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22. Transferring UK Superannuation Benefit Monies to an Australian SMSF

Doctors who have worked in the UK often have UK pension scheme monies and these monies can be transferred to an Australian self-managed superannuation fund.

The following materials are copied from the AMP website as at 1 January 2009 www.amp.com.au/super which, incidentally, we find is an excellent website for superannuation information, and generally refer to clients as a source of information.

Transfer UK pension money

Consolidate your UK pension into your Australian super fund

Make a difference to your super by taking advantage of UK licensing arrangements that allow you to consolidate your overseas pension savings into a qualifying Australian superannuation fund.

The way in which transfers from UK pension schemes are taxed has changed. This could benefit you if you’re a member of a UK pension scheme and you want to transfer to an Australian super fund.

This strategy works particularly well if you’re one of the tens of thousands of former UK residents who move to Australia each year to live and work.

Taxing times

Tax is normally payable, either in Australia and / or in the UK, when funds are transferred from a UK pension savings scheme into an Australian superannuation fund. In certain circumstances, the tax payable is onerous. For example, if a transfer is made to a non-qualifying super fund in Australia, the UK tax can be 40% of the transfer amount plus an additional 15% if the transfer amount is more than a quarter of the member’s account balance.

There are ways, though, to pay a small amount of tax or none at all, and end up with more money in your Australian super fund. One way is to transfer your pension from the UK within six months of becoming an Australian tax resident. This means you pay no Australian tax on the funds you transfer.

If you transfer your pension after you’ve been an Australian tax resident for more than six months, you’ll pay tax on the growth of the account, being the difference between the account balance at the time you became an Australian tax resident and the value at the time of transfer.

You should also ensure that your UK pension is transferred to a qualified recognised overseas pension scheme (QROPS) in Australia.

What to check

Before you transfer your funds, you should:

Check the rules of your UK fund – they will specify whether you can transfer all or part of your pension money from that fund.
Get professional financial planning and tax advice about Australian regulations, because your transfer will count towards the new contributions caps that started 1 July 2007, and there could be tax implications depending on your UK balance. As the transfer is treated as a non-concessional contribution, you can only transfer $450,000 (or $150,000 per transfer if you are 65-75 and satisfy the work test*). The Australian fund cannot accept amounts that exceed this limit.

Only a limited number of superannuation funds in Australia are registered as QROPS, and AMP’s Superannuation Savings Trust is currently one them.

For more information visit the HM Customs and Revenue site and AMP.