QROPS for Australia Residents Still Possible

Australia QROPS (Qualifying Recognised Overseas Pension Scheme) may have been blitzed by new UK tax rules, but there are still options for expats who want to switch their pension away from Britain.

For those who are unsure about what to do with their UK pensions, here the answers to some frequently asked questions.

Can British expats and Australians still set up a QROPS?

Yes. Australia QROPS solutions are still available. Although hundreds of superannuation schemes that accepted transfers from UK pensions have stopped accepting money, anyone with a UK direct contribution pension can transfer their retirement savings from a UK scheme to other QROPS.

Several financial centres will act as a base for a QROPS wherever the retirement saver is located in the world – these are called ‘third party’ QROPS.

Some new QROPS schemes are opening in Australia under the new 55+ QROPS  procedure that limits the age of members to 55 years old or more.

Who qualifies to set up a QROPS?

The retirement saver should have a direct contribution fund – such as a workplace pension, personal pension or self-invested pension where the final pay out depends on fund performance.

The British government has barred the transfer of direct benefit pensions where the pay-out is determined by final salary and length of service, such as public sector and civil service pensions.

The State Pension cannot be transferred to a QROPS.

Typical retirement savers who can switch to a QROPS include:

  • British expats tax resident in Australia with a UK pension
  • Australians who have a UK pension fund
  • British expats or Australians planning to move permanently to Australia within the next six months who have a UK pension
  • Retirement savers of any other nationality living permanently outside Britain who have a UK pension
  • Retirement savers who wish to switch their retirement funds to a new QROPS

How do third party QROPS work in Australia?

The details depend on the personal residency and tax circumstances of the retirement saver in Australia and pension rules in financial centre where the QROPS is administered from.

QROPS Based in Malta are a Popular Choice

A popular choice is a Malta QROPS. Malta has a double taxation agreement with Australia that allows pension benefits to be taxed in Australia, providing the person receiving the benefits can show they have declared any tax due in Australia.

What happens if I have a third party QROPS and move from Australia?

You would need to take professional advice on your tax and residency status to figure out where you pay any tax due on the benefits paid.

However, where you live providing you do not return to the UK does not affect your third party QROPS. The pension carries on as usual wherever you are.

British tax residents cannot have a QROPS, but a specialist IFA should be able to give the appropriate advice under these circumstances.