Pension Changes Trigger Australia QROPS Rush

By Retirement
Australia QROPS

Australia QROPS are proving as popular as ever for British expats starting a new life Down Under.

With an offshore pension for expats opening every two days on average this year, the sunshine destination for retirees is home to almost as many QROPS as the other 29 countries offering the pensions added together.

Australia hosts 462 of the 1,035 schemes listed on the UK HM Revenue & Customs QROPS List, which amounts to 45% of the total number of pensions.

So why are Australian QROPS so popular with expats?

Why Australia QROPS are so popular

Several reasons contribute to the demand.

Strength in numbers – Australia is one of the top destinations for British expats and home to a large number of foreign workers who have come to the UK and have pension savings lodged with a UK provider

Transfer charge tax saving – Many Australians who might have opted for a ‘third party’ QROPS from an overseas provider now have to buy at home due to the 25% transfer charge. The charge is a tax on exporting pensions from the UK for expats who want a QROPS based in a country other than where they live if they are outside Europe. Transferring to an Australian QROPS for local residents avoids the charge.

Aussie super changes – The Australian tax year ended on June 30 and changes to superannuation pension contribution levels triggered a rush of QROPS transfers to beat the deadline. These changes included lowering the annual contribution cap and a limit on lifetime transfers

Compliance issues overcome

The funding caps will not stop British expats and Australians who have worked in Britain and now returned home from making QROPS transfers. The limits just reduce the amounts they can transfer.

Australia QROPS have led the rankings for offering the most QROPS since the pensions were introduced in April 2006.

The number fell from more than 1,600 in May 2015 to just one a month later when HMRC enforced new qualifying rules when pension freedoms started in the UK.

These freedoms only allow pensions to pay benefits to retirement savers who are aged 55 or over, and Australian super schemes had provisions for paying younger savers.

However, this compliance hiccup was overcome and since June 2015, the number of Australian QROPS has continued to grow, peaking at 442 in April 2017.

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