Savings

How to live off Australian pension savings in the UK

I am a dual citizen of Australia and the UK. I have lived in Australia for nearly 40 years and will soon be returning to the UK permanently. I’m 63 and still work part-time. I have a retirement transition strategy in place with a large industry super fund and do not intend to work when I return to the UK. I tried to find out from my fund if my super pension, once retired, is transferable. Specifically, can it be transferred to the UK and held there in a tax-free or reduced-rate environment? I have received conflicting information from various fund representatives. One of them told me that I should keep my pension in Australia and have the pension payments paid into an Australian bank account in my name and then have the funds transferred to a UK account. Another told me that I had to withdraw the full benefits of the super fund if I no longer resided in Australia. I emailed a financial planning company in the UK for advice, but they asked me to shell out around £2,000 (AU$3,774) before I received advice. Can you tell me what my options are? LIKE

To my knowledge, there is no way to transfer an Australian superannuation benefit while retaining tax benefits.

The tax treatment of retirement savings is different in the UK.Credit:Tamara Voninsky

Even if there is a way, why would you bother? Australian pensions are tax-free and paid from an untaxed fund, while UK pensions are taxable on withdrawal after an initial tax-free lump sum of 25%.

In addition, under my interpretation of Article 17 of the UK/Australia Double Taxation Treaty, an Australian pension paid directly to a UK resident is taxable in the UK.

Theoretically, if you have an Australian pension paid into a local bank account, it ceases to be a pension and simply becomes part of your savings, and therefore should not be considered a pension payment when transferred to a UK bank account.

However, transfers to the UK over £5,000 (AU$9,434) are reported to HM Revenue & Customs and you must disclose the source.

Maybe you’d be better off putting your pension into an Australian bank account and having a low-cost currency transfer company make regular payments of it to your UK bank account, until so you can sort your social security and tax information.

I am concerned about my AMP “multi-fund flexible income annuity”, which I have held since 1998. Last September, my fund was transferred to a Resolution Life account, for which I received no prior warning. I understand that AMP has been purchased by Resolution Life. I recently tried to get information about my account, including its performance, with little success. The only information provided relates to the pension holder and his current balance. The controversies surrounding AMP lately, the transfer of ownership to Resolution and the scant details provided to me about my pension fund are concerning. Should I continue with Resolution Life or consider switching to another super fund, such as an industry fund? bj

AMP sold its life insurance business in 2020 to Resolution Life, a global company based in Bermuda, a branch of which specializes in the purchase and management of existing life insurance policies. It does not sell new policies.