Emigrating to Aus - What about the Pension?

[madasacow]

I am considering emigrating to Australia :cool: when I retire next year but I heard a nasty rumour the other day that my pension will not be indexed linked. So when I reach 55 it will remain at the existing rate rather than increasing to its index linked value.:mad:
Can anyone shed any light on this?:confused:

Regards

[L J R]

You may not be aware that UK and Aus have a mutual Tax agreement that pensions are not taxed if you live in reciprocal countries and earn [and pay tax] in the other.

ie your UK pension will not attract UK tax if you live and earn in Aus.

It will not earn tax in Aus but will be added to youir total Aus income to ascertain your Aus tax bracket.


Did not answer your question but that info may be helpful regardless.

[BlueEagle]

Not sure about a SERVICE pension but as far as your sate pension,(payable at age 65), yes, it will NOT be index linked.

This is currently the subject of a court case in the UK, the UK rule only applies to certain countries and is very discriminatory.
By the time you reach 65 the problem may have gone away.

Try this: http://www.britishpensions.org.au

Best of luck.

[madasacow]

Thanks for the replies.

I'll give the pensions section at PMC a ring on Monday and see what they say.

As to the Old Age Pension problem going away, being ‘contracted out’ I hadn't reckoned on my OAP being worth very much in the first place. With the aging population I doubt if any government can afford a decent pension. I suppose Australia may be in a better position as they limit immigration to younger people to reduce the effects of an aging population.

Regards

[EmpireOne]

madasacow

I am curently in the process of moving to Australia and was given this link by a contact at the Aus Dept of Defence. These guys should be able to give you some information on all aspects of moving your pension.

www.comsuper.gov.au

ComSuper
PO Box 22
Belconnen ACT 2616
AUSTRALIA


EO

[bakseetblatherer]

Don't do it!
Nz is much better (ducks for cover)......;)

[reynoldsno1]

I'm with you bakseet .... but what do you cover with the ducks ???

[G.Khan]

NZ is currently in the hands of the Loony Labour Left and has recently sold off it's Air Force!:)

[Charlie Luncher]

Try this website as COMSUPER is only of use if you join the ADF,

www.miplc.co.uk

[madasacow]

Thanks for the links, the Montfort one looks quite interesting.

I suppose NZ would be OK but our family is in Aus! :p

Spoke to the horses’ mouth today at Insworth. The chap assured me that the service pension was unaffected and would be indexed as normal. :)

He explained that Tax would be paid at standard UK rates on the pension before it was sent overseas :( . This seems to contradict L J R but I expect L J R may be aware of more of the subtleties of the Australian tax system than the Insworth bod.

Regards
:cool:

[Hydraulic Palm Tree]

I don't understand how it can be taxed by HMG if you are resident in another country? Surely it should be taxed by that country instead.

Anybody shed light on this? - What about France/Spain?

HPT

[Green Bottle 2]

HPT,

I believe if you pay tax in the UK, you will not have to pay tax in Aus - it's the mutual tax agreement as LJR says. However I would take professional advice before departing these shores - it may be expensive advice but it could save a fortune.

Planning to emigrate to France/Spain HPT??

GB

[TOOM]

I rteired from RAF some 18-months ago at age 55 and returned to NZ, from whence I came some 33 years previously. My Service pension was paid after UK tax until I provided proof to UK IR that I had declared the income to NZ IRD. Thereafter, all UK tax was refunded and pension paid gross and annual index linkage is appied. I could have elected to continue with UK tax and this would have been applied as a tax credit after NZ IRD had calculated my liability on worldwide earnings - thus, no advantage. As I am now self-employed it is better and easier to deal with one authority so that losses can be applied aginst total earnings.

[L J R]

On the issue of Tax, yes I believe that it is taxed upon receipt and payment, you then have to ask for a refund in a yearly request or statement to the Inland Revenue. As advised above, get your accountant to pursue this each year.

My Accoutant advised me of the Aus perspective and said it is reciprocal.

I am not a financial Guru or advisor. I highly recommend you get one.

