Any Aussie who heads overseas for an extended time will tell you it’s a big move, and on the money side, there are many aspects to consider – new jobs, new currencies, new bank accounts, new tax systems.  Eventually, though, the question comes up: ‘I’ve started a new life outside Australia, who knows if and when I may return:  how can I get my superannuation transferred to my new home country?”

Simply put, in most cases, although you might have been able to move, unfortunately, your super must stay put in Australia.  With apologies to Icehouse, Australia remains a Prisoner Island when it comes to the transferability of your carefully saved superannuation funds.  They are locked away, tighter than a snap Covid lockdown.

The strict rules for accessing your super – technically called Conditions of Release – still apply, even if your move overseas is permanent.

For most people, a condition of release is tied to your age and working status. This means being at least 55 and retired, or over 65.  Until then, your Australian superannuation must remain domiciled in Australia, accumulating until you finish working.

If this seems unfair, you have a point (although the first tenet of financial markets is that the concept of fairness is quite a malleable one).  Switzerland for example, will in many cases let you withdraw most, if not all, your retirement savings if you expatriate.

Hidden in the Summer for a Million Years: What Action Should I Take?

It’s not all bad news – just because you must leave your super in Australia, doesn’t mean it should be ignored.  It’s still your money and it should be working hard for your benefit.  This means that your Aussie super should still be part of your overall financial plan.   You can get the best out of it by considering these aspects, all of which can still be done from your new home:

Consolidate accounts: it usually makes sense and saves money and time to have only one superannuation account.

Invest appropriately: Too often I see clients’ super getting left in default portfolios that are not appropriate for their circumstances.  If you are in your 40s and have another 15 years until you reach preservation age, is a Conservative portfolio the right one for you?  

If you are approaching retirement, it is also worth considering the underlying currency in your super investments.  For example, an S&P500 ETF may be denominated in $AU but its performance incorporates the performance of the $US.   

Beneficiary Nomination: There’s one condition of release that few are eager to meet: death.  But who and how you nominate beneficiaries is a critical aspect of estate planning.  The rules for tax on super vary depending on who the money goes to – meaning that with super there is often a ‘de facto’ death tax in Australia.  Funds that end up in the hands of anyone other than your spouse (for example, adult children) can be taxed at up to 15% plus the Medicare Levy. 

Should you still contribute?  In most cases, you can keep saving money in your super fund, but the decision should be made in the context of the savings alternatives in your new home and the tax regime that will apply.  Often, these alternatives are more appropriate and usually have the benefit of easier access should you need it. 

 All of these factors are very simple administratively but do require careful planning, not only for the Australian implications but for what it means in your new home when you are able to access your super.  

A Rainy Day Down on the Harbour: What about my SMSF?

Many Aussies want to have greater control over the management and investments in their super fund and have expressed this by having their own Self-Managed Super Fund (SMSF).  This can be a great idea while you live in Australia, but new problems arise if you leave the country.  

The biggest risk is that your SMSF is categorised as a non-resident fund, which would make it non-complying.   As that phrase suggests, this is not good.  Assessable income gets taxed at the highest marginal rate (right now, 45% versus 15%) and in the first year, the entire assets of the fund are treated as assessable income!

And this risk is very real if you move overseas for a few years.  For the fund to remain resident it needs to satisfy three conditions.  Achieving this for the majority of SMSFs, which are typically one or two-member funds, is in my experience, almost impossible.  Retaining central management and control of the fund, as well as having a majority of members and assets (in simple terms) remaining in Australia is extremely problematic, even if you have a corporate trustee for the fund.  It may be most appropriate to close your SMSF and rollover your benefits to a public regulated fund.

I Hear The Sound of Stranger’s Voices: Retirement Access!

OK, so you have met a condition of release, and can finally get your hands on your super!  Yes, you can withdraw the balance as a lump sum (less any applicable tax) or transfer into the pension phase and take a regular payment from the fund.  The latter method has the advantage that the tax rate on assessable income reduces from 15% to nil.   With some franking credits, the fund may even get a tax refund.

C’est génial, n’est-ce pas? Es ist grossartig, nicht wahr? Not so fast. The planning shouldn’t stop there. Whilst in Australia a lump sum withdrawal and pension payments means little or no tax is payable, as a non-resident you will now need to consider the implications of taxation in the country you reside. 

From a Swiss taxation perspective, the most relevant considerations would be the inclusion of the value of a lump-sum withdrawal in the calculation of wealth tax or the inclusion of all of the (Australian tax-free) pension income in your income. It may be more appropriate to leave the fund in the accumulation stage and make occasional lump sum withdrawals.  

The situation in Switzerland is further complicated by different tax rates in each Canton and of course, determined by your overall financial position.

Looking Everywhere Cause I Had to Find You:  What’s Next

It’s easy for Aussies to put their super in the too-hard basket when you move overseas. Each situation is different and dependent upon the type of super fund, your personal circumstances and the tax regimes of your new home.  Your super fund is likely to be one of your most valuable assets, so it deserves both attention and professional advice, to ensure that your money is working to service the life that you wish.

As a licensed financial adviser in both Switzerland and Australia, I’d be delighted to talk to you further about your own situation.  Contact me here to start the conversation.