Andrew from Vista Financial

Massive shake up for UK Pensions

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    In the recent UK Budget one of the momentous Chancellor announcements is that from April next year anyone aged 55 or over will be able to take their entire pension fund as cash – although only the first 25 per cent will be tax-free. The remaining 75 per cent of the fund would be taxed at the saver’s marginal rate.

     

    Read here: http://www.moneymarketing.co.uk/news-and-analysis/pensions/budget-2014-george-osborne-drops-bombshell-on-pensions-flexibility/2008135.article

     

    Watch here: http://www.bbc.com/news/uk-politics-26650855

     

    This is actually already in play in Australia in that when someone reaches the age at which they are able to access their Superannuation up to 100% can be taken as cash and in most cases tax-free (which does differ from the new UK change announced).

     

     

    Kind regards

     

     

    Andy

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    Guest Guest12727

    Does this mean that if you live in Aus that you can get a lump sum payment of UK pension at 55 rather than get a small monthly sum?

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    Is it worth transferring UK pensions out here? I have two final salary pensions from the UK - one I paid into for 5 years and another for about 2 years, should I just leave them?

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    Does this mean that if you live in Aus that you can get a lump sum payment of UK pension at 55 rather than get a small monthly sum?

     

    Hi Howde

     

    Yes, this is the proposal and it is in relation to Defined Contribution (DC) Schemes (market linked) not Defined Benefit (DB) Schemes (final salary).

     

    The lump sum would be tax free on the first 25% as it is already and then taxable on the next 75%.

     

    In Australia it is already possible to take 100% and after the age of 60 the lump sum is tax free however a full condition of release would need to be met i.e retirement to access 100%.

     

    Andy

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    Is it worth transferring UK pensions out here? I have two final salary pensions from the UK - one I paid into for 5 years and another for about 2 years, should I just leave them?

     

     

    Hi Gus

     

     

    There is no definitive answer here as it would depend on many factors and so having an understanding of how each system works and the implications involved in either leaving or transferring would be required for you to be able to make a decision that you are comfortable with.

     

    Of course I would recommend that you take professional advice in relation to this and we would be happy to work with you if required.

     

    However I would suggest that before embarking on this you wait until such time as you are fully settled in Australia to the point where you can comfortably say that it is your intention to remain permanently as once transferred (if appropriate) it cannot be transferred back to the UK.

     

    Also have a look at this thread I wrote: UK Pension Transfer Information Thread

     

     

    Kind regards

     

    Andy

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    Guest Guest12727

    Thanks for your reply Andrew. I was confused with terminology from your original post and thought you meant government pensions. We transferred our employer based pensions across years ago. I forgot they are called pensions as here it is superannuation.

    Cheers

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    Just an update on this and of particular interest is the proposition to remove the option to transfer from a public service defined benefit scheme i.e final salary to a defined contribution scheme, except in very limited circumstances!

     

    This could mean that inability to transfer the likes of NHS and Police Pensions and potentially private final salary schemes to Australia from that point.

     

    However there is a government consultation on this due on June 11 2014 and my own personal opinion is that a person moving overseas might fall into the category of a very limited circumstances.

     

    It has come to my attention that many transfer companies are jumping on this and scaremongering people into transferring on the basis of you must act now – one company with a headline “Lights out for UK Pension Transfers”

     

    My advice is not to act on this and transfer on this basis, certainly if a transfer is of interest then seek advice but not on the basis of not being able to transfer in the future.

     

    For this we must wait until the consultation in June, as always I will keep you posted.

     

     

    Kind regards

     

    Andy

    Edited by Andrew from Vista Financial

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    Andrew

    I have been hearing rumours that 30 contributory years may not now be enough to claim a full UK pension and that if you retire after 2016 that you will need 35 contributory years. Can you enlighten us about this?

    Thanks

    Catherine

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    Hi Catherine

     

    I posted about this sometime ago, see here: http://www.pomsinadelaide.com/forum/money-finance/35524-uk-state-pension-changes-important-update.html

     

    Since this post the changes are now due to take pace from April 2016: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

     

     

    Kind regards

     

    Andy

    Edited by Andrew from Vista Financial

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