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Treasury working on UK pension block
The Association of Superannuation Funds of Australia (ASFA) has asked Treasury to intervene and find a solution to Australian superannuation funds being restricted from accepting UK pension transfers without a 55 per cent tax charge.
ASFA chief executive, Pauline Vamos, said the group was aware of the recent changes undertaken by the UK government which taxes pensions transfers at 55 per cent if they move into a fund that allows early release at age 55 for ill health or financial hardship.
Recent changes to UK tax laws, which came into effect from 6 April, only allow pension transfers into funds that have an early release because of ill-health and has removed all but one of 1600 Australian funds from a UK list of complying funds.
Vamos said ASFA had asked Treasury to look into the issue as it was not a regulatory matter for Australian superannuation funds but a tax matter between two national governments.
According to Vamos, Treasury had made initial moves to deal with the issue but was unsure how long it would take to reach a resolution.
Vamos said transfers before 6 April should be fine but expected there were thousands more which had been stalled since the changes to UK tax laws.
"We are not sure about the exact numbers but it has caused confusion for the funds, service providers and British ex-pats fund members seeking a transfer," Vamos said.
"Super funds are still seeking clarification and we are thankful that Treasury is engaging the UK authorities on this to provide the right information and guidance for the funds and those members affected."
Vamos noted the UK position was not politically driven but reflected an effort to retain pension funds within the UK tax system, in a similar way to restrictions within the Australian superannuation system, and to reduce leakage within its tax system.
AUTHOR
Jason Spits
Jason has been writing on financial services since 1999 and has worked for on a number of trade media titles in both a full time and freelance capacity. He joined Money Management and Super Review in 2013 in the role of Senior Journalist.
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