Getting UK pensions into an Australian Self-Managed Super Fund
Many of us have UK pensions. From 6 April 2015, the conditions that an Australian superannuation fund (pension scheme) must satisfy to register with Her Majesty’s Revenue and Customs (HMRC) as a qualifying recognised overseas pension scheme (QROPS) has changed.
The UK ‘pension age test’ must be met. The test can be met either by a requirement:
(a) set out in the scheme rules of the QROPS; or
(b) of the law of the country in which the QROPS is established, that benefits are payable to the member:
(i) no earlier than age 55; or
(ii) earlier than 55 only in cases of ill health, which must be judged by a standard which is ‘not lower than the ill health condition set out in paragraph 1 Schedule 28 Finance Act 2004’
How to you register a QROPS?
To register as a QROPS, the pension scheme (as this term is referred to in the UK legislation) you must:
(a) be an ‘overseas pension scheme’ as set out in regulation 2 of the Pension Schemes (Categories of Country and Requirements for Overseas Pension Schemes and Recognised Overseas Pension Schemes) Regulations 2006 SI 2006/206 (Requirements Regulations);
(a) be a ‘recognised overseas pension scheme’ for the purposes of the Requirements Regulations; and
(c) have given appropriate undertakings to HMRC.
What must an Australian Superannuation fund do to get UK Pensions?
A superannuation fund that satisfied each of these requirements is then listed on HRMC’s QROPs register.
As to the restriction of only paying benefits to persons 55 years of age and over, there are three scenarios:
1. Restrict the SMSF fund to members who are 55 years of age and older;
2. Restrict the SMSF fund to members who are 55 years of age and older – and then, after the pension transfer from the UK, do a Deed of Variation to allow persons under 55 years of age to also join the fund; or
3. Restrict the SMSF fund so that payouts can only happen to members who are 55 years of age and older (i.e. no restriction of age on membership, that is, members can be under 55 years of age).
Legal Consolidated Barristers & Solicitors has submitted our Legal Consolidated QROPS Compliant SMSF Deed to HMRC. While our Deed is drafted to comply with the UK legislation, HMRC will not place a ‘precedent’ or ‘pro-forma’ document on their register. We have been in communication with Ray Evans, Higher Officer, QROPS Team, HMRC Pension Schemes Services. Mr Evans confirmed this in an email to us stating:
‘we do not examine or give any form of comment on draft or prototype documentation. Once a scheme has been established using the documentation, it is then that a notification should be made in relation to that scheme.’
We prepare QROPS Compliant SMSF Deeds to get UK Pensions
Legal Consolidated Barristers & Solicitors prepares QROPS Compliant SMSF Deeds for $3,300 (we can amend an SMSF Deed that you are already using, for an additional $1,100). As a private tax law firm, we only accept these instructions through your accountant, adviser or lawyer. We charge $15,000 to amend or prepare non-SMSF Fund deeds (retail, industry etc…).
Legal Consolidated lodges the application for registration with the SMSF Deed and supporting documentation directly with HMRC, and attends to the requisitions.
In the unlikely event that her HMRC will not place a certain fund on the register then we refund our legal fees back to the client.
1) You mentioned $3,300 was the cost to write the Trust Deed and get the SMSF with the required approval status, is that correct?
ANSWER: Yes, that is correct. You get the $3,000 back if we are unsuccessful getting it on the UK register.
2) The client wants to buy property through the Australian SMSF eventually. Are you aware if it is OK to use transferred funds from the UK to purchase property in Australia?
ANSWER: The UK legislation is more about not releasing the superannuation at an earlier age. Provided the superannuation investments are compliant with Australian superannuation law then this won’t generally be a problem. The usual Australian rules about not living in a residential property owned by the SMSF etc… continue to apply.
3) Are there any other challenges to think about?
ANSWER: Every person’s situation is unique. However, because we return the legal fees if we fail to get the UK approval, we are very determined to deal with any issues before we lodge the paper work with the UK.
For more legal advice, please contact us.
Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
39 Stirling Highway, Nedlands, WA (Post Office Box 5169, Dalkeith, WA 6009)
Direct: 08 6389-0400
Reception: 08 6389-0100
Email: [email protected]