[maxburner]

TOOM, I seem to remember that the service pension could only be paid into a UK bank account. Do you suffer under that restriction, and if not, without getting into personal details, how do you arrange money transfers, who pays the costs, do you do it once a year or every month?

I'd apreciate the benefit of your experience.

[kilo52]

We have recently purchased a house in France. My information from "Paymaster" is that the UK Government reserves the right to tax UK Government Service Pensions itself. If there is a dual taxation treaty then the country in which you are resident will not tax the pension as it is subject to UK tax.

If you do not maintain a UK Bank Account then they they can make your Pension payments to your Bank Account in your Country of residence in local currency.

Give "Paymaster" a call on 01293 604020

[TOOM]

Mb

Paymaster General will pay Service Pension into a foreign bank but I don't know what excahnge rate is used - assume PG pays in Sterling and foreign bank selects exchange rate. Because I still have investments to cover in UK, I have mine paid into UK bank and transfer, as required, by personal cheque to local bank who have agreed a slightly preferential rate of exchange and, more importantly, to credit immedaiately in NZ$.

As indicated earlier, if there is a reciprocal tax agreement with country of residence, UK will pay Pension free of UK tax PROVIDED income is declared to tax authority of country of residence. In other words - some govt is going to get a hunk of your pension!

kilo52 makes a good rec - speak with Paymaster General. Though rest assured it ain't as complicated as it might appear or, indeed, the bureaucrats could make it if they really tried. Quite a suprise that!

Work to Retire, Retire to Work!!!!!!!

[BlueEagle]

I, and a number of friends who have money in the UK use our Visa card to draw it down here in Australia, the exchange rate is competative and it is soooo easy!

Just ensure your card allows you to make withdrawls overseas.

[madasacow]

I've found that the rates I've been charged using my UK card in Europe has never been that great. :mad:
Do you use a UK or Aus issued card? Have you compared this to the bank exchange rates and do you get charged extra for an overseas transaction? :confused:

Regards

MAAC

[BlueEagle]

I am using a Barclays Premier card. Yes, there are charges, but not ecessive, the exchange rate on the Barclay Premier is very competitive.-

[maxburner]

To Kilo and Toom,

Thanks for the info.

[tengah chum]

madasacow

Are you planning to enter Oz on a retirement visa?

If so have you had any details on private health insurance.
I would be interested in any info as I'm also considering getting out of Mr Blairs vision of eutopia

[G.Khan]

Tengah Chum:

I am down here on a retiree visa. I was required to show satisfactory medical insurance BEFORE they would issue the visa.

At that time, (last year), MedibankPrivate were the only large health Insurance company in Australia who would issue cover acceptable to Australian Immigration dept. BEFORE I physically arrived in Australia, (nearly a Catch22!).

There may be others now.

MedibankPrivate, GPO Box9999,Melbourne, Victoria 3001.

also at: http://www.medibankprivate.com.au

Cheers and good luck,

GK

[MightyHunter]

The thing to be careful about is the Australian marginal (top) rate of tax is 48.5%. If you pay tax on your UK pension in the UK, the Australian Tax Office will charge you the diff between the UK and Oz rates. If you elect to pay no tax in UK, ATO will charge you the full rate.

UK Armed Forces Penson System will pay (I believe) annual increases from age 55.

Australian Tax system somewhat different to UK - everybody here needs an accountant! Strongly recommend professional advice.

[madasacow]

tengah chum

Sorry to take so long replying. I am aiming for a 'Skilled-Australian Sponsored' visa as we have the right kind of family there (and I ‘aint that old!!).;)

I have also just started making enquiries with financial advisors to try and make sure I don’t get stitched up by the tax system of either country! :mad: Things are just a little more complicated that you first think! :o

Regards
MAAC

[ijp471]

