Transferring a UK Pension overseas can be somewhat of a daunting process to many people causing them to either delay making a decision or even be put off completely by the process.

In this article we will cover 3 important reasons as to why delaying transferring your UK pension may COST YOU MONEY!

When you transfer your UK Pension you are assessed for tax on transfer. The amount of tax you pay depends on the ‘applicable fund earnings’ (investment growth) achieved within your plan from the date you became an Australian resident, to the date you transferred your pension to Australia. If transferring to our Australian Expatriate Superannuation Fund (AESF) the investment growth achieved will be taxed at a fixed concessional rate of 15%.

Lets take an example – Your UK Pension was valued at $100,000 at the date you became an Australian resident. When you transferred it to the AESF, the value had grown to $150,000. Therefore, the growth achieved of $50,000 would be taxed at 15%. If you decided to transfer your pension much earlier then you will have minimized the investment growth achieved in the UK and in turn reduced your tax bill upon transfer.

Additionally, if you transfer your UK Pension within 6 months of becoming an Australian resident, the investment growth achieved during this period would be FREE OF TAX.

Exchange rate risk is always going to be something to consider and it’s a risk on both sides of the coin, whether your funds are held in AUD or GBP. However, under the current climate there is one topic that could have a significant impact on your UK funds if you delay transferring to Australia and that topic is – BREXIT!

There is continued uncertainty and worry growing amongst the British population with many concerned that the effect of BREXIT could effectively knock the value of the British pound ‘off the cliff’. Therefore, transferring your pension to Australia before BREXIT and before the value of the pound potentially drops, could save you money.

Our Australian Expatriate Superannuation offers investment choices in multi-currency. We have AUD, GBP and USD options available for you to invest in which will allow you to take advantage of the best currency exchange rates and try to reduce the negative impact of currency risk, where possible.

The financial services industry is an ever changing landscape and there is always the potential for changes to legislation that may have a significant impact on you and your objectives.

In recent years there have been changes introduced that has had a huge impact on people wanting to transfer their UK pension to Australia.

Firstly, in 2016, the ‘Overseas Transfer Charge (OTC)’ was introduced. This applied to anyone transferring a UK pension overseas. In summary if you were not a resident in the country you transferred your UK Pension to, or did not meet an exemption, then a 25% tax charge would be applied to the transfer. Read more about Overseas Transfer Charge here.

This had a significant impact on pension transfers overseas. Many people who delayed transferring didn’t manage to move their funds before this rule was introduced and were impacted significantly.

Another example of legislation change was the non-concessional contribution limit changing in Australia in 2017 from $540,000 to $300,000. This had a significant impact on people looking to transfer their UK pension who had a value above $300,000, as they either had to pay tax on the excess or look at segmenting their transfer of a longer period of time, which exposed them to other risks like tax and currency risks as described above.

So as you can see there are some strong reasons why you should consider taking action sooner rather than later with your UK Pension. We understand that the prospect of transferring a UK Pension can be daunting but at IVCM it is our job to make the process as simple and as efficient as possible for you. We have a team of experts who have helped 100s of UK expats transfer their UK Pension to Australia and we are always on hand through every step of the transfer journey.

If you would like to find out more about transferring your UK Pension to Australia, call us today for some FREE support and guidance and let us help you.

Many people ask the question, why would I transfer my UK Pension to Australia and not just leave it in place in the UK? Or just withdraw my funds directly from the UK from age 55, whilst resident in Australia?

Well, there are a number of reasons for this, and we will cover 5 reasons why you may want to consider transferring your UK Pension to Australia in this article.

• Tax Planning
• Flexibility in Retirement
• Exchange Rate
• Managing your Finances in your country of residence
• Tax free window to transfer your funds

This is a very important matter you need to consider because if you begin withdrawing funds from the UK but are resident in Australia, you may end up paying more tax, depending on your level of income.

Firstly, if you wanted to withdraw funds directly from the UK, you would need to apply to Her Majesty’s Revenue and Customs (HMRC) for a ‘Double Taxation Agreement’ (DTA) so you are not taxed twice in the UK and Australia on the same income you are receiving. HMRC may not grant this however. For more information in double taxation agreements, see our guide.

If this is granted, then the growth achieved within your UK pension would be added to your taxable income you are receiving in Australia and taxed at your marginal rate, which could be more expensive from a tax perspective than if you transferred your UK Pension to an Australian Super Fund and paid tax under Superannuation rules.

If you transferred to our Australian Expatriate Superannuation Fund the tax you would pay on the applicable fund earnings would be at a fixed concessional rate of 15%. If you did not transfer, and decided to withdraw directly from the UK, then in order for the tax rate payable to be less than 15%, your total taxable earnings for the year would need to be below $18,200. Read more about how superannuation is taxed in Australia.

So depending on your circumstances, there is a good chance that there may be tax advantages to you by having your funds taxed under Australian Superannuation tax rules rather than withdrawing money directly from the UK. However, this is a matter you should discuss with your tax adviser to understand the more favorable option to you.

Our Australian Expatriate Superannuation Fund allows you to flexibly withdraw funds provided that you meet a ‘condition of release’ at your preservation age. You can withdraw your money as and when you require it giving you full control over your finances.

