The QROPS (Qualifying Recognised Overseas Pension Scheme) rules must be followed by the Australian Superannuation Fund in order to transfer UK pensions to it.

Compliance Criteria

An Australian Superannuation Fund must fulfill certain criteria in order for the UK government to recognise it as QROPS compliant. There is no additional tax for pension payment moved from the UK to Australia once your Australian Super Fund is classified as QROPS compliant. However, the transferred sum is regarded as a non-concessional contribution and is capped at that amount.

Since Australian regulations allow early access to pension savings before the age of 55, the majority of Australian Super Funds were taken off the QROPS list due to changes in UK pension legislation that took effect on April 6, 2015. Therefore, until a member reaches the age of 55, UK pensions cannot be transferred to an SMSF (Self-Managed Super Fund) that complies with QROPS.

SMSF’s governing regulations must prohibit members from taking withdrawals prior to retirement and reaching the preservation age in order for the fund to continue to be QROPS compliant. See below for further details about the preservation age:

Preservation Age

You can access your SMSF benefits when you:

• Reach preservation age and retire permanently.
• Reach age 65, regardless of employment status.
• Meet the Transition to Retirement (TTR) conditions while still working.

The preservation age is based on your birth year and determines when benefits can be accessed, with no restrictions after age 65. Once reaching this age and retired, members can start an Account-Based Pension or take a Lump Sum Pension tax-free.

The members are not permitted to early access the benefits from QROPS on compassionate or financial hardship grounds. The SMSF trust deed specifies the conditions in which a member can receive their QROPS benefits.

Deed Amendment

We can create a SMSF that is QROPS-compliant when Trustees inform us about their intent to transfer benefits to Australia from the UK. 

On your request, a QROPS Deed with Governing Rules and specific customisation clauses will be provided to meet the requirements of a QROPS Transferable Fund. Specific customisation clauses will be included to limit lump-sum withdrawals

Keep in mind that you cannot move your UK pension into an SMSF until every member has turned 55. Please get in touch with us if you want to move forward with creating a fund that complies with QROPS. 

QROPS Member Balances

If a fund has received benefits through QROPS, these benefits will be subject to stricter conditions for release. To reflect the QROPS benefits received from the UK, we specifically highlight the QROPS balance in the Member Statement. This approach is akin to how we display balances under the First Home Super Savers Scheme.

Once a member reaches preservation age and is retired, they can initiate a pension for the QROPS balance, following a process similar to starting a regular account-based pension. 

For more information about the Australian tax treatment of overseas pension or superannuation funds, please also read here.

How a foreign pension fund or superannuation fund is taxed in Australia is a complicated area. If you’re thinking about taking money out of your overseas pension fund, moving your pension to Australia, or if you have any questions or need help with SMSF or International Tax, please get in touch with Bates Cosgrave consultants