UPDATE: 30 June 2015
As of 6 April 2015 all Australian SMSFs and retail funds have been removed from the QROPS register meaning SMSFs can no longer accept a transfer from a UK pension fund.
This is because Australian Super Funds will not satisfy the UK Pension Age Test (as Australian funds in limited circumstances will allow a release of monies prior to age 55).
We will update this article when any changes to HMRC policy occur.
Superfund Wholesale is a registered Scheme Administrator with HMRC in the UK.
This means we are able to undertake Qualifying Recognised Overseas Pension
Scheme (QROPS) registrations for SMSFs with the HMRC and that once a transfer from a UK pension scheme has taken place, we can report back to the HMRC.
Please note that there were a number of important changes to UK pensions that came into place on 6 April 2015 and these change may impact your clients and their ability to transfer benefits to a QROPS registered SMSF.
A summary of these changes from IOOF can be found here: UK pension reforms: Changes ahead for QROPS transfers
The process for Superfund Wholesale assisting with the transfer or a UK pension is summarised as follows:
- New SMSF established with a trust deed with specific QROPS provisions -or-
- Upgrade existing SMSF deed with the necessary QROPS provisions
- Superfund Wholesale to undertake the QROPS registration (please note that the QROPS application with the HMRC can take from 4 weeks to 4 months to be processed)
- Adviser to undertake analysis on any taxation implications of transferring the pension. For this you will need your clients to obtain their Cash Equivalent Transfer Value (CETV) from their current UK scheme(s) based on the day they depart the UK.
- Clients are also required to obtain financial advice from a professional adviser authorised by the (UK) Financial Conduct Authority. The adviser must be independent of the pension scheme. An Australian adviser is not authorised to provide this advice.
- Transfer from the UK pension scheme to the Australian QROPS registered SMSF can be completed.
- Australian tax paid by the SMSF based on the growth portion of the transfer
- Where necessary, Superfund Wholesale will report any necessary events to the HMRC on a quarterly basis (lump withdrawals, pensions, transfers).
Some additional key points to be aware of:
- Only certain UK pension schemes can be transferred
- Transfers count towards the clients non-concessional contribution cap
- Transfers within 6 months of departing the UK are tax free, transfers after that date have taxation implications.
- Reporting back to the UK is required on a regular basis for 10 years following the transfer
- It is possible (and recommended) to set up an SMSF bank account in UK sterling to better manage exchange fluctuations
- There are investment restrictions applicable to QROPS monies held in an SMSF - namely the inability to invest in collectibles or residential property
- We also strongly recommend that QROPS monies be kept segregated within the SMSF (different bank and linked investment accounts) to make ongoing reporting and administration easier.
- Significant UK tax penalties apply for breaching any HMRC QROPS regulations
Superfund Wholesale levies additional fees for both the initial QROPS registration, as well as additional fees per annum where reporting back to the HMRC is required.
If you would like further information on these fees or would like us to register one of your clients SMSFs for QROPS, please get in touch.