Defined Benefit Transfers - The Transfer Journey
In this article, we will cover the key steps you must take in order to transfer your ‘defined benefit’ pension plan to our Australian Expatriate Superannuation Fund (AESF).
You should also refer to our Pension Transfer Guide, which covers other areas of the transfer process, for example, eligibility rules, types of pensions you can transfer, the benefits etc. You can view our guide here - Transfer my UK Pension to Australia – Your Guide
This article assumes that you meet the eligibility requirements for transferring your defined benefit pension and you are ready to go.
STEP 1 – FINANCIAL ADVICE
When it comes to transferring a ‘defined benefit’ pension plan, it is a legal requirement for you to obtain Pension transfer advice from a qualified Financial Adviser. During this process, your chosen adviser will produce a Transfer Value Analysis Report (TVAS) which your existing UK scheme provider will require sight of before they permit a transfer out of funds. Without this report, a transfer will be blocked by the UK scheme.
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STEP 2 – CASH EQUIVALENT TRANSFER VALUE (CETV)
To initiate the process you must first request a cash equivalent transfer value (CETV) from your UK scheme provider. This will come in the form of a full transfer pack and you will be given a transfer out value that is guaranteed for up to 3 months. It will also detail other important information that your Financial Adviser will need to conduct a full transfer value analysis for you.
Once you have this, then you must pass it on to your adviser as soon as you can because you only have 3 months to get everything in place for the transfer. Your Financial Adviser will then conduct a full Transfer Value Analysis (TVAS) and provide you with the required report your existing scheme requires in order to transfer out of it. Be aware, that the advice given may recommend that it is not in your best interest to transfer your pension so this is something you should consider.
STEP 3 – DOCUMENTATION
Moving onto the administrative side of the transfer and assuming that you have the green light to go ahead, you need to complete and sign all of the required AESF documentation which can be found on our website :
- Application form – AESF_Application_Form
- HMRC form – APSS263
- Work Test Declaration (if you are aged 67 or over) - Work Test Declaration
Complete all of the above and send this, together with the UK Pension transfer documentation to our office in Sydney.
You must also provide the following ID.
- Proof of Identification – Copy of your Passport or Driving License
- Proof of Address – A utility bill (no longer than 3 months old)
STEP 4 – THE JOURNEY
Once you have submitted all of the above to us, we take over from here. We will deal directly with your UK scheme provider and also provide regular updates to you and your Financial Adviser on the progress of the transfer.
We will continue to work with the UK provider until the funds arrive safely in Australia.
STEP 5 – YOUR FUNDS ARRIVE IN AUSTRALIA
At this stage, the funds arrive into the AFEX account where the currency exchange takes place. The transfer administration team will then deduct set up and transfer administration fees and also any adviser fees.
A calculation of the tax due on the transfer will also be made and paid to the Australian Tax Office (ATO) on your behalf, before moving on to investing your funds.
STEP 6 – INVESTING YOUR MONEY
We will invest the money in line with the investment instructions you have provided on the application form. Choosing the right investments is an integral part of the process, as without a good strategy in place, you will limit the potential for good investment growth.
If you are not sure of the right investment funds to choose then this is when the help and advice from a suitably qualified financial adviser will benefit you.
STEP 7 – BECOMING A MEMBER
Once the funds have been successfully invested, you will officially become a member of the Australian Expatriate Fund and will receive a full welcome pack. This will provide you with login details so that you can access and view your account on our online client portal. Through this, you will be able to fully manage your account.
The transfer journey is certainly more complex when it comes to transferring a defined benefit pension compared to a defined contribution however our expert team will be on hand through every step of the journey in order to make the process as easy and painless as possible for you.
This article does not contain personal or financial advice. It is provided for general information only and does not take into account your personal objectives, financial situation or needs. IVCM is not authorized to provide you with any personal or financial advice.
If you require financial any advice then you must make sure that you obtain advice from a suitably qualified financial adviser.