In the below section we have described some examples of our typical work to give you some potential examples. We have not used our client’s names to protect their privacy.
These case studies are intended to be general in nature and should not be relied upon as the basis for advice or expectations on outcome – your circumstances are different to anybody else’s. No advice should be inferred or taken from these examples.
Defined Benefit Advice
Mr Blue made an enquiry to us regarding what the best course of action would be for his three defined benefit pension funds. We wrote to the trustees on his behalf and gained both his CETV and statement of entitlement each of the schemes.
We then conducted a thorough fact find with Mr Blue gaining a picture of his Australian life and importantly his appetite for investment risk. From this detail we were able to create investment portfolio that would fit Mr Blue comfort zones and objectives.
We then engaged with one of our panel of UK based defined benefit pension specialists to write Mr Blue a suitability report which not only analysed the three defined benefit pensions but also, critically, provided a recommendation statement whether it is in Mr Blue’s interest to transfer out of these schemes or not. The basis of the reports recommended that one scheme remained in place and Mr Blue transferred out of the other two.
Today, Mr Blue has one defined benefit scheme and a UK-based SIPP utilising market leading platforms, investment solutions and receiving regular reviews from us.
Once Mr Blue is aged 55 he will be entitled to transfer his UK set to Australia. This will provide him with significant taxation benefits.
Beware Free Reports
Mrs White approached us approximately two years ago. She had received her CETV and had engaged with a planning company providing a ‘free’ advice report. Mrs White asked us to read the report and make comments.
Having read the report it was clear that the analysis between her defined benefit pension and the new Australian super fund was heavily weighted in favour of the transfer. The report itself was based on Mrs White investing in Cash rather than an actual investment portfolio. Unless Mrs White was prepared to sit in a Cash fund for the next 15 years this analysis and report was very inappropriate.
On our advice Mrs White requested another ‘free’ report but this time with a more realistic new contract charging structure. The growth rate required for this report was outside of Mrs White’s comfort levels and she decided to leave her defined benefit pension in place for the moment.
Two years later Mrs White contacted us again to see whether it was time to investigate a transfer again. We wrote to her scheme trustees on her behalf and discovered that the cash equivalent transfer value had increased from £190,000 to £358,000 over the two-year period. We then engaged with our UK defined benefit advice team, supplying them with the new contract charging structures to create a realistic comparison and the end result is now that Mrs White has invested in a UK-based SIPP and will be transferring her funds to Australia once she is eligible.
By not taking the advice of a free service Mrs White has seen an increase in her pension benefits of £168,000 over two years.
UK experience counts
Mr Red was referred to us two months before his 65th birthday. He had several UK pensions and wanted to transfer them all to Australia whilst he was eligible to. On analysis of the funds we were able to identify one which contained an element of guaranteed bonuses.
If Mr Red had transferred this fund before his 65th birthday he would not have received these bonuses.
Our advice was to transfer once the bonuses were paid, as Mr Red remained eligible to do so. Bonuses amounts to £5,000 or AU$8,000 which more than made up for our fee for our advice.
By engaging with an adviser with both the UK and Australia knowledge you can benefit too.
High Transfer Values
Mr Yellow was introduced to us through an accountancy firm. He had a defined benefit pension scheme in the UK valued at £1.1 million.
As Mr Yellow was 55 years old he is entitled to transfer some of his UK benefits into Australia now. We therefore advised Mr Yellow to set up a Self Managed Super Fund for which we applied for and gained QROPS approval from HMRC.
The contribution level into Australia is currently capped at $300,000 in any three-year period and therefore our advice was to set up a UK SIPP and move the funds across in tranches not breaching any Australian contribution caps.
This involves a highly complex series of advice structures in order to get the most tax advantaged outcome for Mr Yellow. Whilst being invested in the UK SIPP Mr Yellow receives full reviews from us every six months.
Existing QROPS Reviews
Mr and Mrs Green approached us through a referral (where we get the majority of our client enquiries). They had each transferred their UK pensions to Australia about four years previously and it was invested in Australian retail QROPS fund.
Mr and Mrs Green had not received any ongoing advice from their previous planner and contacted us for a review.
On analysis of the existing QROPS fund it was clear that the charging structure was excessive. After taking into account UK HMRC specific rules and applying against the Statutory Residency Test for these particular clients, our recommendation to the Greens was to transfer out of a QROPs fund into a standard Australian superannuation fund.
We reduced the charges for this fund by over 2% per annum, which saved Mr Green over $3,000 a year in fees, and Mrs Green around about $2,000 per annum in fees alone. Having reduced their fees by around $5,000 p.a. , every year, we implemented a personalised investment portfolio. The Greens are now invested in a tailor-made goal based portfolio and receive full financial reviews from us twice a year.
Mr Grey had already transferred his UK pension to an Australian QROPS. He had not received any communication from the transferring adviser and was referred to us to provide a full review.
The existing fund was excessively charged and again we were able to restructure Mr Grey’s QROPS fund to a more appropriate portfolio and reducing his costs from 3.86% per annum to 1.68% per annum.
This was achieved at the same time as creating a relevant investment portfolio for Mr Grey that was well within his comfort zones.
During the review process we questioned why Mr Grey had all of his insurances within the super fund and the response was he was unaware of any other option.
Our advice was to restructure his income protection plan and gain valuable tax benefits in doing so. By following our advice Mr Grey had saved over $3,000 a year in superannuation fees alone and reduced his overall tax burden by a further $3,000 a year.
Ms Pink approached us after being referred by a local solicitor firm.
After our initial meeting we discovered that Ms Pink had a UK personal pension valued at approximately £195,000 and as she was aged 56 was entitled to transfer to Australia.
She was interested in transferring her UK pension fund to Australia but was very concerned about the current foreign exchange rates. She had seen periods where it was possible to get $3.00 to £1.00 and more recently to $2.20 to £1.00.
The exchange rate at the time we met was $1.60 to £1.00 Ms Pink found this an unattractive rate.
Through our advice and the use of market leading platforms and our specifically designed multicurrency investment portfolios we were able to transfer Ms Pink’s UK pension to Australia whilst maintaining her holding in the sterling currency.
We have a range of investment options to cover all risk profiles. When the exchange rate moves to a level that Ms Pink is comfortable with we will facilitate a transfer to Australian dollars over a period of time.
By transferring her UK pension now, whilst remaining invested in GBP, Ms Pink has secured some extremely beneficial taxation advantages.