Time is running out if you wish to transfer a UK public service pension benefit.
The time to act is now if you have worked in the British public sector and wish to take advantage of favourable superannuation tax rules.
After 6 April 2015, former National Health Service workers, teachers, police, fire fighters and anyone else employed in the British public sector will no longer be able to transfer the benefit into an Australian super fund.
This could be costly when it comes time to retire. Currently, any money drawn from an Australian super fund is tax free after the age of 60. Whereas, if the money comes direct from the UK pension fund, it will be paid directly into a bank account and therefore liable for assessment for Australian income tax. It is also subject to the exchange rate at the time.
Given that the deadline to lodge a transfer request falls over the Easter period, the actual deadline is 2 April 2015. Prior to lodging a request, a quote must be received from the fund, which can take some time.
Any benefit not transferred will be paid as a partial lump sum, with the remainder paid as a regular pension over the beneficiary’s lifetime. Also, should a member die, the spouse will receive only a half pension until they die. Australian super pays the full amount plus insurance in the event of a member’s death.
If you are unsure of how this may affect you, consult an independent financial advisor.