Wealth Check: 'I want to sort out my finances before moving to Australia'

Sean Cranny works in London but plans to move to Australia next year with his girlfriend, an Australian national.

Sean Cranny works in London but plans to move to Australia next year with his girlfriend, an Australian national. He hopes to move to Brisbane, and to look for work in marketing, PR or market research, ideally in the public sector or higher education.

Making the move, though, means that Mr Cranny wants to tidy his finances, in particular his pension arrangements. He is unsure whether he can - or, indeed, should - transfer funds to Australia, and needs to find out more about how pensions and investments work there.

He has already set aside some savings to fund the move to Australia, but how should he best manage his money in the meantime?

We put his case to Meere Patel at Hargreaves Lansdown, Patrick Connolly at John Scott and Partners and Anna Sofat at Destini Global Financial Services.

SEAN CRANNY, 33, HEALTH SECTOR PROJECTS OFFICER

Education: BA (Hons) in Business Studies

Income: £25,500

Debt: £1,000 (credit card)

Property: Renting

Savings: £1,900

Investments: none

Pension: Paying £40 a month into a policy with Windsor Life, held since 1993. Local government scheme, with a transfer value of £2,584. Five months' contributions to Australian pension scheme.

Monthly outgoings: rent £400, bills, including food, £200.

PENSION

Mr Cranny's largest assets are in his pension funds. The Australian pension system differs from the UK's, mainly because membership of a Superannuation Scheme, known generally as Super, is compulsory.

Ms Sofat points out that employers in Australia must pay nine per cent of salaries into a Super scheme, so Mr Cranny will be guaranteed pension contributions once he finds work. But the tax treatment of Australian pensions is very different. Australians pay tax on contributions at 15 per cent - here contributions are tax-free - and also on growth, again at 15 per cent. But unlike in the UK, benefits from an Australian pension are usually tax-free.

Mr Cranny will almost certainly be able to transfer his existing Australian pension to a new scheme. But the choice is less clear-cut for his UK pension funds. Under UK pension rules, he can continue to pay into his UK pension fund until 2006, based on his best earnings in the UK over the last five years, says Mr Connolly. Then, under pension simplification, his contributions will be limited to £3,600 before tax relief.

This means there is no immediate urgency for Mr Cranny to transfer his UK pensions; he might wish to wait until his residency becomes permanent. But Ms Patel recommends that Mr Cranny transfer his pensions to Australia once he is settled and working there.

If he does opt to leave his pension money in the UK, he may have to pay Australian tax on the growth in his pension, between the time he moves and transfers the money. Ms Sofat points out that he does have a window of six months to transfer pensions to Australia without incurring taxes. He will need to find a pension provider in Australia that will accept the transfer, and also check with the Inland Revenue here.

SAVINGS AND INVESTMENT

Ms Sofat cautions that the Australian authorities will also levy tax on any other investments Mr Cranny leaves in the UK. Growth, even if it is not realised, is assessed as income on an annual basis. Tax can be as high as 48.5 per cent, for incomes over AS$70,000 (£28,500) a year.

Ms Patel says the Australian investment market is well developed, with mutual funds that operate in a similar way to unit or investment trusts here. There are differences in the tax treatments of investments, but this should not put off Mr Cranny from setting aside money for the longer term.

In the short term, though, Mr Cranny is likely to need financial flexibility. Mr Connolly feels that he should keep his money accessible on deposit. As he plans to make the move to Australia a permanent one, he should look to hold his savings in Australian dollars, to minimise currency risk.

Mr Connolly adds, though, that Mr Cranny is likely to be paying more interest on his credit card than he makes on his savings. He should clear debts before leaving the UK, preferably immediately, in order to free up cash.

MAKING THE MOVE

Mr Cranny should look into opening an Australian bank account either before he moves - via a bank that operates both in the UK and there, or through the UK office of an Australian bank - or he should open one up as soon as he arrives.

Ms Patel says that Mr Cranny should keep an eye on the pound-Australian dollar exchange rate, as this fluctuates. The rate is now around AS$2.46 to the pound, but it has been as high as $2.80 and as low as $2.20 recently. Ms Sofat says that a reputable currency broker might be able to help Mr Cranny judge when to move his funds to Australia.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Suggested Topics
News
people'It can last and it's terrifying'
Sport
Radamel Falcao
footballManchester United agree loan deal for Monaco striker Falcao
Sport
Louis van Gaal, Radamel Falcao, Arturo Vidal, Mats Hummels and Javier Hernandez
footballFalcao, Hernandez, Welbeck and every deal live as it happens
Sport
footballFeaturing Bart Simpson
PROMOTED VIDEO
News
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
News
i100
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
News
news Video - hailed as 'most original' since Benedict Cumberbatch's
Arts and Entertainment
booksNovelist takes aim at Orwell's rules for writing plain English
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Head of IT (Windows, Server, VMware, SAN, Fidessa, Equities)

    £85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...

    Technical Software Consultant (Excel, VBA, SQL, JAVA, Oracle)

    £40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...

    SQL DBA/Developer

    £500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...

    .NET Developer

    £650 per day: Harrington Starr: .NET Developer C#, Win Forms, WPF, WCF, MVVM,...

    Day In a Page

    Alexander Fury: The designer names to look for at fashion week this season

    The big names to look for this fashion week

    This week, designers begin to show their spring 2015 collections in New York
    Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

    'I like Orwell's writing as much as the next talented mediocrity'

    Will Self takes aim at Orwell's rules for writing plain English
    Meet Afghanistan's middle-class paint-ballers

    Meet Afghanistan's middle-class paint-ballers

    Toy guns proving a popular diversion in a country flooded with the real thing
    Al Pacino wows Venice

    Al Pacino wows Venice

    Ham among the brilliance as actor premieres two films at festival
    Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

    Neil Lawson Baker interview

    ‘I’ve gained so much from art. It’s only right to give something back’.
    The other Mugabe who is lining up for the Zimbabwean presidency

    The other Mugabe who is lining up for the Zimbabwean presidency

    Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
    The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

    The model for a gadget launch

    Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
    Alice Roberts: She's done pretty well, for a boffin without a beard

    She's done pretty well, for a boffin without a beard

    Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
    Get well soon, Joan Rivers - an inspiration, whether she likes it or not

    Get well soon, Joan Rivers

    She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
    Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

    A fresh take on an old foe

    Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
    Fashion walks away from the celebrity runway show

    Fashion walks away from the celebrity runway show

    As the collections start, fashion editor Alexander Fury finds video and the internet are proving more attractive
    Meet the stars of TV's Wolf Hall... and it's not the cast of the Tudor trilogy

    Meet the stars of TV's Wolf Hall...

    ... and it's not the cast of the Tudor trilogy
    Weekend at the Asylum: Europe's biggest steampunk convention heads to Lincoln

    Europe's biggest steampunk convention

    Jake Wallis Simons discovers how Victorian ray guns and the martial art of biscuit dunking are precisely what the 21st century needs
    Don't swallow the tripe – a user's guide to weasel words

    Don't swallow the tripe – a user's guide to weasel words

    Lying is dangerous and unnecessary. A new book explains the strategies needed to avoid it. John Rentoul on the art of 'uncommunication'
    Daddy, who was Richard Attenborough? Was the beloved thespian the last of the cross-generation stars?

    Daddy, who was Richard Attenborough?

    The atomisation of culture means that few of those we regard as stars are universally loved any more, says DJ Taylor