Treasury to resolve pension transfer block
The Treasury department will seek a resolution with its UK counterpart regarding pension transfers after lobbying by Australian superannuation funds.
Association of Superannuation Funds of Australia chief executive Pauline Vamos said it 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.
Vamos said that ASFA was aware that Treasury had made initial moves to deal with the issue of UK pension transfers into Australian funds attracting a 55 per cent UK tax burden but was unsure how long it would take to reach a resolution.
The 55 per cent tax was imposed on all UK fund transfers that took place from 6 April where funds went into superannuation or pension schemes considered by the UK tax authority — HMRC — to not comply with UK pension and tax laws.
Of the 1600 Australian funds previously listed as eligible to receive funds only one currently remains on the HMRC list after UK laws were changed to tax transfers into funds that allowed early release in the event of financial hardship or illness.
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 said 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.
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