Foreign Pension Transfers

Pensions are somewhat of a droll topic when you are young, but become surprisingly more interesting as you age. As an expatriate you will encounter two broad sorts of pension - the state pension, often financed through Social Security contributions, and private or occupational pensions funded by employer and individual contributions.

State pensions are relatively inflexible and normally require you to be resident and contributing security contributions for a certain minimum time before you have an entitlement to claim, usually post age 65. They are not transferable as a lump sum and whilst the sums are usually relatively small, they should not be forgotten. In fact, with certain pensions like the UK state pension, you have the ability to make additional contributions and increase your entitlement. A relatively cheap way to buy an annuity and well worth investigating your entitlement prior to retirement age.

More interesting from a financial viewpoint are the employer and private pensions. Most countries provide tax incentives for residents to invest in retirement savings; examples include 401(k)'s and IRA's in the US, RRSP's in Canada, which are basically tax deferral arrangements, and private pensions in the UK. Note that all of these pensions are currently capable of being withdrawn as cash or transferred into Australian superannuation. This can make participation in your local pension plan very attractive, but you should seek professional advice to confirm your position, and particularly when and on what basis you can access the pension funds accumulated.

So, to summarise:

Which Pensions can be transferred to Australia

 
UK State Pension No
UK Private Pension Yes, with zero UK tax, subject to the funds being transferred into a complying Australian superannuation fund.
US Social Security Pension No
US 401k's, 403b's, IRA etc., Yes, it may be possible to transfer out of the US into Australia with no American marginal or early withdraw penalty tax applying if the pension holder is not an American citizen or green card holder (ie. permanent resident) and depending on the age of the recipient.
Canadian Social Security Pension No
Canadian RRSP's (including Locked products) Yes, at a preferred Canadian rate of tax of 15%
South African Retirement Annuities and other pension products Yes, South African tax will apply, which is dependent on whether the holder is younger or older than 50. Tax clearance from SARS is a necessary prerequisite.
Irish State Pension No
Irish Private Pensions In principle Yes, in practice difficult and becoming nearly impossible given the constraints on recipient funds. Transfers may still be possible but it is worthwhile only for larger pension balances.

See Exfin for further details and to initiate a pension transfer.