LARGE VALUE TRANSFERS

Under 55 Transfer - Finsec PTX Adelaide

Like London’s iconic red phone box, our Over 55 Large Value Transfer service stands out for its unique and quality design.

Built on a foundation of knowledge and experience, you will partner with leading experts in; UK pension transfer, QROPS, UK SIPP, SMSF, retirement and risk strategy for an all considered transfer solution.

So specialised is this advice that many other financial advisers, accounting professionals and SMSF administrators turn to us for this expertise.

What is a large VALUE transfer?

If your combined UK pension fund values at the date you became resident for tax purposes in Australia exceeds the non-concessional bring forward limit of $360,000, you will need to navigate the issues associated with a large case transfer.

Large transfers do bring complexity and the considerations are many, but a transfer is not a transaction it requires professional advice.

Strategies such as transferring in one or multiple tranches will depend on many factors; your fund type, financial situation, contribution caps, current total super balance, work test rules, residency rules, lifetime allowances, UK safeguarded benefits and outcomes on death to name just a few.

A large value transfer strategy will consider:

  • Contribution Limits
  • $1.9M transfer balance cap (Australian super to Australian pension phase, tax free)
  • Taxation Implications
  • QROPS Expertise
  • Currency Conversion Strategy
  • Navigating Legislative change
  • Determine historical pension values (Defined Benefit/Final Salary)
  • Pension Attributes
    • Drawdown
    • Split Transfers
    • Other Unique to Fund
  • Date of Residency
  • UK Overseas Transfer Allowance
    • What lifetime allowance has been used?
    • Do you have protection?
  • Benefit Chrystalisation Events
  • Taxation Implications
  • UK SIPP Expertise
  • Tax Election
  • 10 year UK non-residency rule
  • Navigating Legislative change
  • Future residency
  • Overseas transfer charge
  • Investment choice
  • Currency conversion strategy
  • Consolidating your UK pension proceeds with your Australian superannuation assets
  • Portfolio construction
  • CGT implications
  • Retirement planning
  • Risk mitigation
  • Centrelink allowances
  • Estate Planning
  • Intergenerational wealth transfer
  • Navigating Legislative change
  • Future Superannuation contribution strategy
  • Strategies for released funds from super due to excess non-concessional contributions
  • Specific goals and objectives
  • Health and longevity issues

The cost of not getting expert advice can be huge. In our experience people who do not consult a specialist:

  • May overpay on tax: In particular for Defined Benefit scheme transfers and the growth component of their fund (learn more about Defined Benefit transfers here).

  • Risk an ‘unauthorised payment charge’ (up to 55% of the total transfer value), dependent on how you structure your benefits beyond the initial UK pension transfer.

  • May be unaware that many pensions cannot be transferred without a UK adviser authorised and regulated through the Financial Conduct Authority (FCA).

  • May be unaware of Individual Protection deadlines for securing higher UK Lifetime Allowance Limits.

  • May be unaware of potential Estate Planning advantages within Australian Superannuation.

  • May trigger avoidable tax consequences particularly in accessing your retirement funds.

  • May find the process overwhelming and therefore take no action at all, potentially leading to an inferior outcome.

Getting the Process Right.

Historically, before all the legislative changes, UK product providers were willing to give out enormous help and guidance (as distinct from advice) to people wanting to transfer. However the world changed in April 2015 (and subsequently again in May 2016 and April 2017) adding a huge layer of complexity. Today product providers are reluctant to provide assistance at all.

Why? Because the need for advice and ensuring things are done at the right time and in the right order is crucial.

It may not be rocket science (depending on the complexity of the transfer and the individual’s circumstances) however get the process wrong and you can create restrictions for yourself or trigger unwanted tax consequences in both the UK and/or Australia.

On a regular basis we get a phone call from someone that has come ‘unstuck’ trying to DIY or they have engaged the services of an offshore advice provider and has got the process wrong. Sometimes we can help, sometimes it’s too late.

Better understand when UK advice is required and the advice behaviours to be aware of.

QROPS/ROPS Expertise.

If considering a transfer it is critical that you seek expert QROPS advice before making any decisions. The goal of this advice is to determine whether or not a transfer is financially beneficial to you and that any associated strategy properly considers all your unique goals and objectives.

