Pitfalls of transferring your UK pension

Complexity
The process is not a simple one. If you've had several employers, or if your former company or the scheme has changed hands, it can be difficult to locate your pension scheme. Moneytree Partners will assist in tracing your scheme.

Currency issues
The exchange rate applied to your transfer is set by your scheme's banker in line with the prevailing market rate at the time of transfer or by the transferring fund.

Investment risk
With more choice and flexibility in investing, there could be the potential for increased investment risk, as with any investments. See an adviser to assess and manage investment options and risk.

Contribution limits
Transfers are treated as ?contributions? to an Australian super fund. Care must be taken not to exceed the contribution limits set by the Government. Transfers in excess of contribution caps are taxed at individual marginal tax rates. See an adviser for appropriate strategies.

Accessibility
UK pension rules allow you to retire from age 50, rising to 55 after April 2010. Preservation ages are different in Australia and if you transfer you may not be able to access your funds before age 60.

Tax may be payable
If you transfer your UK pension fund after you have been resident in Australia for longer than six months, the transfer is likely to give rise to a tax liability. Tax may be applicable to earnings in the fund for that period (often referred to as the ?growth component?).

Not all Australian super funds qualify as QROPS and transferring to a non-recognised scheme will be classified as an unauthorised payment by HMRC and may be subject to up to a 55% tax charge. Attempting to transfer into non-qualifying schemes should be avoided at all costs. It is important to seek professional qualified and authorised advice.

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