I want to transfer my UK teacher's pension to Australia (28 years). I have been in Oz for 5 years and I know that I will need to pay 15% tax on the "growth" that has accumulated since I have been here if I roll over to an Aussie fund.
The problem is that it is a defined benefits scheme and they cannot tell me how much the fund was worth when I left. There must be a formula for this but all I meet is frustration.

I want to find somebody competent to do this calculation for me - so that it is acceptable to the ATO.

Has anyone else been through the same process? If so I would love to hear from you. Or if anyone has any advice at all, I would be extememly grateful.

Hi tonyonoz,

I hope you don't mind me asking, but why do you want transfer it? The conventional thinking is that if you're lucky enough to be in a defined benefits (i.e. final salary) type scheme, you should not give it up lightly.

The reason I ask is that I will be in this situation too (if visa comes through).

PPJ

Seems to me that if they can tell you what your fund is valued at when you want to transfer out then they should be able to tell what the value was 5 years ago. This work is undertaken by an actuary using the current valuation of the assets and assessing your life expectancy at that time. They will then calculate what it would cost to buy an annuity to meet your benefit payments over your life expectancy. This would be the sum that they would be prepared to transfer out to you.

I suspect that it's not so much that they can't do the calculation but rather that they cannot be bothered. Have you tried insisting on a valuation? You are a member of a scheme and have certain rights. Don't deal with the administrators but go direct to the trustees as it is their duty to look after the members best interests.

I'm no expert in these matters but the above is the approach that I would be taking if my fund was not being cooperative.

PPJ is right that you will need to consider the matter carefully before deciding to move as a defined benefit pension especially if it is index linked will be hard to beat. See what they will pay out to you and then work out if you can invest the same money safely and match or better your defined benefit before you jump

Thank you. I will follow your advice Paddy.
I decided to transfer for a number of reasons

1)If i go part-time soon and start to draw my pension from the uk - i will be taxed on the income and lump sum at my marginal rate. There is a favourable "transition to retirement" scheme here which allows you to work and draw a pension.

2) When i die, my spouse will get less than half of the pension and when she dies, there is nothing. Here my money is my own and any left can go to my kids.

3) the exchange rate has moved in the wrong direction ever since i came here. it moved back again recently but who knows what the future holds?

4) When i am 60, all withdrawals are tax free.

5) the danger is that i dont make enough earnings to keep my transferred lump sum healthy. According to the "allocated pension" tables from the government, if i withdraw an amount similar to my uk pension, it should still be going well past my 100th birthday (assuming average returns). As I will be working part-time for some of this, i will continue to build my aussie super too.

It's a tough decision - but i want to leave something to the kids. I would appreciate advice if you spot flaws in my thinking.

Tonyonoz your thought processes sound absolutely correct. I am in exactly the same position as you and I have come to the same conclusions. I just wanted to be sure that you had checked all the bases. My major problem is that my deferred pension is a Jersey pension and the Tax Office there will not allow the transfer to an Australian Super. Still working on it!

I hope you are looking at using a self managed super. I presume that you are at the preservation age where you can elect to take a part pension and still work. If you have other revenue earning assets besides your pension it would be sensible to throw all of these into your super as well. As soon as you elect to draw down the pension your super will no longer attract the 15% tax and if you get the right calculations done then your pension now could also be tax free and will definitely become that once you turn 60 under the new rules.

Paddy, it is a relief to find someone in the same boat. I have looked into self managed super but i am a real novice at this. i have done a lot of research however but i am still nervous. have you seen this website:
http://www.acleardirection.com.au

it gives good information about aussie super etc. i like his style.

good luck with the jersey authorities.

and yes........i am 55 and looking to take my pension and keep working......and feeding as much into super as i can.

my best financial decision, however, was to marry a younger aussie....so that if my pension evaporates.....i can live off her wages heh heh!

quote:

Originally posted by Paddy:
Tonyonoz your thought processes sound absolutely correct. I am in exactly the same position as you and I have come to the same conclusions. I just wanted to be sure that you had checked all the bases. My major problem is that my deferred pension is a Jersey pension and the Tax Office there will not allow the transfer to an Australian Super. Still working on it!

I hope you are looking at using a self managed super. I presume that you are at the preservation age where you can elect to take a part pension and still work. If you have other revenue earning assets besides your pension it would be sensible to throw all of these into your super as well. As soon as you elect to draw down the pension your super will no longer attract the 15% tax and if you get the right calculations done then your pension now could also be tax free and will definitely become that once you turn 60 under the new rules.

Have you sought QROPS approval for your smsf which should allow tax free transfer - or is the problem through using an offshore provider?

As far as i am aware.....all uk funds have to pay tax on the amount that the fund has grown whilst you have been in oz. Unless you transfer in the first 6 months of residence - then it is all tax free.

Hi Jim the problem is nothing to do with QROPS which only applies to a UK pension fund. My problem is with the Jersey tax office as my pension was through my Jersey employer and was an approved scheme under section 131 of the Jersey tax laws. At present the tax office will only sanction a transfer to another pension fund in the UK or Guernsey as these are the only 2 territories that Jersey has a double tax treaty with. The other catch is that I would need to be permanently resident in one of those areas as well.

Tonyonoz please note that Jim has a very valid point in that your SMSF would need to be QROPS approved before you transfer money across from your UK pension or you will get hit with a 40% tax by the UK tax office as well as getting hit by OZ tax on your growth while you have been here.

Then you could transfer to a UK Sipp first and from there to your smsf.

Regards

Won't work Jim that's why I emphasised needing to be permanently resident in the UK or Guernsey. To get the transfer you need to prove residence.

quote:

Originally posted by Paddy:
Won't work Jim that's why I emphasised needing to be permanently resident in the UK or Guernsey. To get the transfer you need to prove residence.

Its a pity that you didn't set up a SIPP before you left the UK. Goof luck with it there must be a way.

Rgda

I will be emigrating to Queensland in Feb 2007 on a 457 temp. visa.
Can someone help me with the 15% tax that is taken on a UK pensions growth.Does this tax apply to persons on a temporary visa as well as permanent residents.

Many thanks

M.J.D.

Michael,

The tax I think you are referring to (payable under section 27CAA) only applies when an overseas pension fund is transferred to an Australian superannuation fund.

If you were to transfer your UK pension benefits to Australia more than 6 months after becoming a tax resident I anticipate your Australian super fund would have this tax exposure.

Best regards.