Self-Managed Super Funds

Vs

Retail Superannuation Funds

What option best suits your UK pension monies?


When transferring your UK pension to Australia, you can only transfer it to a scheme that is registered with Her Majesty’s Revenue & Customs (HMRC) as a Qualifying Recognised Overseas Pension Scheme (QROPS)

Your Options

Our Australian Expatriate Superannuation Fund is currently the ONLY** Retail Superannuation Fund in Australia that is registered with HMRC as a QROPS. This makes it the ONLY Retail Superannuation Fund in Australia that can accept a transfer of money from a UK Pension plan and the transfer process is simple and taken care of by us. Your other option is to set up a Self-Managed Super Fund and apply directly to HMRC for QROPS registration of your fund. The application process is not simple and comes at a cost and it is your responsibility to ensure the fund is set up correctly and in line with all compliance requirements.

SMSF vs Retail Super Fund – What is the key difference?

To highlight all of the differences between the two funds would require a full book but you can understand more in our guide – SMSF vs Retail Super HERE!

To keep things simple…

Self-Managed Super Funds (SMSF)

These are ‘Self-managed’ funds, meaning that the set-up of the fund and the ongoing day to day administration, financial reporting and investment decisions are your responsibility as Trustee of the fund. An SMSF carries a significantly higher level of legal responsibility and ongoing management than a Retail Superannuation fund and due to the complexity of them, it is essential that you have a thorough understanding of how they work and the legislative requirements of managing them. Failure to do so may lead to financial penalties from the regulator. Please see the Australia Tax Office guidance for setting up an SMSF.

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As mentioned, if you want to transfer your UK pension to a Self-Managed Super Fund, then you must go through a strict application process with HMRC for this. Due to the nature of SMSFs, many people opt to outsource the management and administration of them which in some cases can be too expensive and not cost-effective.

Retail Superannuation Funds

Our Australian Expatriate Superannuation Fund is very similar to the structure to a UK Personal Pension plan in that all of the ongoing day to day administration and management is handled by us as the provider and not you. This removes the administrative and time burden away from you as the investor. Compliance and management reporting responsibilities are also handled by us, the same way Personal Pension Plans operate in the UK. You also do not need to worry about the complex set up process and QROPS registration with HMRC, in order for your fund to be able to accept your UK pension monies, this is all in place with our Retail Fund.

The key difference in structure between both funds may be a reason that we are seeing cases where individuals are opting to set up a Retail Superannuation fund over an SMSF, particularly those who are transferring a UK pension to Australia, as it is a simple set up and transfer process. Many people also prefer to save for their retirement in a secure product without the ongoing administrative headache that may come with a Self-Managed Super Fund. We are finding that most people we talk to would favour the structure of a Retail Fund over a Self-Managed Fund, once it has been explained to them.

What is the best option for you?

There are of course advantages to both products but it all really boils down to your circumstances, preference and investment objectives. As mentioned, some people may prefer to avoid the administrative responsibilities involved with Self-Managed Super Funds, where others may not. There may be cost advantages of using a Retail Super fund, depending on the amount of money you are transferring to Australia.

We are not authorised to provide you with any personal or financial advice so we cannot tell you which product suits you best, we can only provide general advice on your options. You should seek financial advice from a qualified Financial Adviser to understand the best advice option for you based on your circumstances.

If you would like to find out more about Retail Superannuation Funds or have any questions regarding UK Pension transfers to Australia, contact us today for some support and guidance.

* HMRC Rops list dated 6 April 2017 as at 8 May 2020. Refer Tidswell Master Superannuation Plan, as Trustees got the Australian Expatriate Superannuation Fund

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IVCM is not authorised to provide you with any personal or financial advice. If you require any advice in relation to your personal circumstances, you must contact a Qualified Financial Adviser.