If your UK pension funds are held in a ‘Defined Benefit’ arrangement or an old style personal or company pension plan, then you may not have this same flexibility and control over your funds once you reach your retirement age. Your retirement options are generally fixed and restricted with these types of UK pensions so this is something that you need to consider.

You should also consider that if you seek to withdraw funds directly from the UK and do not have a UK bank account, as many providers may not permit a payment of funds to an overseas account. If you do have a UK bank account, then you need to consider that you would be subject to exchange rate risk and potential charges every time you transfer money from your UK account overseas.

Your UK pension is most likely to be held in Great British Pounds (GBP) which restricts you to one currency. Whilst currency and exchange rates constantly fluctuate, the Australian Expatriate Superannuation Fund, has a diverse range of currency options, including the Great British Pound (GBP), Australian Dollar (AUD) and the US dollar (USD). This enables you to transfer and exchange when the time is right for you, giving you control of your exchange rate decisions when required.

Many schemes do not offer multi-currency investments which restricts you to obtaining the best rates when investing your funds. For example, in April 2020, you could get $2 (Australian dollars) for every £1 you invested. This was the highest difference between both currencies we had seen since May 2016. People who transferred their UK pension to Australia during this period benefited from the favourable exchange rates.

Managing your retirement savings under one roof is always going to make life easier from an administrative perspective, particularly for those who have multiple Pensions or Superannuation schemes. You would not need to deal with multiple providers and different charging structures, and you would not have the potential headache of managing tax in two different jurisdictions.

In addition, most providers in the UK will send annual statements by post only and this can be an issue if you are living overseas, so managing your plan may result in needing to make phone calls back to the UK to request information. This is a problem mainly for holders of older style UK Pension Plans that do not have a modern online system to view their account.

Our Australian Expatriate Superannuation Fund (AESF) allows you to consolidate all of your UK Pensions into one manageable plan with us. If you have any existing Superannuation funds then you can also consolidate these with the AESF so that you have all of your retirement funds under one roof.

Lastly, if you transfer your UK Pension to Australia within 6 months of becoming an Australian resident, you would not be subject to tax on the investment growth achieved, during that period.

Lets take an example:

You became an Australian resident on 1 January 2020 and the value of your UK pension, at that date, was $200,000. You transferred your UK Pension to Australia on 1 May 2020, at which point it was valued at $220,000.  In this example, the pension had grown in value by $20,000 and this is the amount that would normally be subject to a tax charge. However, as you had transferred the plan within 6 months of becoming an Australian resident, no tax would be payable on the growth, during this period, which will save you money.

So, as you can see there are important factors that you should consider when it comes to your UK Pension funds. The examples above may be of benefit to you depending on your current circumstances, however we would always recommend that you seek professional financial advice to understand the best options to you, particularly when transferring a pension.

If you have a UK pension that you are considering transferring to Australia, contact a member of our team today for some FREE support and guidance and let us help you.

The Superannuation Guarantee, commonly known as SG, is the minimum amount of superannuation that most Australian employers must pay for eligible employees.

SG contributions help employees build retirement savings throughout their working life. These contributions are generally paid in addition to an employee’s salary or wages, although the precise arrangement will depend on the employee’s remuneration terms.

What is the current Superannuation Guarantee rate?

The Superannuation Guarantee rate is currently 12% of an employee’s qualifying earnings.

An employer may pay more than the minimum rate under an employment contract, award or workplace agreement. Contribution caps still apply to the total concessional contributions received for an employee during the financial year.

Who is eligible for Superannuation Guarantee contributions?

Most employees aged 18 or over are eligible for SG contributions, regardless of how much they earn.

Employees under age 18 are generally eligible if they work more than 30 hours in a week. Certain contractors who are paid mainly for their labour may also be treated as employees for SG purposes.

Eligibility can depend on the working arrangement, so employers and workers should check the current Australian Taxation Office requirements if they are uncertain.

When must Superannuation Guarantee contributions be paid?

From 1 July 2026, Payday Super requires employers to pay SG contributions at the same time as salary and wages.

Contributions must generally be received by the employee’s superannuation fund within seven business days of payday, although different timeframes may apply in limited circumstances.

Employees should check their payslips and superannuation account regularly to confirm that contributions are being paid correctly.

How are Superannuation Guarantee contributions taxed?

SG contributions are concessional contributions and are generally taxed at 15% within the superannuation fund.

Additional Division 293 tax may apply to certain higher-income individuals. SG contributions also count towards the member’s annual concessional contributions cap, together with salary-sacrifice contributions and personal contributions for which a tax deduction is claimed.

Can Superannuation Guarantee contributions be paid to AESF?

Eligible employer contributions may be paid to AESF, subject to the Fund’s rules and the employer’s SuperStream and choice-of-fund requirements.

Members should provide their employer with the current AESF Statement of Compliance and the information required to make contributions to their account.

For more information about SG eligibility, payment requirements and contribution caps, visit the Australian Taxation Office website and check out our article Retail Super Funds – The 3 Stages of Tax.

These contributions are classed as ‘Concessional’ contributions meaning that they are ‘before tax’ contributions. Upon entry into your Superannuation fund, they will be taxed at 15% if you earn below $250,000. If you earn more than this, tax at 30% will be applied.

If you have any questions about SG or general superannuation enquiries, contact us today and a member of our team would be happy to answer any questions you may have.

Learn more about AESF