Davies’ VIEW Although qualifying recognised overseas pension schemes were arguably born Down Under, we may now be seeing a swing away from funds being transferred to Australia.
One of the final actions watched over by Australia’s last government was to abolish the foreign investment fund legislation. The FIF regime demanded tax on permanent resident’s pension funds, including Qrops. It was a significant consequence when the country took a tax swipe at an overseas pension scheme held by one of their residents, maybe a former UK resident, as their pension grows thousands of miles away in the UK. This was a problem for those living in Australia under 75 who had yet to draw their UK private pensions.
But this has been replaced with an “anti roll-up” regime, which may target a narrow range of foreign accumulation funds instead. It means we are revisiting where necessary our advice to our Australian influenced clients and we would expect that all financial advisers are doing the very same.
The Australian issue just goes to demonstrate how complex pension advice has truly become following the advent of Qrops
We cannot be sure what will come in the new legislation but the word is out that perhaps personal financial products related to accumulation in former countries of residence could escape the new rules. I have spoken to leading Australian technical experts and they remain concerned that the new legislation may not be in place for many months to come but yet be backdated. If this was ever a warning that advisers must have access to the very best in international technical research, this is it.
We are now faced with the “son of FIF” that will be passed by the new government in the near future and even though the old regime has gone, the abolition came with words of warning that new rules would apply. This means advice is needed today with all the necessary caveats, not knowing what will happen tomorrow.
So, is Australia the right country any longer to move a pension to an Australian Qrops? Clearly, all advisers must factor in local rules if most of their clients will live, work, retire and die in the UK. But others will change countries and the interfacing rules and reactions and consequences are ever changing. This is a different type of advice.
The Australian issue just goes to demonstrate how complex pension advice has truly become following the advent of Qrops. One could, for example, have a Frenchman with a UK pension fund living in Australia contemplating a Maltese Qrops. The permutations are endless.
Geraint Davies is managing director of Montfort International