Bringing overseas retirement savings into super in Australia

Australia has one of the best retirement savings schemes in the world. Our system, known locally as ‘superannuation’, ranks sixth globally, according to the 2021 Mercer Global Pension Index. So, if you’re relocating to Australia it makes sense that you may want to transfer your nest egg ‘down under’. Here’s what you need to know.

There’s a lot to love about migrating to Australia, and while transferring your savings from an overseas retirement or pension scheme to an Australian superannuation account can seem daunting, it may not be as complicated as it appears. The key is to know what’s involved.

Why bring overseas retirement savings to Australia?

Australia has a very strong superannuation system. The value of our pension funds ranked fifth largest in the world in 2021, coming in at a total of about $AUD3.15 trillion or about $US2.3 trillion according to Willis Towers Watson research. So, you can rest assured your retirement savings are going into a well-managed and highly regulated system.

Other countries can have retirement schemes of their own, and if you’ve lived and worked overseas, you could have accumulated savings in one of these plans. If you’re moving to Australia, you may be thinking about transferring these savings into an Australian superannuation account.

To start the ball rolling, you’ll need to select a local super fund and open an account. It’s a simple process, and once your account is set up you can begin the process of transferring an overseas pension fund, while also having a place to grow retirement savings here in Australia.

Some of the key factors to consider when selecting a super fund are fund fees and long-term investment returns. You’ll find a lot of useful information in the Target Market Determination (TMD) and Product Disclosure Statement (PDS) to consider from a super fund too. However, it’s also worth noting that not all Australian super funds will accept transfers from an overseas pension scheme, so this is something to check with any fund you’re thinking of joining.

Transferring retirement savings from New Zealand

If you’re migrating to Australia from New Zealand, you’re in luck when it comes to moving your retirement savings. The Trans-Tasman Retirement Savings Portability scheme means you can normally transfer funds between a KiwiSaver scheme and a participating super fund regulated by the Australian Prudential Regulation Authority (APRA).

You should check if your Australian super fund participates in the Trans-Tasman scheme, and you’ll need an Australian tax file number set up to transfer the balance of your KiwiSaver fund to an Aussie super fund.

The Australian Tax Office (ATO) advises that New Zealand-sourced retirement savings transferred to Australia are treated as non-concessional (or personal) contributions. How much you can transfer from a KiwiSaver to an Australian super fund depends on your non-concessional contributions cap. For 2021/22 financial year, the non-concessional contributions cap is $110,000 annually.

You will be required to transfer the entire balance of your KiwiSaver over to an Australian super fund. If your balance is more than the transfer limit, you won’t be able to transfer your savings.

Transferring retirement savings from the UK

Transferring retirement savings from other countries can be a bit more complicated, and the rules and process can depend on where you’re transferring the savings from.

Specific rules apply if you are transferring pension savings from the UK. In particular, you can only transfer a UK pension into an Australian scheme if it is registered as a Recognised Overseas Pension Scheme (ROPS). This makes it important to contact your UK pension provider to know if your scheme ticks this box, and to understand the implications of making a transfer to an Australian super fund.

Eligibility requirements also apply under both Australian and UK law. As a guide, if you’re aged 65 years or older, an Australian super fund can only accept the transfer if you meet a work test – this means you’ve worked at least 40 hours within 30 consecutive days in a financial year. If you’re under age 65, your Australian super fund can accept the contribution regardless of whether you’re working or not.

Transferring retirement savings to Australia from another country

If you’re thinking of transferring retirement savings from a country other than the UK or New Zealand, it’s wise to speak to your Aussie super fund to see if this is possible. In general, your overseas scheme will need to meet similar restrictions to those that apply to Australia super funds – notably that the accumulated funds must be available solely for your retirement.

Some overseas savings plans, such as 401(k) plans found in the US, may not match the definition of a super fund, and you may be unable to make a direct transfer to an Aussie fund.

How much retirement savings can you bring to Australia?

Barring schemes like the one between Australia and New Zealand, the ATO says that money transferred from overseas retirement savings to a local super fund is considered to be a contribution. This makes the transfer subject to the regulations that apply to non-concessional (personal) contributions.

As the ATO points out, fund-capped contribution limits generally apply. If you’re aged 65 or older, the maximum you can transfer from your overseas scheme matches the non-concessional contributions cap for the current financial year. If you’re younger than 65, the limit is three times the non-concessional contributions cap.

As we’ve seen, the non-concessional limit is $110,000 for 2021/22, meaning if you’re 65 or older, you can potentially bring in up to $110,000 from your foreign savings. If you’re under 65, you can potentially bring in up to $330,000.

What to consider when bringing overseas retirement savings into Australia

Choosing to bring retirement savings from overseas into Australia is a major financial decision. QSuper advises generally weighing up a number of issues. Here are some examples of the types of questions you might want answers to:

• Could you lose part of your retirement savings to tax by making the move?
• Could any fees apply when you exit your old pension savings plan?
• How might currency exchange rates affect the value of your savings?
• Are the benefits available in your overseas fund better than those you will receive by transferring the money?
• Is it in your best interests to transfer your money?

Given the important role that retirement savings play in our lives, good advice matters. It is worth speaking to your overseas pension scheme, your Australian super fund, and even a professional financial adviser, to understand if bringing overseas retirement savings into the Australian super system is the right choice for you.

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