There are thought to be over 1m British citizens now living in Australia. There is a similarly large number of Australian citizens who have worked in the UK at some point and are now back living in Australia.

Whilst these two groups may be wearing different jerseys when the rugby or cricket is playing on the TV, they will both be asking one question; what to do with their UK pension benefits.

Anyone who has worked in the UK will normally have built up some form of UK pension benefits. It is now compulsory by law for all employers in the UK to enrol their employees into a workplace pension scheme.

This means when people leave the UK, they will need to decide what to do with the pension fund they have built up.

➤ Find out why MyExpatSIPP is the ideal solution for Australian residents with a UK pension 

Transfer a UK pension

The money held in a UK pension scheme can be transferred to another pension scheme in the UK, or certain overseas pension schemes. Transferring your pension between UK pension schemes is usually a relatively easy process and enables people to transfer and combine multiple pensions into one easy to manage pension such a SIPP.

You can transfer your pension to an overseas pension scheme if the receiving scheme meets a number of criteria specified by HMRC in the UK.

QROPS in Australia

You can transfer your UK pension to a QROPS in Australia as long as the receiving Superannuation fund has QROPS status. 

A qualifying recognised overseas pension scheme or QROPS for short, is an overseas pension scheme that the UK recognises as eligible to receive transfers from registered pension schemes in the UK.

To qualify as a QROPS in Australia, the scheme must meet the requirements set by UK tax law. To check if a pension is a QROPS you can check the list of schemes that have told HM Revenue and Customs (HMRC) that they meet the conditions to be a recognised overseas pension scheme (ROPS).

"You can only transfer your UK pension to Australian QROPS if you’re aged 55 or over."

You can only transfer your UK pension to a QROPS in Australia if you are aged between 55 and 75 as the Australian Superannuation rules regarding accessing your pension before age 55 don’t match the rules in the UK.

If you’re aged between 65 and 74, then you can only transfer to a QROPS in Australia if you meet the ATO "work test”. To pass the work test you must have worked at least 40 hours within 30 consecutive days in a financial year.

According to the ATO rules; “Superannuation funds cannot accept personal contributions that are made more than 28 days after the end of the month in which the member turned 75.”

A transfer of a UK pension to Superannuation is treated as a personal contribution.

If the transfer is made within 6 months of moving to Australia, then the whole transfer is treated as a non concessional contribution and therefore subject to the NCC limits and rules.

If the transfer is made after 6 months of moving to Australia, then the rules are slightly different. The value of your UK pension on the date you arrived in Australia is treated as a non concessional contribution. The growth in the value of your fund between the date you arrived in Australia and the date your transfer is treated as fund earnings and therefore subject to tax in Australia. This part of the transfer is neither treated as a concessional contribution or NCC.

There is only one retail superannuation with QROPS status, the Australian Expatriate Superannuation Fund, the rest are all self managed superannuation funds (SMSF).

Once you transfer your pension to a QROPS in Australia then it becomes subject to normal Superannuation rules, as well as being subject to UK rules for 10 years after the transfer.