The UK Department of Work and Pensions is inviting submissions from practitioners and their representative bodies about the need for QROPS transfers to obtain UK IFA advice for UK safeguarded pension benefits. Submissions must be made by Friday 23rd December, 2016.
Financial advice is required for all transfers out of UK defined benefit pensions with a value of £30,000 or more since April 2015. The usual UK transfer reports are expensive (usually above £1,000) and provide no assistance with Australian tax aspects or currency risk. Consequently, this burden pushes expats into taking large pension benefits taxable under ITAA 1936. The deductible amount is usually small for people who left the UK some years ago. So many of these pensions that could be lightly taxed once as a QROPS (15% of the growth component) end up being far more heavily taxed.
In my opinion, the interests of the members would be better served by permitting the expat member to seek equivalent advice in their new country of residence.
The debate is likely to revolve around whether the overseas adviser has relevant qualifications similar to UK “pension transfer specialists”.
I would encourage the FPA and other Australian professional bodies to make a submission.
The NetActuary Team