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Tougher Rules for UK Pension Transfers

17 November 2017

October 2017: Sun-Herald, Money Article  - 'Thousands of Aussies caught in tougher rules to transfer British pensions'. Laura McGeoch explains how UK legislative changes implemented in April 2015 have resulted in thousands of Australian expats and British Migrants now having to wait for decades (in some cases) before being able to transfer their UK pensions into an Australian super account.

Prior to April 2015, it was possible to transfer a UK pension to Australia regardless of your age and it was usually cost effective to transfer pension values of £20k and above. Since April 2015, you must be at least 55 yrs of age, with a transfer value in excess of £100k (in most cases) and the primary transfer option available is via setting up a SMSF certified by HMRC (Her Majesty's Revenue & Customs), creating the equivalent of a QROPS - Qualifying Recognised Overseas Pensions Scheme. There are currently over 500 individual SMSFs in Australia on the HMRC ROPS list which have effectively taken the place of some 1,654 retail and industry funds which used to have QROPS status pre-2015 but were effectively delisted after the UK changes.

The change has stopped millions of dollars flowing into the Australian super industry each month. Just one of the 1,653 Australian superfunds to lose their QROPS status was averaging $26 million in UK pension transfers in the 6 months between February and July 2015. 

Australia has effectively become collateral damage in Britain's broad brush approach to limiting transfers to jurisdictions where regulations around early access are more relaxed, such as Malta and Gibraltar.

Sun-Herald Money:-  click here to read the full article " Thousands of Aussies caught in tougher rules to transfer British pensions" by Laura McGeoch . 

Sterling Planners currently offer 2 options for UK pension transfers:

  1. Over 55 SMSF Transfer Option
  2. Under 55 Secure CETV UK SIPP Option

  If you have any questions please contact our client service team on 1300 132 737.






UK Pension (QROPS) Transfers to Australia - Latest Update

31 August 2017

November 2017 Update.

The November HMRC ROPS list contained 515 Australian funds, the majority of which are individual SMSFs. New QROPS regulations, effective 9 March 2017, imposed a 25% tax charge on UK pension transfers to offshore schemes like Gibraltar or Malta when the client is not also residing in the same country as the QROPS (for more details refer 25% tax on QROPS transfers). After the announcement, HMRC suspended the ROPS list two times [in April and June 2017] to make the necessary amendments. The resulting compliance crackdown saw an additional 410 QROPS being removed from the ROPS list globally and several jurisdictions stopped listing QROPS completely.  The most significant changes to QROPS regulations occured in 2015 when the UK government moved to crack down on what it said was the mis-use of pension transfers to enable people to access their pensions before the age of 55. Since then, there has been 52% fewer overseas pension transfers than the peak year of 2014-2015, in which 20,100 were transferred compared with 9,700 transferred in the 12mths to 5 April 2017.

Transfers to Australia are currently possible for clients aged 55yrs and over, satisfying the work test (if 65 yrs or over) with permanent residency status in Australia or citizenship, who are currently resident in Australia, with a transfer value of GBP 100k or greater with an eligible UK pension schemeOver 55 SMSF Transfer Option. If you are under 55 yrs with a UK DB Scheme (Final Salary scheme), refer to our Under 55 Secure CETV Option.

We do not recommend transfers to offshore schemes such as Malta, NZ, Gibraltar, Guernsey or Isle of Man etc [unless the member is resident in the country of transfer as per the recent March 2017 HMRC announcement -  HMRC Tax on Offshore QROPS.

Download our Free UK Pensions E-book for a comprehensive UK pension transfer checklist.

Why you need QROPS Advice - How expert advice could potentially save you thousands on your UK Transfer.

Who is Eligible to Transfer their UK pension? To make a compliant UK pension transfer, you must either be:

  • A member of a public service superannuation fund on the ROPS list (as at June 2016 these included - Australian Defence Force Super Scheme / CSS(Commonwealth Super Scheme) / Local Govt Superannuation Scheme / Military Super and Benefits Scheme / Public Sector Super Accumulation Plan / Public Sector Super Scheme)
  • Or, you must be 55 yrs of age (or older), with permanent residency status in Australia, satisfy the work test (if over 65yrs old) with a transfer value of GBP 100k or more. These transfers are now possible via the set-up of an Over 55 SMSF (Self Managed Super Fund) with appropriate ROPS certification from HMRC. 
    For details of our Over 55 SMSF Transfer Option click here - Over 55 SMSFs.

Not Eligible for Transfer (effective April 2015) - All unfunded Civil Pension Schemes (eg NHS, Police Pensions, Teachers Pensions, Firefighters, Armed Forces etc - click here for more information.) and all UK State Pensions (i.e. Old Age Pensions from your National Insurance contributions.)

Brief history of the QROPS situation - refer to our QROPS webpage
Details of our Over 55 SMSF service offering - click here.
Details of our QROPS Advice document and fees - refer to our UK Pension Report and Fees page.
Details of our Under 55 Secure CETV to UK SIPP - for clients aged under 55yrs with Defined Benefit/Final Salary Pensions in the UK, please click here.

Post 6 April 2015 Transfers - HMRC Tax Relief Decision – for UK pension transfers made after 6 April 2015 and before 1 July 2015, HMRC announced in July 2016 that these transfers do not constitute unauthorised payments and therefore will NOT be subject to the 55% penalty tax - click here for details.

Note: The QROPS (now ROPS) list is self-certified and cannot be relied upon to avoid potential penalties. It is ultimately the responsibility of the member to determine whether or not their receiving scheme complies with QROPS regulations.

Contact our client service team on 1300 132 737 if you have any questions.