Knowledge and experience of proper set up and reporting requirements is critical to ensure that HM Revenues and Customs (HMRC) rules are not breached, because a non-compliant transfer can attract a penalty of up to 55% of the total transfer value. Getting expert QROPS advice could potentially save you thousands of dollars on your transfer.

Find out why you should transfer your
UK pension to Australia:

Common benefits explained

The 5 biggest misconceptions of large value transferS

This is usually true for Defined Benefit schemes. In fact, scheme actuaries have the right to refuse a transfer request if you are within 12 months of the selected retirement date in the scheme. It is usually possible to transfer Money Purchase or Defined Contribution schemes without age restrictions however historically clients needed to meet a work test and were restricted as to the amount of non-concessional contributions they could make.  Combined both issues made it difficult for some client to affect a transfer. This is not an issue now as individuals can contribute to super until age 75 and utilise the 3-year bring forward rule for non-concessional contributions through this period.

This may or may not be the case.  There are several issues that will influence the timing of currency conversion. When you need to access money in Australia, your total super balance, your current health, the current state of broader investment markets and end of financial year deadlines are just a few issues that may impact when you decide to exchange funds and then transfer them to Australia.

Generally, these days most pensions are transferred via a Self-invested Pension Plan (SIPP), following UK advice. One of the main reasons clients are opting for this approach is for better control (mitigate currency risk) and cost savings associated with currency conversion. You can set the rate that you wish to transfer at, and this can be reviewed over time.

If you choose a direct transfer to Australia, it is possible for a SMSF to have a Sterling account where you can when you convert but our experience shows your cost to convert currency will likely be higher.

The decision to transfer a pension really needs consideration from both an Australian and UK perspective. If your pension is a Defined Benefit pension or it has guaranteed annuity rates, and a value over £30,000, then advice from an FCA authorised adviser in the UK is legally required.

There may also be situations where UK advice will benefit you despite it not being legally required. Our FinSec PTX service will provide appropriate Australian advice and we then we will collaborate with our aligned UK advisers to ensure they have the required information at hand to provide Best Interest Advice from a UK perspective. We will manage this process, so it is as seamless as possible from your perspective.

Prior to July 2017 this was certainly the case for Large Value Transfer Values, as there were severe penalties for breaching the Non-concessional Contribution bring forward limit, so clients navigated the contribution caps over time. The legislation changed in July 2017 and now there are consequences rather than penalties for breaching the non-concessional contribution limit.

One of the options available is to elect for an amount including the excess non-concessional contributions to be released from super. This strategy needs consideration on an individual basis but generally speaking it has proved very popular and tax efficient.

This is not a myth, there are very few.

Generally speaking in the pension transfers space their are only a handful of key players, add to this SMSF speciality and the number halves again.

At FinSec we have specialised in both pension transfers and SMSF independently of each other for over 20 years.

Probably not, but we will need to consider your individual circumstances.

First thing to check, will be determining if you have fixed protection allowing you higher LTA. If not, under certain circumstances we can apply to have this lifted to £1.25M.

If you still have an excess LTA the lowest rate of tax you will pay on the excess will be as a result of transferring to a QROPS (25%). If you draw a lump sum, you will pay 45% tax or if you draw an income, you will pay 25% plus your marginal rate of tax in addition.

If you leave the excess funds in the UK and they grow in value and eventually you transfer them to Australia, you will increase the amount of tax you pay in both the UK and Australia.

What to expect:
Our fully integrated pension transfer solution >

Our over 55 Large Value Transfer service includes:

  • Data collection and analysis of your UK pension schemes and personal situation (including goals and objectives) to enable us to provide a complimentary tailored Statement of Advice from an Australian perspective. This will include determining if a transfer is appropriate, the recommended strategy and product/s, the reasons for the recommendations, consequences and costs associated.
  • Facilitation of UK advice process, and collaboration with UK advisers as required to enable them to provide Best Interest advice from a UK perspective. We aim for the overall process to be as seamless as possible.
  • Establishment of recommended product or entity (in the case of a SMSF).

  • QROPS registration (if required).

  • Navigation of the onerous administrative and reporting requirements.

  • Subsequent post transfer advice process and the provision of additional Statement/s of Advice to provide pre-retirement plan (including cash flows and projections). This advice will usually address issues such as consolidation of super, investment of transfer proceeds, contribution strategies, estate planning and insurance requirements.

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*Information provided on this website is general in nature and does not constitute financial advice, please refer to our Disclaimer for further information.

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