Pension Transfer Specialists

1 July 2017

Contribution Cap Changes
With the reduction of the contribution caps in July 2017 many people wishing to transfer may find themselves over the contributions caps.

1 July 2017
Non-Concessional Contribution Cap From $100,000
Brought Forward Cap $300,000
Lifetime Contribution Cap $1.6 million

If you have a value of £175,438, based on current exchange rates you may be over the contribution caps of $300,000.

PTS can review your transfer, calculate the non-concessional contribution and offer solutions for transferring within the contribution caps. Call PTS 08 9233 9269

Important Changes to QROPS [initial understanding]

9th March 2017

The attached is not financial planning advice. This is for your information only.

As you are currently undertaking a UK pension transfer or have made enquires to transfer your UK pension to Australia, it is very important that you read this letter.

You need not be concerned about completed transfers.

UK Changes QROPS rules

Overnight HMRC has confirmed that payments made to QROPS schemes may be subject to UK tax.

A tax will apply where the transfer is made to a QROPS in one country where the individual is not a current resident. SMSFs are therefore not affected.

If your transfer paperwork has been received in the UK prior to 8 March 2017 and you are transferring to i-Select (ie a QROPS in another country) then it would appear this tax charge will not apply. (We are seeking stronger clarification).

HMRC has also introduced a revised rule regarding withdrawals from QROPS. HMRC will apply tax to any withdrawal for 5 years from the date of transfer. This applies to payments made from QROPS where the transfer is received after 5 April 2017. This would seem to apply to SMSFs. (We are seeking stronger clarification).

How are PTS responding?

1. We are seeking formal guidance on the changes from an international tax specialist. Once this has been received we will notify you as soon as possible.
2. If you’re transferring direct to a SMSF you are not affected by the initial 25% tax charge. Future withdrawals would be subject to UK tax for 5 years from date of transfer if funds are received after 6 April 2017 (we are seeking stronger clarification)
3. Where a transfer is completed to New Zealand (or other country) but you are awaiting a rollover to your SMSF we are seeking clarification on how these changes will affect you
4. Where transfers are in process we are working with the UK schemes to determine if and what date the paperwork has been received in the UK and if it has been processed. If it has not been processed we are seeking the UK scheme’s position on the new rules.
5. We will contact all clients who have signed an engagement letter to transfer their funds.
6. If you are awaiting UK financial advice, or to receive a Statement of Advice we will be in contact with you.
7. If you are in the initial transfer quotation stage, or are considering a transfer then please ensure you check our website and newsletters for urgent updates. We will be back in contact as soon as possible with any current news.

Action required

Whilst news of this potential tax increase may be confusing, please be assured that we are working with the UK Pension Schemes to ensure compliance with the Legislation. As soon as we have received further clarification we will contact you.
Should you have any particular concerns regarding your pension transfer please do not hesitate to email pensions@ptspecialists.com.au or telephone the office on 08 9233 9269.

Unfortunately the information contained in this letter is the only update we can provide at this time as we await further advice from the UK Schemes and the international tax specialist. We appreciate your patience and understanding

The ability of the UK tax authority to tax unauthorised payments made by QROPS schemes will be extended from its current five years, to 10 years. It is expected this will take effect from 6 April 2017.

“It has always seemed incongruous that an individual could only be taxed on unauthorised payments from ROPS schemes if they have been resident in the UK within the last five years, but that schemes had to continue reporting withdrawals for a whole ten years. Whilst the applicable dates related to these two periods may still not align, their lengths are being equalised. It will be interesting to see if this requirement will be made retrospective, so that the current five year waiting period for pre-2012 QROPS will somehow be affected” Source – i-Select Autumn Statement

Current non-concessional contributions are set at $180,000 per annum, with the ability to bring forward up to 3 three years. Making the current contribution cap $540,000.00 for the 3 year rule.

A new limit proposed to the government would be to reduce the non-concessional cap to $100,000 a year. It is proposed the changes will be introduced on 1 July 2017, reducing the 3 year contribution cap to $300,000.00.

We have alternative solutions for transferring your pension, which are not limited by the contributions cap.

Alternatively if you have funds in the UK, that you wish to move direct to your SMSF (ROPS approved) please call the team at PTS to discuss a tax strategy for moving your funds within the caps or exploring other transfer options.

Call PTS now on 08 9233 9269 or email pensions@ptspecialists.com.au

The UK Pensions industry believes that the government needs to make changes to the current advice legislation.

The legislation to protect schemes means transfers from Defined Benefit schemes with benefits worth £30,000 and above have become exceptionally difficult for advisers, providers, trustees and scheme managers to handle.

UK advisers cannot advise on a transfer of more than £30,000 unless they have a specific qualifications that allows this advice. Overseas transfers also require a UK adviser to consider the investments into which the client wishes to transfer their lump sum.

There has been a huge increase in transfers as result of changes in legislation in 2015, which relaxed the flexibility in which pensions could be accessed.

In addition inflated transfer values following the plunge in gilt yields after the Brexit vote have increased the amount of people interested in transferring.

PTS use a UK specialist firm for all Defined Benefit transfers. They are able to provide advice in as little as 3 days for urgent cases. Make sure you receive the right advice.

Call PTS now on 08 9233 9269 or email pensions@ptspecialists.com.au

The UK Lifetime Allowance Limits reduced to £1 million as at 5 April 2016.

Do you know the value of all your UK pensions? This value must include ANY past benefit crystallisations. A benefit crystallisation would be a transfer to QROPS, or an income drawdown.

If at the 5 April 2014 the value of your benefits was greater than £1.25 million and you did not already have Primary Protection as at that date, then you have until 5 April 2017 to apply to HMRC for IP 2014 (Individual Protection 2014).

If your UK Pension values are between £1m and £1.5m then application for IP 2016 would be recommended. There is no downside to registering for IP, so anyone eligible should do it. Clients who registered for primary protection previously cannot register for Individual Protection.

Call PTS now, who will arrange for expert assistance to ensure you take the necessary steps so you do not exceed your UK Lifetime Allowance 08 9233 9269 or email pensions@ptspecialists.com.au

Pension Transfer Specialists would like to wish you a Merry Christmas and a Happy New Year.

Our offices will be closed during the Christmas break from Friday 23 December 2016. We will reopen in the New Year on 9 January 2017 at 8.30am.

Wishing you a wonderful holiday season.

Pension Transfer Specialists