Must I transfer my UK pension funds to Australia when I migrate or can I do it at some later stage?

There is never a requirement that you must transfer your UK pension funds when you arrive permanently in Australia.  It is generally advisable to do so at some point, but circumstances may be such that delaying the process is more advantageous that transferring the funds prematurely.

Many Australian financial advisers will tell you that you must transfer your UK Pensions funds to avoid paying tax in Australia. Some UK based IFA’s will say the same. That advice is not always true, and may not be in your best interests. Sound unbiased Financial advice is therefore an essential element to the process.

Most UK schemes will also suggest you simply leave the funds with them until they retire and then draw down a pension from the UK.

There are some limited instances where this strategy  may be reasonable, however, in many cases that would be considered to be very poor advice indeed, particularly when you would then have to pay income tax on the pension paid from the UK.

As long as you bear in mind that when you do eventually decide to transfer your funds you will have to account for any fund growth from the date of residency and you will be taxed at the rate of 15% on any increase in value.

If the UK Pension fund grows at a reasonable level, yes you will pay tax on that growth, but at a maximum of 15% of the growth only, and you retain the remaining 85%. The tax will also be drawn from the funds and not have to be paid by you personally.

If UK IFAs and fund trustees had a better working knowledge of the Australian superannuation system and our very favorable tax treatment to retirees, they would inevitably give very different advice.  Bear in mind that Australian superannuation pension income is tax exempt, whereas UK Pension income is taxable.

So, whilst it is not mandatory to transfer, it is certainly well worth the effort to investigate the options and weigh up the benefits of transferring and comparing them to leaving the funds behind.

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