24 Nov Managing Your Superannuation from Singapore: What Every Aussie Expat Needs to Know
By Jarrad Brown
Moving to Singapore as an Australian expat is an incredible opportunity. With its low personal income tax, world-class infrastructure, and dynamic business scene, it’s easy to see why so many Aussies are making the move. Amid the excitement of this transition, one important question should remain at the forefront of your planning: what happens to your Australian superannuation when you live overseas?
Superannuation is often a key component of retirement planning in Australia. Even if you are no longer contributing through an Australian employer, your super fund retains several advantages that are worth considering. By taking a strategic approach to managing your super from Singapore, you can ensure that it remains an important part of your long-term financial planning.
Why Superannuation Remains Important
Many Australian expats mistakenly believe that leaving the country reduces the importance of super, but this is not the case. Your super fund often continues to be invested, and earnings within super are typically taxed at lower rates than other investment vehicles, particularly for Australian residents, which can make a notable difference over time.
Additionally, withdrawals from super can be tax-free for individuals over the age of 60, provided they meet certain conditions. Singapore does not tax foreign pension or retirement savings income, making it an attractive jurisdiction for maintaining your Australian super. For many expats, allowing superannuation to grow while living overseas is an important part of their wealth management strategy.
Tax Residency and Its Effect on Superannuation
Understanding your tax residency is critical for Australian expats in Singapore, as it determines how your superannuation is treated under both Australian and Singaporean tax laws. In Australia, your tax residency status is determined by your ties to the country, including family, property, and economic connections. Moving to Singapore does not automatically make you a non-resident for tax purposes.
In Singapore, you are generally considered a tax resident once you have a visa to live and work in the country, such as an Employment Pass or ONE Pass. The Australia-Singapore Double Taxation Agreement ensures that income is not taxed twice. As a result, non-residents of Australia are typically only taxed on Australian-sourced income, which may include certain superannuation payments. Given the complexities of determining your residency status, seeking professional guidance is advised to ensure full compliance with both jurisdictions’ rules.
Continuing Superannuation Contributions from Singapore
Even while living abroad, it may still be possible to continue contributing to your Australian superannuation. Whether this is an option depends on factors such as your income, your super fund’s rules, and your long-term retirement plans.
There are various types of contributions that might be possible. Non-concessional contributions, which are after-tax contributions, are typically allowed by most funds for non-residents subject to contribution limits. Some Australian employers may continue making Superannuation Guarantee contributions if you remain on their payroll, but this usually applies only if your employer is based in Australia and you remain a tax resident of Australia. Additionally, concessional (before-tax) contributions could also be an option, depending on your eligibility.
It is important to verify whether your super fund accepts contributions from non-residents and consider cost-effective methods for transferring funds internationally. Regularly monitoring contribution caps is also necessary, as exceeding them may lead to additional tax consequences.
Self-Managed Super Funds (SMSFs) and Expats
Some Australians opt to establish a Self-Managed Super Fund (SMSF) for greater control over their retirement savings. However, managing an SMSF from overseas is typically not recommended for expats due to strict regulatory requirements and penalties for non-compliance where they do not meet the required tests for SMSFs.
For an SMSF to remain compliant, it must have its central management and control in Australia. Managing the fund from overseas can result in non-compliance with this requirement. Additionally, an SMSF must meet the “active member test,” which refers to Australian resident members representing at least 50% of the balance. Failing to meet these requirements can lead to the fund being taxed at higher rates and losing concessional tax treatment.
The administrative burden of managing an SMSF from abroad is also significant, including compliance with annual audits, Australian Taxation Office reporting, and record-keeping requirements. As a result, many expats choose to consolidate their superannuation into a retail or industry fund before leaving Australia, or they appoint a trusted representative in Australia to manage their SMSF.
Currency Risk and Investment Strategy
As an expat in Singapore, you are likely earning and spending in Singapore dollars while your superannuation remains in Australian dollars. This creates currency risk as fluctuations in the exchange rate can affect the value of your superannuation over time.
To manage this risk, you might consider diversifying your super investments across both Australian and international markets. Some investment options may be hedged against currency fluctuations, and rebalancing your portfolio regularly can help ensure it aligns with your risk tolerance and long-term objectives. Additionally, it is important to be mindful of fees, as high costs can reduce your overall returns, especially if contributions are irregular.
Accessing Your Superannuation and Withdrawal Rules
Living in Singapore does not automatically grant access to your superannuation. Australian super funds have specific conditions of release, such as reaching preservation age, retirement, turning 65, or meeting other criteria such as permanent incapacity.
If you are a non-resident, you may be subject to withholding tax when accessing superannuation lump sums or pensions. However, Singapore does not currently tax foreign superannuation withdrawals, provided the funds are remitted after retirement. Understanding the tax treatment of superannuation withdrawals in both countries is essential to avoid any unexpected costs.
It is also important to review your estate planning documents, as superannuation is not automatically included in your estate unless you have made a binding death benefit nomination for it to be paid to your legal personal representative. Expats should ensure that their nominations are up to date and comply with both Australian and Singapore regulations.
Insurance Within Superannuation
Many super funds offer default insurance, such as life cover, total and permanent disability cover, and income protection. Expats should review their insurance coverage, as it may be limited or invalid if you are living overseas long-term.
It is important to check whether the premiums are still appropriate and whether the cover is relevant to your current circumstances. In some cases, it may be necessary to consider purchasing expat-specific insurance outside your super fund. Additionally, it is essential to keep your super fund updated with your current address to ensure you receive all relevant information about your insurance policies.
Consolidation and Regular Monitoring
When living overseas, it is especially important to monitor your superannuation regularly. Consolidating multiple super accounts can help reduce fees and simplify management. The Australian Taxation Office offers services to help locate lost or forgotten superannuation accounts, which may assist in growing your retirement savings.
Regularly reviewing your investment options and fees is also crucial, as default settings may not align with your risk tolerance or retirement goals. If you plan to make contributions from Singapore, it may be worthwhile to consider using cost-effective foreign exchange services instead of traditional bank transfers, which may incur higher fees.
Planning for Retirement
Your superannuation strategy should align with your long-term retirement goals. If you plan to return to Australia, you may want to revisit your contributions or investment strategy to reflect your plans.
If you plan to retire outside Australia, it is important to understand how superannuation withdrawals will be treated in your new country of residence and to plan your retirement income accordingly. Estate planning should also consider both Australian and international regulations to ensure your wishes are fulfilled.
Common Mistakes to Avoid
There are several common mistakes made by expats when managing superannuation from abroad. Some expats mistakenly assume that contributions will automatically be tax-free, which may not be the case if you are a non-resident. Others may leave their super in poorly performing or high-fee funds without reviewing their options.
It is also important to comply with the rules around managing an SMSF from overseas, as non-compliance can result in severe penalties. Failing to address currency risk or not planning for withdrawals and estate matters can also hinder long-term retirement goals. Regularly reviewing your superannuation and seeking professional guidance can help avoid these pitfalls.
The Role of a Financial Adviser
Managing superannuation from Singapore can be complex, and working with a financial adviser who has expertise in cross-border planning may be helpful. They can help you navigate residency and tax issues, optimise your investment strategy, ensure compliance with reporting obligations, and assist with cross-border estate planning.
Conclusion
Managing your superannuation from Singapore requires careful planning and ongoing attention. Your super remains a valuable asset, and a strategic approach can help it continue to grow even while you are living overseas.
When you’re ready, feel free to arrange a first meeting with me to review your overall retirement plans and strategies.
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian professionals in Singapore.
Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3
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General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision.
*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.