Madasacow
I am no expert and a little out of date, but I have jumped through most of the hoops, so thought I would share some of my ideas with you. Seems pretty consistent with what's been discussed here although there are obviously some creative ideas out there.
:D
Your service pension will remain linked to the UK inflation index and added to any Australian income and any other 'worldwide income' you may have and taxed accordingly - at Australian rates. This is not necessarily a good thing as Oz rates are quite high, rather they cut in at relatively low income levels, but there is not much you can do about this I believe.
As far as I am aware, Paymaster needs to pay into a UK (or CI) bank account although this would appear to contradict some posts here. Possibly the best thing to do is to open a UK bank account BEFORE you leave UK - it is very much harder to do so from overseas, with the tightening of banking regulations (post 911?) but ensure you have VISA or some other Debit Card access, then as someone else pointed out it is a simple matter to transfer money at your convenience.
As far as the OAP goes, it will not be index linked after you start taking it at 65. This has been the suject of many court challenges and emotive rhetoric but IMHO will never change - the UK cannot afford to foot the bill. There was a recent High Court challenge from someone in SA, I believe, which got nowhere. Of course you can delay taking it, this might be beneficial if you didn't really need it and were in the middle of ultra high inflation, for example. Otherwise I think it is just a fact of life.
Having said that, I would highly recommend the move if you pick the right part of the country (no comment on this;) Although the tax imposition is high, the cost of living is, conservatively, 30% less and your pension(s) will go a long way.
As way of a disclaimer, I do not claim to be a qualified financial adviser - these points are as a result of personal experience.
Bon Voyage!

[Stan Bydike]

I have seen conflicting information here about the taxation of a service pension.

The tax books I have seen indicate that HMG will tax a UK service pension at UK rates if you move overseas, irrespective of any double taxation treaties.

Can any provide any evidence otherwise.

The country I am thinking of moving to has no Income Tax!!

Edited to add the following:

BTW has anyone heard anything about the proposed US retirement Visa

[tengah chum]

G Khan

Thanks for the info ,it was very useful.

madasacow

Sorry if I assumed you were retiring , I have an awful habit of assuming everyone is as old and decrepit as myself.

[madasacow]

Thanks to all for the replies.

I have been doing a little investigation for myself on the newsgroups and in particular the misc.immigration.australia+nz newsgroup which is very helpful on both general migration issues and many specifics. Check it out if you are thinking about jumping ship down under.

There are several sites offering financial advice and assistance for those moving to Auz. Having read a little about the differences between the Tax systems I am convinced that I will need to bite the bullet and pay for some advice. :mad: Hate to do it but I am convinced a few hundred pounds of advice now may save much more in the future. Problem now is how to choose between the advisors! :confused:

ijp471
Thanks for the personal experiences. Always worth hearing how someone else made out even if you may not be officially licensed to give financial info :) Having been over there a couple of years ago (and off there again at Christmas) I can agree with your Cost Of Living assessment. Unfortunately, the tax system counts your worldwide income when assessing your tax liability but any UK tax paid will be taken into account.

Stan Bydike
I haven’t seen any details to confirm or deny the UK taxation of service pensions. However, if you are resident for tax purposes in another country I can’t see why they would tax it in UK but kilo52 may have a point. Seek professional advice.

tengah chum
I may be (feel) decrepit but I’m not that old :)

Regards
MAAC
:cool:

[TheNightOwl]

Madasacow: I'm ex-RAF (SNCO), and have lived in Oz since 1983. My Service pension is paid to me here, by cheque drawn on HM Paymaster-General, every month. I see to the exchange and banking, and DO NOT pay UK Income Tax. I was given the option of a direct transfer to my bank account, but chose to keep it this way some years back.

Pension IS index-linked, and is added to Oz income for total annual earnings for tax liability calculations. Oz tax rates are bloody awful, top rate 48.5%, INCLUDING 1.5% Medicare levy. As has been said, the cost of living here is much lower than UK, hence the exchange is, usually, to our distinct advantage here. My pension goes a long way!

The UK Age Pension is NOT index-linked for ex-pats in Oz, it has been a bone of contention between the respective governments for a long time past, and I doubt it will ever be resolved to our benefit.

Hope this is of help, and I wish you well if you do decide to jump. Just remember the state of Oz aviation, if that is your intent, BE CAREFUL!!

Kind regards,

TheNightOwl.