Thinking of going to Oz and taking a pension with you?
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Thinking of going to Oz and taking a pension with you?
Not strictly mil, but I know many reading this do emigrate so it could be of interest if you're thinking about taking a pension with you. No longer permissible with AFPS of course.
British expats in Australia caught in pensions cap - FT.com
If the link doesn't work (paywall), search: $500,000 or £250,000 pension transfer limit Australia immediate effect FT Jo Cumbo. Jo's well worth a follow on Twitter, @josephinecumbo.
**Britons planning to retire to Australia face a severe cut to the pensions they bring with them. Australia has consistently been one of the most popular destinations for Britons moving abroad over the past 20 years, with tens of thousands emigrating Down Under each year. But last week, the Australian government imposed, with immediate effect, a $500,000 (£250,000) lifetime cap on contributions made into Australian pension accounts.
The move was designed to catch Australians injecting large contributions into their funds, for example the proceeds of a house sale. But it will also catch Britons who hoped to transfer their pensions. “Previously, a person could contribute non-concessional amounts of $180,000 per year or bring forward three-year contributions and make a $540,000 contribution if under 65,” said Liam Shorte, director of Verante, a New South Wales based financial planning firm.
“This allowed UK expats moving to Australia to move $720,000 pretty quickly and they could move a further $540,000 three years later and so on. “But now that a lifetime limit of $500,000 has been placed on non-concessional contributions this severely limits the amount that can be transferred.” Mr Shorte said those trying to move more than the $500,000 limit in one transfer could see their whole contribution “sent back to the UK” under rules that prevent accounts from accepting lump sums over the legal limits.
Individuals who breach the new $500,000 cap face penalty taxes of up to 45 per cent on the excess, or being asked to remove the excess contribution. “Many people will find themselves in a difficult situation now because their UK pensions may breach the new $500,000 cap,” said Geraint Davies, managing director of Monfort International, a pension advisory firm. Anyone thinking of migrating or returning to Australia as a national has just had a lifetime limit slapped on them. It hits everyone who is thinking of moving Down Under and came into force immediately. There was no time to plan.”
UK advisers said the measure could also potentially hit high earning Australians living in the UK, who had built substantial pensions, and returned to Australia. Many prominent Australian-born individuals have lived, or are living in the UK, including Kylie Minogue, the singer, Natalie Bennett, the Green party leader, and Sir Lynton Crosby, the political strategist. Pension savings in the UK can reach a lifetime cap of £1m, nearly four times the new Australian cap.
The new $500,000 limit was part of a wider move by the Australian government to curtail the amount of cash that Australians can put into their funds and draw tax free in retirement. It will be calculated retrospectively for everyone back to July 1 2007.**
British expats in Australia caught in pensions cap - FT.com
If the link doesn't work (paywall), search: $500,000 or £250,000 pension transfer limit Australia immediate effect FT Jo Cumbo. Jo's well worth a follow on Twitter, @josephinecumbo.
**Britons planning to retire to Australia face a severe cut to the pensions they bring with them. Australia has consistently been one of the most popular destinations for Britons moving abroad over the past 20 years, with tens of thousands emigrating Down Under each year. But last week, the Australian government imposed, with immediate effect, a $500,000 (£250,000) lifetime cap on contributions made into Australian pension accounts.
The move was designed to catch Australians injecting large contributions into their funds, for example the proceeds of a house sale. But it will also catch Britons who hoped to transfer their pensions. “Previously, a person could contribute non-concessional amounts of $180,000 per year or bring forward three-year contributions and make a $540,000 contribution if under 65,” said Liam Shorte, director of Verante, a New South Wales based financial planning firm.
“This allowed UK expats moving to Australia to move $720,000 pretty quickly and they could move a further $540,000 three years later and so on. “But now that a lifetime limit of $500,000 has been placed on non-concessional contributions this severely limits the amount that can be transferred.” Mr Shorte said those trying to move more than the $500,000 limit in one transfer could see their whole contribution “sent back to the UK” under rules that prevent accounts from accepting lump sums over the legal limits.
Individuals who breach the new $500,000 cap face penalty taxes of up to 45 per cent on the excess, or being asked to remove the excess contribution. “Many people will find themselves in a difficult situation now because their UK pensions may breach the new $500,000 cap,” said Geraint Davies, managing director of Monfort International, a pension advisory firm. Anyone thinking of migrating or returning to Australia as a national has just had a lifetime limit slapped on them. It hits everyone who is thinking of moving Down Under and came into force immediately. There was no time to plan.”
UK advisers said the measure could also potentially hit high earning Australians living in the UK, who had built substantial pensions, and returned to Australia. Many prominent Australian-born individuals have lived, or are living in the UK, including Kylie Minogue, the singer, Natalie Bennett, the Green party leader, and Sir Lynton Crosby, the political strategist. Pension savings in the UK can reach a lifetime cap of £1m, nearly four times the new Australian cap.
The new $500,000 limit was part of a wider move by the Australian government to curtail the amount of cash that Australians can put into their funds and draw tax free in retirement. It will be calculated retrospectively for everyone back to July 1 2007.**
Hi Al! Yes, it is all part of the Mega Pensions Raid, waged by polis who have seen the £££ saved by most of us! It is no joke, they know we are a soft target. I have no doubt that, in 10 yrs, I will not get a penny of my fully NI paid "State Pension" because, it will be means-tested.
No question, look at the Ladies, they have lost over £50,000 due to changes in the last few years!
IMO, there is no point whatsoever in buying State "qualifying years" or maybe, even buying a pension!
