General
An International Pension Fund (IPF) is your personal, portable retirement fund. Ideally suited to entrepreneurs, executives and families who have complex affairs or are considering overseas retirement, long-term international relocation, or migration. The structure is legally a trust. Under the IPF structure, as a client you have your own separate private sub-trust to hold your designated assets. This means your assets are not pooled with other clients providing extra asset protection for you and investment discretion.
Northland Group’s structure is open to globally mobile executives, globally mobile entrepreneurs and business owners, individuals and families looking to migrate to certain jurisdictions and small-medium corporates.
A foreign superannuation plan can be used by non-Australians and Australians alike that are intending to retire to Australia.
Northland Group work with regulated third party trust companies around the world and are therefore flexible to administer plans established in any regulated jurisdictions (subject to compliance with local rules), however, historically clients counsel have primarily advised the use of Singapore, Jersey (Channel Islands) and certain circumstances Hong Kong. However, you do not need to be a resident of any of these jurisdictions to utilise our solution.
Yes, Northland Group adopts an ‘open architecture’ methodology which means you have the freedom to appoint any financial advisor, private bank, or other advisor of your choosing.
Whilst the IPF is optimized for those that are retiring to Australia as an international pension plan it can be drawn down by those who retire elsewhere as well. The plan is flexible to dealing with a change in future circumstances.
We can have your individual sub-fund set up within two weeks.
At Northland Group, we don’t provide recommendations, but the majority of our clients use a Singapore based structure due to the country’s political and financial stability.
Treatment
Northland Group obtain annual binding tax rulings from the ATO (Australian Tax Office) for each master trust that our clients are in. Each ruling includes all sub funds of those master trusts and therefore each year the ATO affirm the compliance of your IPF.
You do not. When you become Australian tax resident in the future you crystallise your fund on that date with any future income and gains from your investments deemed to be applicable fund earnings (AFE) for Australian tax purposes. We have had clients maintain their IPF whilst drawing their AFE at personal income tax rates, avail of a transfer of their AFE to a domestic superannuation which is subject to a 15% tax or alternatively leave to their next of kin via a testamentary trust.
Generally, the contributions (both those made overseas and those made in Australia) are not subject to taxation in Australian and nor will be the income and gains generated by your assets whilst you are a non-resident. Those income and gains generated once you are an Australian tax resident will be deemed to be applicable fund earnings (AFE) and are subject to taxation in Australia or drawdown but not in accumulation. When you are looking to drawdown upon your AFE you can either do so personally at your progressive income tax level or alternatively transfer to a domestic superannuation plan for a flat 15% tax rate. Some clients that do not require drawing down on their AFE instead bequeath to their next of kin via a testamentary trust.
Generally, there is no income tax payable on accumulation of the assets within the pension fund.
Contributions and draw down
You can access once you have obtained the minimum retirement age of the scheme which is 55 years of age if you are not in full time employment and 60 years of age if you are. Once you meet the minimum retirement age you can access the assets of your sub fund at the rate that you require rather than needing to follow any withdrawal time tables.
No, there is no limit on contribution caps.
No, there is no limit on draw down amount or frequency.
No, it can remain open indefinitely.
Assets
Your IPF is a highly flexible ‘open architecture’ solution. You can hold both standard and non-standard assets. It will be able to hold all standard investments that you would find on your private banks or financial institutions platform i.e. shares, bonds, cash, private equity. As well as non-standard assets such as shares in an operating company, unlisted private equity, shares in a private company, art/collectibles and all your illiquid assets basically.
Whilst a pension is a form of trust it is treated significantly differently in Australia. Please find more information on the differences here.
Structure and features
The structure is a type of trust known as a master trust structure (also known as an accumulation account), which is governed by a central governing trust deed and each client has their own sub trust/fund. We have an ATO ruling at the trust deed level which therefore is applicable to all underlying sub funds. Most importantly, the structure ensures your assets are segregated from other clients and therefore not subject to the risk of a “pooled” retirement fund arrangement.
Like any superannuation or pension fund, you are the beneficiary or member of your private sub-trust.
The trustee will act as legal owner of the assets and Northland Group will provide all fund administration services.
Northland Group is responsible for all administration duties required to operate your sub-trust, including the provision of the master-trust deed, provision of a private binding tax ruling from the Australian Taxation Office, financial reporting for your sub-trust and your member balance, and client and technical support to you, the member and your advisors. In order to ensure the highest level of independence, Northland Group does not provide trustee or investment services but ensures these are outsourced to leaders in their field.
Northland Group performs considerable due diligence on each trustee it works with. Our Trustees include Kensington Trust, JTC Group and Rawlingson Hunter.
Contributions can be made from anywhere in the world and are flexible (how often to suit your needs and no limit on the frequency, stop or pause. Start at your leisure). Another key feature is the ‘open architecture’ methodology that allows you to use your own banker or financial advisor and accounting legal, tax advisor. Northland Group also provides consolidated financial reporting for all asset classes held in the structure.
Some of the unique benefits include:
- Freedom to retire globally
- Move between jurisdictions with ease
- Generally no tax on accumulation within the fund
- Ability to hold a wide variety of assets
- Asset protection benefits due to the trust-type structure
- Flexible draw-down at retirement age
- Northland team with almost 30 years experience