Important - Have you transferred UK Pension (QROPS)? Please read

[Andrew from Vista Financial]

Hello

 

Important information for anyone that has or intends to transfer their UK Pension to an Australia Superannuation (QROPS) Fund.

 

Proposed changes by HMRC to UK Pension Transfers are now to come into effect from the new UK tax year 6 April 2012.

 

The changes can be read here http://www.hmrc.gov.uk/pensionschemes/20120307-faqs-template.pdf

 

 

It is very important if you have transferred to understand how these changes will impact on you.

 

The rules were:

 

that the receiving Australian (QROPS) scheme report member withdrawals for a term of 5 full tax years since ceasing to become a UK tax resident.

 

The rules now state:

 

that the receiving Australian (QROPS) scheme must report member withdrawals for 10 years from when the transferred Pension arrives.

 

 

This means that if you make a withdrawal from your transferred UK Pension within this time period and it is outside of the prescribed UK limits a tax charge of up to 55% can be levied by HMRC!!

 

This rule change suggests it will be retrospective, therefore anyone that has QROPS monies in Australia will have to adhere to the new timelines.

 

Therefore it is vital that if you intend to start drawing on your Australian Super (formerly UK monies) you are either outside of the reporting period or you seek advice on what you are able to draw.

 

Regards

 

 

Andy

Edited March 28, 2012 by Andrew from Vista Financial

[lorluc]

Please could you explain what this means in simple terms?

 

We transfered our pensions across couple of years ago, and have had the money sitting in a QROPS fund. The way i understand it, is that the money has to sit in a QROPS fund for 5 years from when you arrived in Australia. OUr 5 years was up in NOvember 2010, and i am intending to get the money out of the QROPS fund and transfer it to our super funds that we have up and running here.

 

I'm planning to organise a straight transfer to our each individual funds. Nothing major!

 

Have read the link you provided but cant my head around it! What effect does this have on us?

 

Thank you

[Andrew from Vista Financial]

Hey Lorluc

 

From my research, reading and understanding of these new changes essentially if someone's money is still in a QROPS fund come 6 April 2012 the receiving scheme's reporting period falls in line with the new rules which are that reporting is required on payments/withdrawals and transfers to a non QROPS for 10 years since the money arrived.

 

Therefore if a transfer to a non QROPS occurs after 6 April 2012 and the Pension monies have not cleared the new time period i.e 10 years since the Pension fund arrived this will create a breach and between 40%-55% of that money can be taxed by HMRC.

 

These changes are pretty drastic and really quite complex, there are a number of QROPS providers I have spoken to that do not even know about these changes.

 

However to air on the side of caution I suggest that it would be wise to keep the monies in a QROPS fund.

 

Hope this helps.

 

 

Andy