Time running out for transfer of British pensions
|17/05/2019||Posted by admin under 苏州美甲美睫培训学校||
April 2’s deadline is looming for expats wanting to make their UK public service pension transfer under optimum conditions. Former British public sector workers will have to act immediately if they want to have their UK pension benefit transferred to an Australian super fund and receive favourable tax treatment.
From April 6, members of public sector pension schemes including those covering former National Health Service workers, teachers, police and fire fighters, will no longer be able to be transfer the money to an Australian super fund.
That is a big deal for former pubic sector workers – whether they’re expats living in Australia or Australians who have done a stint working in the United Kingdom – because the money drawn from an Australian super fund is tax-free after the age of 60. Otherwise, the British scheme pays the money into the member’s bank account. This income is then assessable for Australian income tax and, as it is paid in pounds,subject to exchange rate changes.
The deadline to lodge an application with the UK fund is April 6. But with the way that Easter falls this year, April 2 is the real deadline. The first step is to obtain a quotation from their UK scheme, says Simon Harvey, a director of BDH Sterling, which provides cross-border financial advice. The turn-around time for the quote varies from scheme to scheme, Harvey says.
The NHS, for example, takes about four weeks while the teachers’ pension is a little quicker, he says. After the quotation is received, the scheme member must return the signed transfer request to their UK scheme’s administrator by April 2.
“People would have to move by the end of this week to have a chance of making the deadline,” Harvey says.
Those who do not transfer will keep their benefits but they will be restricted in the way the money is accessed. They are entitled to a portion of the money as a lump sum, with the remainder taken as income for life.
There is also another drawback of leaving the money in the UK scheme. Typically, if a member dies the spouse receives a half pension with that ceasing on their death. With Australian super, the death benefit consists of the entire balance and the insurance benefit.
Private sector-defined benefit pensions will still be transferable to Australian super funds beyond April However, the new rules require a scheme member to take financial advice from a UK-regulated company even if they live in Australia, if the transfer value is more than £30,000. Those living in Australia have limited access to such advice.
BDH Sterling is licensed in Australia and the UK and can give advice on whether a transfer is needed and make arrangements to have the money moved to a super fund.
The British government has said that it will allow transfers in some limited circumstances beyond April 6, but these limited circumstances, have not, so far, been stated.
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