UK defined benefit schemes use an actuary to calculate your UK pension transfer. They convert the amount of pension you have accrued into a cash equivalent UK pension transfer value often referred to as a Cash Equivalent Transfer Value (CETV).

UK defined contribution schemes, such as a personal pension, use the current value of your investment funds accrued as your UK pension transfer value. 

In both cases, the UK pension transfer is full and final settlement of the benefits you have accrued within the scheme and releases the scheme of all liability for your membership.

UK defined benefit schemes are based on complex formulas, as such transfer values which are guaranteed for a period of 3 months from the date of calculation. There are several steps involved with transferring a defined benefit scheme, such as obtaining UK financial advice. It is therefore important that you contact us as soon as practical, if you have already received a transfer value which has a 3-month guarantee date deadline. 

UK defined benefit schemes allow one free Cash Equivalent Transfer Value (CETV) at no charge per year. However, more often, your scheme may charge an additional fee (sometimes at an hourly rate) to recalculate the transfer value which will almost certainly be different to the original guaranteed transfer value quoted.

UK defined contribution schemes use the current value of your investment funds and therefore the final transfer value will depend on the value of the underlying funds when they are transferred. These funds Cash Equivalent Transfer Value (CETV) are not guaranteed and will be re calculated on the date of transfer. 

Some UK schemes may not permit the transfer to proceed until 12 months after the transfer was originally requested, effectively delaying the transfer for a year.

For these reasons, if you have received transfer value from your UK scheme, we recommend speaking with us as soon as possible.

• An occupational pension scheme
• A Defined Benefit final salary scheme
• A Defined Contribution personal pension fund
• A Small Self-Administered Scheme (SSAS) 

The following types of UK Pensions cannot be transferred:-

• UK State Pension
• Underfund Civil Service pensions, which include NHS, Teachers, Police and Armed Forces

To protect members, UK Pension Transfers can only occur to an approved scheme. Receiving schemes need to prove they meet certain requirements by HMRC then schemes obtain Recognised Overseas Pension Scheme (ROPS) status. Currently, due to Australian Superannuation rules there are an extremely limited number of ROPS schemes available to transfer your funds to.

You cannot transfer your UK pension to an Australian QROPS until you are aged 55 but you can transfer your funds in a UK pension in GBP or AUD prior to age 55.

QROPS stands for ‘Qualifying Recognised Penson Scheme’. A QROPS is an HMRC registered scheme which can accept transfer of a UK pension fund. 

For an overseas scheme to qualify for ‘QROPS status’, it must meet certain strict criteria set by HMRC. If you transfer your pension to a plan that is not a registered QROPS, you will face a significant penalty so be sure to check that the pension scheme you are intending on transferring to is listed on the HMRC ROPS list.

A full list of registered QROPS schemes can be found here.

https://www.gov.uk/guidance/check-the-recognised-overseas-pension-schemes-notification-list

If you set up a Self-Managed Super Fund, you can apply to HMRC for QROPS registration for your fund to accept a transfer of your UK Pension monies, but this is a complex and time-consuming process. 

Alternatively, you can completely avoid the complex registration process and transfer your UK Pension to a ROPS Retail Superannuation that is registered with HMRC as a QROPS fund.

Any income you receive from the UK in retirement would be subjected to continuously fluctuating exchange rates. If you draw the pension and lump sum from the UK, it will be added to your earned income and taxed at your highest marginal rate. This income will also be included in the test that determines how much Age Pension you receive from Centrelink.

If you were to pass whilst your benefits remain in the UK, the amount payable to a spouse or dependent would depend on the rules of the
scheme. In general, a scheme would pay a spouse’s pension equivalent to 50% of your original annual pension. In addition, a refund of the
contributions you made to the scheme would be payable if you passed away before retirement. Some more generous schemes allow the spouses
pension to be payable to dependent children, but it would cease to be payable after they reach the age of 21.

If you are single with no acceptable dependants the scheme will have zero residual value for your estate.

The entire investment fund can be paid either as a lump sum or income which would generally be tax free.

UK defined contribution schemes would pay the value of your underlying investments to your nominated dependents.

UK regulation requires that your funds are held in QROPS fund for several years, depending on your situation. 

During this time if you were to transfer your funds to a non-QROPS superannuation fund your balance would be potentially subject to a 55% tax charge.

If you have been a tax resident for more than 6 months, then you will be subject to a tax charge from your fund upon transfer.  Tax is based on the investment growth you achieved within your UK pension plan; from the date you became an Australian resident to the date you transferred your UK pension fund to Australia. 

There are limits on the amount that can be transferred, we are specialised in UK pension transfers, calculating assessable growth, and transferring your UK funds within the contribution caps.

We can help you navigate the contributions caps permitted and assist with
strategies to avoid excess contributions tax.

The transfer can take between 6 – 12 months from the completion of the initial paperwork.

Where you are transferring a UK Defined Benefit Pension (i.e., Final Salary Scheme). Due to the nature of these plans and the guarantees they hold, it is a regulatory requirement from the UK Financial Conduct Authority (FCA) to obtain a Transfer Value Analysis (TVAS) report from a UK Qualified Financial Adviser. Your UK scheme would not allow funds to be transferred out of your plan without this report.

This advisory service for pension transfers is now required when your UK Pensions scheme requests the need for you to seek this advice before transferring your pension. Once you have submitted all the necessary paperwork, your UK scheme will ask you to complete this phone call, whereby a unique reference number will be provided after the call which will be required by the UK Pension Scheme to enable the transfer out to proceed. 

The MoneyHelper telephone call is also referred to as pension safeguarding calls, it effectively allows you to check that you have completed the entire pension transfer process, including seeking the advice of a qualified independent financial advisor. 

If you have consulted a trusted and highly qualified Pension Transfer Specialist then there will be no problem with you being able to complete this call successfully. During the call, you will be asked to recall in detail what was discussed with the pension transfer specialist.