UK expats warned on Brexit impact on pensions

“The rules in that area are entirely set by the UK government and Australian government, so in that sense, Brexit has no impact on how those rules are drafted,” Mr Chapman said.

Mr Chapman said that it is already quite difficult for UK citizens to move their pensions across to Australia and expensive, so the bigger issue is for those who’ve still got pensions in the UK because of the potential impact of Brexit on the UK economy.

“The economic hit from Brexit could flow through to people’s pensions in terms of the reduction in share values or property values that underpin those pensions,” he cautioned.

“Property has already taken quite a hit in some parts of the country, particularly in the South East. I think it’s fair to say that post-Brexit, the economy will struggle which could have an impact on shares as well.”

Given the potential impact that Brexit may have on UK pensions, UK expats able to transfer their money to Australia may want to consider doing so, he said.

“I think most people would prefer to transfer it, but the problem is that, essentially, until you reach the age of 55, it’s actually very difficult to do it, because the UK government places restrictions on pension transfers to Australia where it’s possible for the recipient in the other country to withdraw the money before 55,” he explained.

“That’s an issue here because you can potentially access super because of financial hardship or medical reasons. To a large extent, until you reach age 55, it’s actually extraordinarily difficult to transfer your money across because of that catch. It’s very difficult, unless you can transfer it into a fund that’s guaranteed to be locked in until 55.”

Setting up an SMSF with terms that comply with the strict criteria set by the government may be a viable option for some clients, he said, but there is a lot to consider.

“You still need to have a decent pool of money to make it worthwhile. If you’ve only few ten thousand pounds or even $100,000 pounds, it’s very difficult to make an SMSF viable with those sorts of balances,” he said.

“So, yes, it is still possible to transfer the money into an SMSF which precludes early access and therefore you get around each condition, but you have the usual issues around low balances. The fees and charges that you can potentially rack up can make it economically difficult to do that.”

Where an SMSF isn’t a good option, professionals should encourage these clients to have a look at where their UK pension is invested and try and move out of any assets that look particularly exposed to economic turbulence.