UK to Australia Pension transfer

QROPS stands for ‘Qualifying Recognised Overseas Pension Scheme’. A QROPS is an HMRC registered pension scheme which can accept a transfer of UK pension funds. 

In order for an overseas scheme to qualify for ‘QROPS status’, it must meet certain strict criteria set by HMRC. If you transfer your pension to a plan that is not a registered QROPS, you may face a significant penalty.

When transferring your UK Pension to Australia, you may be subject to a tax charge upon transfer. Tax is based on the investment growth achieved within your UK pension plan, from the date you became an Australian resident, to the date you transferred your UK pension into Australia. It is the growth achieved during this period which would be subject to tax.

Overseas pension transfers are classed as ‘non-concessional’ contributions and you are permitted to transfer up to $110,000 plus investment growth, without an excess contribution charge of 45% being applied. In year one, you can bring forward three years of allowance meaning that the initial transfer allowance is $330,000.

You may transfer the following types of UK pension arrangements to an Australian QROPS:

• An Occupational Pension Scheme – A pension offered by your employer, typically a Group Personal Pension.
• A Defined Benefit Scheme – These are schemes offered by your employer which offer a guaranteed benefit in retirement. Also known as Final Salary Schemes.
• A Defined Contribution Scheme – These are Personal or Group Personal Pension Plans. A Self Invested Personal Pension (SIPP) is a Defined Contribution Scheme.
• A Small Self Administered Scheme (SSAS) – This is also a Defined Contribution Scheme, however, the set up of them is a bit more complex.

The following types of UK Pensions are not permitted to transfer:

• UK State Pension
• Unfunded Civil Service Pensions which include NHS, Teachers, Fire Fighters, Police and Armed Forces.

You can transfer your UK Pension to Australia if you meet the following criteria.

• You must be aged between 55 and 75 years. If you are under the age of 55 then you can transfer your Funds to an International Expat SIPP.
• If you are between the ages of 67 and 74, you must meet the criteria of the ‘Work Test’. In summary, you must have been employed for at least 40 hours in a period of not more than 30 consecutive days during the financial year to pass this test. (From 1 July 2022 the age test will change to 75).
• You can only transfer your UK Pension into a scheme that is registered with HMRC as a Qualifying Recognised Overseas Pension (QROPS).

In some cases, you may fit these criteria but there are restrictions with transferring your plan, for example, it could be an NHS Pension Scheme or Teachers Pension which generally do not permit transfers. Our FREE consultation will allow us to understand what pensions you have and the options you have with them.