How to Arrange Pension Transfers to Australia
Pension Transfers to Australia from the UK
This is something that you will want to consider and it is a great idea to get some information and advice before you leave your home country on any local issues and potential tax implications relating to UK pension transfers to Australia. A word of CAUTION, don’t believe anyone who tries to scare you into making any transfers before you leave for Australia and don’t sign any contracts with anyone before you have received financial planning advice from an approved financial planner in Australia after your arrival here.
Australia’s pension funds are called Superannuation Funds and these are essentially locked funds until retirement, so if you move your pension into one of these funds and then return to your home country at a later stage to live for whatever reason, your pensions is essentially “stuck” in Australia until you reach retirement age. There are companies that operate overseas (and in Australia) that earn large sums for transferring pensions to Australia without providing any financial planning advice that try to scare people into transferring pensions when it may not be in your best interests to do so. We would suggest that you wait until you arrive in Australia, make sure that this is where you want to be long term and then make any decisions on pensions / annuities transfers when you have had time to meet with an approved Australian financial planner and seek professional advice. Any overseas company will still be happy to assist you when you are living in Australia and if they aren’t then they probably shouldn’t be trusted…
There are potentially some Australian tax issues that could relate to pension transfers and these generally won’t affect migrants unless you have been living in Australia as a permanent resident for six months – so it is important not to leave this and it is definitely worth getting advice, just don’t let anyone push you into anything unless there is a valid reason for you to act. Once you feel a bit settled, then it should be a priority to find a suitably qualified financial planner and discuss transferring your pension with them and establishing what fees they will charge you to arrange the transfer as well as provide the relevant financial advice.
The Australian Tax Office (ATO) (link) regulates the maximum amount (both pre- and post-tax contributions) per year that an individual can contribute into Super, and this can also have an effect on you if you are migrating to Australia as there is therefore a limit of how much you can add into a super fund from your overseas fund when you first arrive. So it is important to consult with a suitably qualified and certified financial planner when you arrive in Australia to discuss your own needs and plan the best strategy for you when it comes to pension transfers. You may also want to research which fund you think would best suit your needs and open an account with them.
Transferring Pensions (or Annuities) to Australia from South Africa
An important question and one that needs serious consideration is what to so with a South African pension, preservation fund or retirement annuity when leaving South Africa and how to arrange pension transfers to Australia from South Africa.
Before you leave South Africa it’s advisable to consult with a specialist in this area to understand the various options, the required processes and the respective pros and cons.
The products that are included for this purpose are as follows:
Pension: The individual rules will dictate what you can and can’t do, however in most cases you will be able to make a full withdrawal provided that you act within a specific time frame. Failure to do so could result in you becoming what is known as a “deferred member” which restricts you to receiving an annuity income only, from age 55 onwards.
Preservation fund: You are permitted to make one withdrawal, for any amount, from the fund before retirement age. Where there has been a partial withdrawal rules prohibit you from accessing the remaining balance as a lump sum. It is however, possible to transfer the balance to a different product type and then effect a withdrawal; this is a very complicated process and should be entrusted to a specialist financial migration specialist.
Retirement annuity: Full withdrawal is permitted subject to completing an exchange control process termed financial emigration, which simply changes your status from financial resident to financial non-resident. Financial emigration does not impact your South African citizenship or birth-right and will not affect your status in Australia, in any way.
Currencies Direct may be able to assist you or refer you to a relevant pension transfer specialist in SA who can assist you or advise you.
Contact them in Cape Town on (+27) 021 418 0105. Please visit the Currencies Direct SA Website for more information.
