum pension transfer in exchange for your future income entitlements.  The offer made is known as the cash equivalent transfer value (CETV).

UK Defined Contribution schemes use the current value of your fund accrued as your UK pension transfer value.

In both cases the UK pension transfer is full and final settlement of the benefits you have accrued within the scheme and releases the scheme of all liability for your membership.

Is the transfer value amount guaranteed?

UK Defined Benefit schemes are based on complex formulas, as such transfer values are guaranteed for a period of 3 months from the date of calculation. If the offer is not accepted within the guarantee period time frame the schemes can charge a fee to issue a revised value which may be higher or lower than the previous one issued.

UK Defined Contribution schemes use the current value of your fund and are therefore unable to provide a guaranteed value as they are commonly linked to traditional investment markets and the values fluctuate on any given day.

Are there restrictions on where I can transfer my pension to?

In order to protect members, UK Pension Transfers can only be made to an approved scheme.  Approval for schemes is made by HMRC and receiving schemes need to prove they meet certain requirements.  Once this has been done, schemes are given Qualifying Recognised Overseas Pension Scheme (QROPS) status and issued with a QROPS number, even an Australian Self-Managed Superannuation Fund will need to obtain QROPS status before it can receive a UK pension transfer without penalties.

In the event of my death while in a Defined Benefit scheme, what happens to my UK fund?

If you were to die whilst your benefits remain in the UK, the amount payable to a spouse (or dependent if allowable by the scheme trustee) would depend on the rules of the scheme.

Normally what we see is that a scheme would pay a spouse’s pension equivalent to 50% of your original benefit. In addition, many schemes offer a refund of the contributions you made to the scheme if you died before retirement.

Some more generous schemes allow the spouses pension to be payable to dependent children, but it would generally cease to be payable after they reach the age of 21.

If you are single with no acceptable dependants, the scheme will have a zero residual value for your estate.

What happens if I were to die and my money is invested in Superannuation or QROPS?

The entire investment value fund can be paid as a lump sum to your nominated beneficiary which can include your estate.

Is there a limit on how much I can transfer to a superannuation fund?

Yes. UK Pension Transfers which come into Australia have an element that is counted towards the Non-Concessional Contributions Cap which is currently $110,000 per annum. You are able to bring forward an additional 2 years of Non-Concessional Contributions, which means that the maximum amount that can come directly to Australia is $330,000 or less if you have already used some of your allowable cap in any given financial year.

The annual cap and bring forward provisions are available to all Australian residents (working or not) up until age 75.

There is also a maximum amount that you can have in Australian Superannuation, this is called the transfer balance cap. The general transfer balance cap began on 1 July 2017. This is a lifetime limit on the total amount of super that can be transferred into tax-free retirement phase income streams, including most pensions and annuities.

On 1 July 2021, the general transfer balance cap increased to $1.7 million. Once this cap is reached by your Australian Superannuation holdings, you will not be able to make any further Non-Concessional Contributions. This can be a serious issue for those with high balances in both UK pension holdings and Australian Superannuation holdings.

We take the combination of the above cap issues into all advice that we provide, and can use QROPS schemes in alternate jurisdictions (including the UK) if necessary to manage your caps and avoid excess contribution penalties.

Do I have to pay tax when I transfer my UK funds to Australia?

In most cases yes. It is quite complex so we have created a special tax information download which you can obtain by using the email form on our contact page >>

I have a large balance in the UK, can you help me navigate the UK Lifetime Allowance?

Yes, we can. The UK Lifetime Allowance has had multiple changes since its introduction. We can explain how those may affect you, and may be able to assist with strategies to avoid future excess allowance problems. Some protections are available but not all people have them in place. This is a complex area of advice so please call us to discuss your situation.

What are the costs of transferring my UK pension?

We have an initial free, no obligation consultation in which we discuss your situation and the types of schemes involved. Once we have that key information we will provide you with an Engagement Letter that outlines all associated costs of the transfer.

Please note that with effect from 6 April 2015 it is no longer possible to transfer NHS, Teachers or Police pensions.