back-arrow

Back

UK Pension Changes: How are you affected?

Financial Advisors Perth | Empire Financial Group

Nicholas Hart

Nicholas Hart is Empire Financial Group’s UK pension transfer expert. He draws on almost a decade and a half of financial service experience in the UK and Australia, and specialises in delivering strategic advice to UK expats, on a wide range of areas including superannuation, investment and insurance solutions.

YOU

Did you know that all UK pensions could previously be transferred to an eligible Australian Super Fund (Qualifying Recognised Overseas Pension Scheme – QROPS)? However changes made in April could now STOP your ability to transfer for good. Now only certain pension schemes are eligible to be transferred to Superfunds. Boo!

What’s more…

If you are under 55 you could end up being taxed at a whopping 55%!

(If this is you – STOP right now and call us!)

Currently Australian legislation allows payments to you if you are under 55 and experiencing certain circumstances (known as Limited Conditions of Release). These include financial hardship, compassionate grounds, permanent incapacity or refunds relating to excess contributions.

This UK rule change means that unless you satisfy HMRC’s definition of ill-health, you could be taxed at 55% for any benefits transferred over here. Ouch!

WARNING: DON’T MIX YOUR FUNDS

Payments made from Superannuation funds which contain ANY UK pension funds contributed before the age of 55 may be classed as an unauthorised payments by HMRC and taxed at 55%.

Our tip: Keep your UK pension funds isolated from other Superannuation funds to avoid the risk of ALL your super being taxed at 55%.

YOUR FUND (The taxman cometh!)

HRMC has written to ALL eligible QROPS schemes, requesting in no uncertain terms that they abide by UK law and apply a ‘Pension Age Test’ to your scheme. This means all QROPS Superfunds HAVE to tighten up their rules and abide by UK laws (which do not allow benefits to be paid earlier than 55 unless you are eligible to claim ill health according to HRMC’s definition).

The QROPS funds are currently liaising with the Financial Services Council (FSC) (the regulatory body in the UK). In the hope that they will approach HMRC and seek an exemption from this condition for all Australian QROPS.

But they are being threatened with removal of their recognised status – if they don’t comply.

The deadline for the funds to respond is 17 June 2015.

Hopefully this matter will be resolved shortly. It really highlights the importance of getting the right advice at the right time to secure your financial future.

 

For these tips and more follow us on Facebook, or for more personalised- tailored advice call Nick on 08 9323 3000

You May Also Read

Perth Property Update: National Spotlight Turns West

Perth Property Update: National Spotlight Turns West

Written by Matthew Hughes, Capital Property Advisory Perth’s property market has recently experienced a significant drop in days on market, along with a noticeable increase in buyer activity. Our median house price has risen slightly since the beginning of the year,...

read more
Year in Review: Looking Back at the Investment Market in 2022

Year in Review: Looking Back at the Investment Market in 2022

Year in Review • Inflation has been the story of the year for financial markets • Rapid increases to interest rates, from a historically low starting point, has contributed to steep sell-offs across most markets. • Empire’s Managed Account portfolios have held up...

read more

Sign up to our newsletter to receive our latest and best articles straight to your inbox.