The complexities of moving pension funds from the United Kingdom to Australia have been highlighted by a recent determination by the Superannuation Complaints Tribunal, including the risk of incurring exchange rate losses when the entire transaction is reversed.
The SCT has rejected a claim made by a man who sought to transfer his UK pension to an Australian superannuation fund but eventually faced having the transfer rejected by the fund because of the inherent complexity.
The man claimed that he was financially disadvantaged as a result of exchange rate differences that resulted from the trustee changing its mind not to accept his Qualifying Overseas Pension Scheme (QROPS) transfer when it had originally agreed to accept his monies and sought payment from the Australian fund of an additional GBP £93,554.13 ($158,483.03).
However, the SCT determination held that the Australian superannuation fund could not be held responsible for fluctuations in the exchange rate and this was something that had been pointed out the complainant from the outset and made clear in a declaration he had signed.
The determination said the tribunal was of the view that the declaration put the complainant on notice that his funds may not be granted Final Funds Allocation status; consequently there would also be a risk that his Funds, if repatriated back to the UK, could be less than initially transferred to the fund.
The SCT also noted that the complainant had been receiving expert help and should have been aware of the risks.
“The tribunal also notes that the complainant was being assisted with his transfer by the representative who, as the employee of a company with a title that implies expertise in the facilitation of overseas pension movements, had no doubt fully apprised the complainant of these risks, prior to funds’ transfer,” the determination said.
“Finally, the tribunal considers it unlikely this aspect of the complaint would have been aired by the complainant if the exchange rate, on repatriation by the trustee, had been favourable, such that he would then have forgone those gains,” it said.
