As you may or may not be aware there are changes afoot to the UK pension system and in particular the Government had announced the possibility of a Ban on Pension transfers.
See Thread: Proposals to Ban Pension Transfers
Following the announcement they conducted a consultation and as a result of this it was stipulated that there would be a Ban on Pension transfers from Un-funded Government Defined Benefit Pensions for example NHS, Police and Armed Forces:
See Thread: Outcome of Government consultation regarding Pension Transfer Ban
My opinion on this has always been that a transfer of a Pension to Australia should not be done on the basis of a possible ban as it does not affect ones actual pension benefits and these changes do not put them at risk.
A transfer should be done under the right circumstances after fully investigating the implications of leaving against transferring based on your individual situation.
I also have continued to highlight that there will still be situations where transfers are able to continue based on the ‘very limited circumstances’ definition and that this could very well mean a person who is living overseas ie in Australia may fall into this definition.
However there does not seem to be exact details of what this ‘limited circumstance’ definition entails in any of the publications released by Government.
I think that the way Government have dealt with this is atrocious as lots of people are feeling the pressure of these changes without being allowed much breathing space.
Therefore I contacted HM Treasury to firstly express my concerns that there are a lot of expats rushing into transferring pensions purely based on a potential ban mainly fuelled by Pension Transfer Companies/Banks/Advisers coercing people to do so and to try to get an explanation of what these limited circumstances are.
Their response as follows:
Thank you for your email dated 26 August in relation to the Freedom and Choice in Pensions consultation, and in particular, for your query in relation to transfers to overseas pension schemes and the limited circumstances under which the transfer ban for unfunded public service schemes may not apply, and for highlighting your concerns in this area. The DWP has passed on your email to the Treasury.
Government will set out in legislation in due course the limited circumstances under which transfers out of unfunded public service pension schemes to defined contribution schemes will be allowed.
The government recognises that the changes to the pensions tax rules will have implications for the rules relating to Qualifying Recognised Overseas Pension Schemes (QROPS). The Government will consider these implications further to ensure that the rules relating to QROPS are appropriate when the new system comes into force.
I hope this is helpful and thank you for taking the trouble to make us aware of your concerns”.
Again we are still no clearer on this however as you will see there is going to be further consideration in relation to QROPS which are essentially Pension Transfers Overseas (ie to Australia).
Let’s hope that we can get this information from Government sooner rather than later so that anyone contemplating a transfer is able to do so purely on the merits of where their retirement monies might be best placed as opposed to feeling pressured into doing so .
Obviously although my opinion is that they may still be allowed it is still unknown and so if you are considering a transfer and a ban does come into effect the effective date is April 2015.
As always I will keep members abreast of any further changes/announcements.