The rules around superannuation are confusing enough when you are living in Australia, let alone trying to understand what happens to your superannuation when moving overseas. In this article, we try to explain some of the common questions.
What happens to my Australian superannuation when moving overseas?
In simple terms, nothing. When moving overseas you can generally leave your Australian superannuation where it is until retirement, and you may even be able to continue contributing funds into your superannuation if you choose.
I don’t plan on returning to Australia to live (ever). Can I transfer my Australian superannuation overseas?
If you are an Australian permanent resident or citizen living overseas, your super remains subject to the same rules as other Australians. This means you cannot access your Australian superannuation until you reach preservation age. Even if you are leaving Australia permanently, and have no plans to ever return to live, it is generally not possible to access your super early (subject to a few specific exceptions).
What should I look out for with respect to my Australian superannuation when moving overseas?
Reduce fees by consolidating Your Australian superannuation into one low cost account
When moving abroad it is easy to forget about your superannuation, and so my tip is before you leave or soon after, endeavour to consolidate all of your superannuation accounts into one low cost superannuation fund. As I have mentioned in other articles (eg. The truth about managed funds, and How to boost your superfund returns) , higher management fees rarely result in higher returns, and so find a no frills superannuation fund with low annual management fees that won’t eat away your superannuation balance while you are abroad.
Check your life insurance policy
Consolidating your superfund accounts also has the benefit of reducing the amount of life insurance you are paying for. Often, with every superannuation fund account you have you will be paying contributions to a life insurance policy. Consolidating your superannuation funds will ensure you are not paying for multiple policies.
And on the subject of life insurance, you should check the terms of any life insurance policies that you are paying for. Many life insurance policies will become invalid if you move to live and work overseas. So check your life insurance, and see if you can upgrade the policy.
Ensure your Australian Superannuation Does Not Become Lost Super
Your superannuation will be considered “lost super” if your superannuation fund reports you as a lost member, which generally means they have been unable to contact you for five years.
Money held in lost member accounts is retained by the superfund, unless it is deemed to be a “small lost member account”. From 31 December 2016, a lost member account is taken to be a ‘small lost member account’ if the balance of the account is less than $6,000. Small lost member accounts will have their balance transferred to the ATO, until it is claimed back by the lost member.
Beware of compliance issues if you have a Self Managed Super Fund
In order for a SMSF to comply with Australian government regulations it needs to meet three tests at all times. The key test for Australians moving overseas is having the central management and control of the SMSF ordinarily in Australia. If you have a SMSF, then read our article The Self Managed Super Fund Nightmare for Australian Expats to understand what you can do about your SMSF when moving overseas.
Can I contribute to my superannuation fund while living abroad?
The simple answer is, yes, it is possible to continue contributing to your superannuation when living overseas, however there are restrictions on contributing to self managed super funds.
As with all matters pertaining to superannuation, if you want to continue making payments into your superannuation when living overseas, you should take professional advice from a licenced financial adviser to ensure your contributions are tax effective and do not breach any contribution limits that may result in significant additional tax liabilities.
You may find, however, that often the tax benefits do not warrant making voluntary contributions into your Australian superannuation when moving overseas.
If you have been transferred overseas with an Australian employer, and if there is a superannuation bilateral agreement between Australia and the country you are working, your employer may be required to continue making Superannuation Guarantee payments into your account.
Disclaimer : This information is for educational purposes only and does not constitute financial or taxation advice. As this information is not advice and has been prepared without taking into account your objectives, financial situation or needs you should, before acting on this information, consider its appropriateness for your circumstances. Independent advice should be obtained from an Australian financial services licensee before making investment decisions, and a registered (tax) financial advisor/accountant in relation to taxation decisions. To the extent permitted by law, we exclude all liability for any loss or damage arising in any way. We may receive referral commissions from companies referred in this article.