This weeks question from the community takes us global…
Hi Tash, I’ve been divorced for three years now after settling with the courts in Scotland where our property was. I’ve been a stay at home mum most of my life as I travelled with my husband and children in postings around the world. We were transferred to Australia and that’s sadly where the marriage broke down. I purchased a property putting down a 70% deposit and now have a small mortgage. I also have a super fund here of around $50,000, but in the U.K. I have a fund of £165,000. I work full time, have a salary of $72,500 and my savings are only around $15,000 but am putting some aside each month. At 52, am I on target to reach enough to retire? And should I move my funds from the U.K. to Australia or should I just take out some when I’m 55 to clear my mortgage?
Superannuation can be complicated on its own, let alone when you add the super system of another country and international currency transfer on top! This is one complex case, and unfortunately it’s not something that has an easy answer.
Seeing a financial adviser should be your first port of call. Specifically, someone with experience or contacts in the UK who understands how the system works. Ask around, or contact the Financial Planning Association (FPA) and they can point you in the right direction.
What I can do though, is give you a few things to consider before you make any decisions.
1. Understand the UK fund that your money is in – and any associated rules and regulations
It sounds like your pounds are in the UK equivalent of a super fund. If that’s the case, there would likely be rules around what age you can access your money, how you can access it and how much tax you would have to pay. So you may want to confirm that it is in fact possible for you to withdraw your money at age 55 and understand any implications of doing so. In Australia for example, it’s possible to access some of the money in your super fund before retirement age, but you need to meet very specific conditions of release, like severe illness for instance.
If, however your pounds are in a regular investment account or managed fund, super rules will not apply so it should be much easier to move your money.
2. Consider the impact of the exchange rate
As we all know, exchange rates go up and down. According to xe.com, in the last five years the pound has purchased as low as $1.49AUD and as high as $2.04AUD – so there is a bit of fluctuation. When you’re considering moving a large sum of money between countries it’s important to understand the impact the exchange rate will have on your final figure. If your UK fund is performing well you might choose to hold off on making the transfer, or you could choose to move it in batches.
3. Find out what the implications are of moving your money here
It’s not always possible to transfer money from a UK super account directly to an Australian super account. You may need to set up a self-managed super fund (SMSF) in order to be able to move your money, which would require more initial set up and more ongoing management than a regular super fund. Special restrictions could also be applied given where the money has come from, like being unable to use the funds to buy an investment property.
It’s really important when there are complexities like these that you seek out professional financial advice. It will not only save you a lot of paperwork, but can also save you money (and trouble) down the track.
And as far as how much you need to retire, take a look at an article I wrote last year – that should give you a good idea!
Submit a Question!
Have a finance question you’d like answered? Why not drop me a line! Each week I would love to answer a question from the community. Click below to get in touch.
The information provided by Women with Cents is general in nature. It doesn’t take into account your objectives, personal financial situation or needs. Think of it as educational material in which to help you make more-informed decisions. We recommend you obtain financial, tax and credit advice specific to your situation before making any investments or financial decisions.
Sova Financial Pty Ltd Trading as Women with Cents. ABN 71 163 435 836 | Sova Financial is an authorised Credit Representative Number 443432 of Finsure Finance & Insurance Pty Ltd, ACL 384704, ABN 72 068 153 926| Sova Financial is a corporate authorised representative no 468977 of Shartru Wealth Management, AFSL 422409, ABN 46 158 536 871