ASK NIGEL

Question: Dear Nigel, I am a UK national who has recently moved to Dubai with my job but have now been asked to relocate again to Australia where I am likely to retire as I am aged 61. I am concerned about my various UK pensions, would be grateful if you can help me?

Answer: If it is your intention to retire in Australia, it is possible to transfer your UK pensions to a more suitable Australian plan that is approved by the UK HMRC as a Qualifying Recognised Overseas Pension Scheme (QROPS). If the transfer value is below AUD450,000 and you have not been resident in Australia for more than 6 months, there should be no Australian tax on the transfer. However, please note that certain time-frames may apply, depending on when you left the UK.

If you choose to withdraw the benefits of your new Australia pension, it should be paid without tax in Australia, because you are over the age of 60. A further benefit to moving your pension into a QROPS is that you can choose AUD as the currency of your benefits, thus eliminating currency risk.

Question: Dear Nigel, I am returning to the UK next year with my wife and hold an offshore Portfolio Bond that I have owned for a number of years. I am told I have to be careful of some deemed tax rules, can you help explain please?

Answer: You are correct, if you hold personalised assets like shares or notes in a Portfolio Bond, upon becoming UK resident you are likely to become subject to deemed gains of 15% p.a. In 1999, HMRC introduced the Personal Portfolio Bonds (Tax) Regulations which state that a policyholder who holds personalised assets in a bond and who has become UK resident, will be subject to income tax on a deemed growth of 15% p.a of the premium, regardless if the bond grew or not. This is a cumulative tax and therefore it is very important to inform the insurance company that you have returned to the UK and wish to endorse the policy to allow collectives (cash and funds) only. A policyholder has until the first policy anniversary to do this if the bond was taken out after 17 March 1998. The policy can then still be held and the holder can still benefit from the various tax benefits available and may also receive a very valuable tax credit for holding the personalised asset whilst abroad.

Question: I have thought about moving my UK pension to a QROPS but despite all the really great tax advantages I only have a small pension fund of GBP40,000 and am concerned that this is too small to transfer for most providers?

Answer: Most QROPS providers have minimum transfer values of anything from GBP50,000 to GBP100,000. I think there are many clients of deVere Group who have no intention of returning to the UK and who wish to move their UK pensions to a QROPS to benefit from the income tax and inheritance tax benefits that may exist. Obviously, you must first look at the tax situation in your new country of residence and your deVere consultant can help you with that.

However, I am pleased to announce that following such demand, we are now able to offer a QROPS based in Guernsey from Sovereign Group that is written with an offshore investment bond provided by Providence Life that caters for small transfer values. It offers a very simple investment structure and low charges. Please contact your deVere Consultant and ask for the Providence Capital Simplicity Personal Pension Plan.

Question: I am Mr Ballack, a German national who has contributed to a Reister scheme in Germany and am living in Thailand and wish to retire here. My friends from England tell me they can transfer their UK pensions overseas, what about myself?

Answer: Mr Ballack, I am very pleased that The deVere Group can probably help you.  It should be possible to transfer your Reister (a type of personal pension) to another EU Jurisdiction under the EU Freedom of Movement and IORP Directives.  In recent months, deVere Group has recognised the great potential for all our European clients and have thus worked with pension providers in Malta to offer EURBS, European Union Retirement Benefits Schemes.

EURBS allows pension transfers to a Malta domiciled pension scheme, as Malta is a full member of the EU and has highly regulated pension provisions. Pensions from Malta are paid without tax to non-residents. Therefore, Mr Ballack, if you transfer your pension to Malta, this should be withdrawn in Thailand free of German income tax. The Malta pension is also potentially free of German inheritance tax, should you die in Thailand and your beneficiaries are non German resident.

Please contact your deVere Consultant for expert advice.