If you are thinking about retiring in Australia, it may be possible to move your UK pension there, but there are strict rules. Transfers can only be made to Australian superannuation funds that appear on HMRC’s list of recognised overseas pension schemes (QROPS), and you usually must be at least 55 years old to do so. This age limit exists because Australian pensions allow earlier access, which conflicts with UK pension transfer rules.
Is QROPS the Right Choice?
A QROPS is an overseas scheme approved by HMRC to receive UK pensions. It is designed for individuals who are no longer UK residents and do not intend to return. Moving your pension to a non-QROPS can trigger an unauthorised payment tax charge of up to 55%. Only certain types of pensions – such as defined benefit schemes, occupational pensions, and SSAS – are eligible. State pensions and unfunded public sector schemes (e.g. NHS or fire service) cannot be moved.
A 25% overseas transfer charge may apply unless you meet specific conditions, such as living in the country where the QROPS is based. Mistakes or missing paperwork can also trigger this charge, and refunds may take time.
What Are the Potential Downsides?
Not all Australian super funds qualify as QROPS, and access to your funds is restricted by Australian rules, generally from age 60 if retired, or at 65 regardless of work status. Also, transferring from a defined benefit pension may mean giving up valuable guaranteed income, so this must be weighed carefully.
Transferring your pension to Australia is complex and depends on your age, the type of pension you have, and your long-term residency plans. To make sure you do not lose valuable benefits or trigger avoidable tax charges, you should seek advice from a qualified financial adviser before making any decisions.
What Are My Options if I’m Under 55?
If you are under 55 and living abroad, it is still worth reviewing your UK pensions. One option to consider is using an International SIPP (Self-Invested Personal Pension), which allows you to manage your pension while remaining under UK regulatory protection.
An International SIPP can hold investments in multiple currencies, including Australian dollars, helping to reduce currency risk. It also offers flexibility with access to a wide range of investments.
Always seek professional advice to make sure any decision suits your circumstances and complies with both UK and Australian rules. For full information on using an International SIPP (Self-Invested Personal Pension), please refer to the following link: https://sjb-global.com/international-sipp-an-overview/
