UK government pensions will face major legislation changes from April 2015.
When the UK financial year begins on April 6, 2015, those receiving unfunded public sector pensions can no longer transfer them as a lump sum to a private account or fund.
It will affect government workers such as police, doctors, dentists, nurses, armed forces and firefighters with a pension fund.
Pension Transfers Direct managing director David Ford said transferring a pension was hugely beneficial.
‘They can still receive their payments if they choose not to transfer before next April, though three reasons make it viable to transfer now,’ he said.
‘These reasons are what people expect for retirement: to save, control and preserve what they are entitled to.
‘Savings would be made because benefits derived from lump sums transferred into Australian Super funds are not taxed.
‘Control gives the recipient the power to do what they want with their money, not be told when and how it is paid.
‘Preservation ” they would receive the whole amount regardless of if they died, where only 50 per cent goes to their partner, or if both a recipient and their partner die the pension is absolved back to the government.’
That means any other family members, including children or grandchildren, are not entitled to anything if they are over the age of 18.
But he offered a stark warning to those thinking they have time on their side.
‘It is not a quick process,’ he said.
‘Some transfers can take six months and as demand is growing a backlog of transfers has started.’
He said he was keen to advise those on the best outcome for their situation.
‘I strongly recommend people seek financial advice, even if they don’t want to transfer,’ he said.
Westpac regional general manager Lee Davidson said being an expat himself he understood the situation.
‘As a migrant myself, transferring my pension I did it because if I passed away not all the money would go to my partner ” just 50 per cent.
‘You kind of don’t do it for yourself ” you do it for your family.’
He said Australia had the best model of superannuation in the world.
‘Your beneficiaries pick up the lump sum tax free if anything happens to you pre or post-retirement,’ he said. ‘The advantages are real, you can take it all now.
‘If you were daft you could take it down to the Crown and put it all on black.
‘My advice is to invest it and prevent further losses through the weakening sterling while there still is a chance.’