Is Your Superannuation Expat Friendly?


When Australian expats relocate overseas (become non-residents for tax purposes) there is always so much to be done but if your superannuation expat friendly?  Have you informed the Australian Taxation Office?  Have you updated your various holdings in your investment portfolio?  Does your accountant know? Have you accidentally ‘forgotten’ to tell the in-laws your new contact details?

Something that is very often taken for granted is that your superannuation (and any attached insurances) will be ok.  Why is that?  Well the general train of thought is that if you are an Australian expat and have a Tax-File Number then all the boxes are ticked in terms of keeping your superannuation fund happy.

In general terms, this may be correct for your superannuation fund itself (let’s come back to this), however this may not be the case for your insurances. Recently we have undertaken financial reviews for a number of Australian expats who had Life, Total and Permanent Disability and Income Protection Insurance within their existing superannuation funds . . . . Well they thought they did.

Upon further investigation we have discovered that these policies were actually void, leaving the clients without the insurance cover they thought they had. Why was this?  A number of policies, particularly ‘group cover’ found in a number of industry funds, only provide cover to Australian residents.  If a fund member was no longer considered an Australian Resident then this cover was void.

Australian expat superannuation


What this potentially means is should the fund member have tried to make a claim while living and working overseas as a non-resident then it is possible the insurance policies would not have been paid. This of course requires urgent attention and, in the case of our clients, replacement cover organised where appropriate.

As noted this situation with insurance inside of superannuation is not unusual, but recently we had a client whose retail superannuation account did not provide for members who are non-residents.

Initially he contacted them to check whether his insurance policies still provided cover while he was living and working overseas as a non-resident.  Not only was he told that his insurance cover was void but also that he could not maintain his existing superannuation fund with this particular provider either.

The client was told he had 28 days to organise a rollover of his funds to another complying superannuation provider or they would rollover funds out automatically “to a government provided fund”.  They even sent him the rollover paperwork to help him facilitate this.

In our experience, superannuation providers do not like having funds rolled over to another provider, so having a provider tell someone they had to move their funds was unheard of.

Now there are plenty of superannuation providers who do not consider being a non-resident a problem, so we were able to resolve our client’s situation within the 28 day window his previous provider gave him to rollover his funds.

This may be the first time we have heard of this situation with a superannuation fund however with ever-changing compliance and reporting requirements we doubt it will be the last.

If you are an Australian Expat, or planning to relocate overseas in the future, it is worth contacting your superannuation provider to discuss their policies on non-residents holding accounts with them.

The above article was written by one of our Expat Financial Advisers, Adam Bolton, and was published on LinkedIn. To read this and other posts please click here or go to https://www.linkedin.com/pulse/your-superannuation-expat-friendly-adam-bolton

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