OAP
No question, look at the Ladies, they have lost over £50,000 due to changes in the last few years! IMO, there is no point whatsoever in buying State "qualifying years" or maybe, even buying a pension!OAP
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Means tested, likely, yes.. especially for those currently in their early thirties. I think the 2011 WASPI changes were unfair to some ladies; I have little sympathy for those who failed to act on legislation announced in 1995 though, and who now pontificate from their 4 bedroomed leafy David Wilson developments. The new LISA will see the evolution of retirement planning for sure, the biggest concern that I can see is the slow but steady eradication of physical money and the generally, universal policy of financial depression. It was easy for Cyprus to implement draconian financial measures because the way loose money was circulated.
Whilst I'm here, and going off at a tangent, one of my pet gripes has been getting some traction recently. We've got the support of the two most recent pension ministers (although Ros Altmann got slapped down today, by the SoS in commitee) and we got a good spread in lots of quality media recently. It's about those servicemen and women who were made redundant just days, weeks, months from getting an immediate pension a few years back. To its credit, the Forces Pension Society is reviewing its position and might support them after all. Which is nice. Either way, if anyone who tweets can retweet this link below, I'd be very grateful, thank you. I know it might present professional difficulties, so no snags.
https://twitter.com/RAF_IFA/status/727392103647592448
Finally, seeing as we're doing pensions, this is the brand spankers .gov.uk pension tracing service web page. If you've lost a pension, give it a go.
https://www.gov.uk/find-pension-contact-details
Whilst I'm here, and going off at a tangent, one of my pet gripes has been getting some traction recently. We've got the support of the two most recent pension ministers (although Ros Altmann got slapped down today, by the SoS in commitee) and we got a good spread in lots of quality media recently. It's about those servicemen and women who were made redundant just days, weeks, months from getting an immediate pension a few years back. To its credit, the Forces Pension Society is reviewing its position and might support them after all. Which is nice. Either way, if anyone who tweets can retweet this link below, I'd be very grateful, thank you. I know it might present professional difficulties, so no snags.
https://twitter.com/RAF_IFA/status/727392103647592448
Finally, seeing as we're doing pensions, this is the brand spankers .gov.uk pension tracing service web page. If you've lost a pension, give it a go.
https://www.gov.uk/find-pension-contact-details
Getting to the OP (how quickly it's gone OT), the budget announcement has gone pear shaped very quickly. Super contributions are taxed at only 15% to encourage people to plan for retirement and avoid becoming dependent on State pensions. But this has led to a pot of many $$trillions which has irked pollies of both sides who can't refrain from fiddling with the rules in order to get more of the pie.
Despite the cries of 'it's only the top 4%', more are realising that $1.6 mill isn't a lot to live on through your years of retirement, especially given the raging cost of living here.
The concession allowed legal contributions at the concession rate; to go back nine years and demand tax payments now be made under the new rules could well nail Turnbull to the wall and see his demise, to the detriment of the country as a.whole
Despite the cries of 'it's only the top 4%', more are realising that $1.6 mill isn't a lot to live on through your years of retirement, especially given the raging cost of living here.
The concession allowed legal contributions at the concession rate; to go back nine years and demand tax payments now be made under the new rules could well nail Turnbull to the wall and see his demise, to the detriment of the country as a.whole
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I used the phrase 'financial depression' and I should have used 'financial repression'.
The problem is not one that we aren't aware of, and have been aware of for some time. We're all living longer, we're all not paying as much tax.. there is no money. We have been lied to, as we all knew or suspected, but we were happy to play along with the illusion. Single issue campaign groups menacingly pointed to their supporters, and the government of the day pandered to the vote potential. Now, Baby Boomers aren't the up and coming electoral force that they once were and the inter generational vote is being targeted. The sad reality is, anyone joining up now will be working until they are seventy five and I have little doubt that the state pension will be seen as a parachute and not a trampoline.
The problem is not one that we aren't aware of, and have been aware of for some time. We're all living longer, we're all not paying as much tax.. there is no money. We have been lied to, as we all knew or suspected, but we were happy to play along with the illusion. Single issue campaign groups menacingly pointed to their supporters, and the government of the day pandered to the vote potential. Now, Baby Boomers aren't the up and coming electoral force that they once were and the inter generational vote is being targeted. The sad reality is, anyone joining up now will be working until they are seventy five and I have little doubt that the state pension will be seen as a parachute and not a trampoline.
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We haven't actually seen the legislation to give effect to this yet. Asmentioned, the intent is to limit the contributions of those already living in Aust; how people immigrating will be treated is yet to be made completely clear.
As spoz points out, it's not law yet and there's an election in July. Whatever the outcome of the election, changes to the superannuation rules will happen, rightly or wrongly, as the politics of envy will win out. The limit of $500,000 for tax paid contributions (non concessional) has a retrogressive application, in that the limit will take into account payments paid since 2007. My understanding is that if you haven't reached the limit since 2007, then you can make up the difference but they are not going to ask people to remove cash from their pensions if they have contributed more than $500,000 since 2007. That's providing the money went in prior to the budget announcement and met all the old, existing regulations. The personal limit proposed of a total pension fund size that can produce a tax free income is $1.6 million - above that there will be (for now) 15% tax payable on income generated.
Lots of changes but what will finally happen after the election is anyone's guess. The joys of having elections every three years.
Lots of changes but what will finally happen after the election is anyone's guess. The joys of having elections every three years.
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Why stop at OZ? Carry on for another 1100 miles and be happy with your money.
