UK Pension Transfers to Australia

Many migrants have personal pensions, occupational schemes, AVCs and contracted out schemes in the UK. You should address how you are going to deal with these funds prior to departure.

Pensions held in overseas countries are considered Foreign Investment Funds (FIF) in Australia. This means the growth in the fund since your arrival in Australia is potentially taxable in Australia on an annual basis even whilst the money is still locked in the fund.

Getting the funds out of the pension fund and into acomplying superannuation fund within 6 months will ensure there is no tax incurred when bringing the funds into Australia. Where this process takes more than 6 months and the funds are transferred to an Australian complying superannuation fund, you can elect to have the growth taxed at the superannuation rate of 15% or at your marginal rate of tax, whichever is the lesser.

If the funds are not transferred into a complying superannuation fund, the growth amount would be regarded as assessable income in your hands, and tax would be payable at your marginal rate of tax (which in most case would be significantly higher than 15%).

Outside of the 6 months, the growth in the balance of your UK fund component since your date of residency to the actual transfer would be treated as a post 1983 untaxed component and taxed accordingly and the balance will be considered an non concessional contribution, which on retirement is paid to you free of tax.