[BITList] Transfer of British private pensions to Australian super funds

[John Feltham]

From a correspondent…



A recent change in British government requirements meant that it was almost impossible to transfer money from UK pension funds into Australian superannuation funds. The local super funds could simply not meet the British requirements without effectively violating the Australian rules.  This matter is well know by the Australian government and it seems that might be able to do something to resolve the problem.  I would not hold my breath but it is more likely to have a solution than convincing the British to reinstall indexation. 

Treasury to resolve pension transfer block

22 July 2015by Jason Spits <http://www.moneymanagement.com.au/authors/jason-spits>






The Treasury department will seek a resolution with its UK counterpart regarding pension transfers after lobbying by Australian superannuation funds.

Association of Superannuation Funds of Australia chief executive Pauline Vamos said it had asked Treasury to look into the issue as it was not a regulatory matter for Australian superannuation funds but a tax matter between two national governments.

Vamos said that ASFA was aware that Treasury had made initial moves to deal with the issue of UK pension transfers into Australian funds attracting a 55 per cent UK tax burden but was unsure how long it would take to reach a resolution.

The 55 per cent tax was imposed on all UK fund transfers that took place from 6 April where funds went into superannuation or pension schemes considered by the UK tax authority — HMRC — to not comply with UK pension and tax laws.

Of the 1600 Australian funds previously listed <http://www.moneymanagement.com.au/news/superannuation/brits-reject-1600-super-funds-pension-transfers> as eligible to receive funds only one currently remains on the HMRC list after UK laws were changed to tax transfers into funds that allowed early release in the event of financial hardship or illness.

Vamos said transfers before 6 April should be fine but expected there were thousands more which had been stalled since the changes to UK tax laws.

"We are not sure about the exact numbers but it has caused confusion for the funds, service providers and British ex-pats fund members seeking a transfer," Vamos said.

"Super funds are still seeking clarification and we are thankful that Treasury is engaging the UK authorities on this to provide the right information and guidance for the funds and those members affected."

Vamos said the UK position was not politically driven but reflected an effort to retain pension funds within the UK tax system, in a similar way to restrictions within the Australian superannuation system, and to reduce leakage within its tax system.



Not sure how LGS was able to remain listed

The number of Australian superannuation funds considered compliant with new UK pension laws and thus able to receive UK pensions transfers has been reduced from 1660 to one.

In a new list released by UK tax authority, HM Revenue & Customs (HMRC), only Local Government Superannuation Scheme remains as a Recognised Overseas Pensions Scheme (ROPS) after the release of the revised list of funds.

The move follows changes to the UK pension laws <http://www.moneymanagement.com.au/news/financial-planning/uk-clients-may-cause-legal-trouble-australian-planners> from 6 April in which a pension or super fund could only receive UK pension funds if it restricted access to funds before age 55, unless the member retires because of ill-health.

Australian schemes also allow access before age 55 for financial hardship and in the lead up to the changes Australian schemes were notified of their need to comply with the changes to the UK law.

Australian pensions and super funds that have not complied and continue to receive UK pension transfers will expose the fund member to a 55 per cent tax on the roll-over amount imposed by HMRC on the outgoing funds.

Of the 1660 funds on the list, many were self-managed superannuation schemes but all of the major retail and industry funds that were on the list have also been struck off.

However even if funds are added back to the list HMRC will not automatically consider them as schemes qualified to receive UK pensions stating on its ROPS website that it "can't guarantee these are ROPS or that any transfers to them will be free of UK tax. It is your responsibility to find out if you have to pay tax on any transfer of pension savings".

UK based financial adviser and pension transfer specialist Geraint Davies, managing director with Montfort International, said the shift could result in HMRC examining all transfers after April 5 and many of those which have taken place beforehand.

"Anyone who has made a transfer since 5 April is a marked person and the HMRC may examine a list of transfers to Australia since that date. It may also examine how those Australian super funds promoted and marketed their services to people seeking transfers," Davies said.

"In the UK we expected zero tolerance on this issue by the HMRC and the letters it sent to Australian funds were a courtesy letters reminding them that it they did not qualify they should stop receiving funds. However my understanding is not a single Australian scheme asked for clarification."




-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.bcn.mythic-beasts.com/pipermail/bitlist/attachments/20150724/49bb46e2/attachment.html>