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Advice for Doctors on the safe
transfer of UK pension assets
New regulations governing the transfer of United
Kingdom pensions out of the country can potentially
have a significant affect on the retirement incomes
of expatriate doctors now working in Australia.
According to a financial adviser who specialises in
United Kingdom pension transfers, the new rules, which
came into effect for the new British tax year on April 6, can
result in heavier tax penalties and consequently, a smaller
retirement nest egg for some expatriates.
McKinley Plowman & Associates, United Kingdom
Pensions Transfer Manager Colette Pieniazek said
obtaining the right professional advice about transferring
or investing pension assets could save a doctor thousands
of dollars in tax and ultimately a far more comfortable
retirement.
Mrs Pieniazek, who immigrated to Perth from Britain
over eight years ago, said while doctors had a lot to gain
from transferring their pensions into Australian Qualifying
Regulated Overseas Pension Scheme (QROPS) funds, it
was critical for them to understand how the latest changes
would affect them.
She said the new rules required for the receiving
QROPS scheme to report members’ withdrawals to HM
Revenue & Customs (HMRC) for ten years after their
pension was transferred to Australia.
Under previous regulations the Australian pension
scheme was only required to report withdrawals for five
UK tax years from the date of residency here.
Mrs Pieniazek said the rule changes would be
retrospective, so expatriates who had already transferred
their British pensions into Australian QROPS funds would
also need to be aware of the longer reporting requirements
and their taxation implications.
“This means that if you make a withdrawal from
your transferred UK pension within this time period
and it is outside prescribed UK limits then you will face
an unauthorised tax charge of 55% by HMRC,” Mrs
Pieniazek said.
“It is absolutely vital that those who intend to either
retire or plan to draw on their former UK funds within the
next ten years seek professional advice now.”
Mrs Pieniazek said with the right professional advice
immigrants could safely transfer their pension to Australia
in a tax effective way and be better off in retirement.
She said McKinley Plowman and Associates was now
providing doctors with a free no-obligation report on
the different financial and tax outcomes of leaving their
pension in Britain or transferring it to Australia.
She said transferring British pensions to an Australian
Qualifying Regulated Overseas Pension Scheme
(QROPS) offered many benefits including a tax-free
income in retirement, flexible investment opportunities,
potentially higher returns, freedom from exchange rate
fluctuations and long-term asset protection.
Unlike the British pension funds, Australian funds
allowed pension holders to pass on their entire fund
balance to a spouse or beneficiaries after death.
Mrs Pieniazek said it was important to begin the
pension transfer process, which usually took up to four
months, as soon as Australian residency was obtained.
Pension transfers made within six months of obtaining
residency did not incur Australian tax; however those
made after this period were subject to a 15% tax.
This tax applied to any capital gain made by the
UK pension between the time an individual moved to
Australia and the time the pension funds arrived here.
“Also, Australians can take 100% of their super tax free
at age 60, whereas UK laws only allow for 25% to be taken
as a lump sum.”
For more information email:
pensions@mckinleyplowman.com.au
T: (08) 9301 2200 F: (08) 9301 2201
McKinley Plowman & Associates
Level 2 / 5 Davidson Terrace JOONDALUP WA 6027
Correspondence PO Box 635 JOONDALUP WA 6919
www.mckinleyplowman.com.au
1 24 MEDICUS MEDICUS March May