Why transfer my pension?
Good question – you certainly don’t have to transfer your pension from the UK, even though you may have emigrated to New Zealand. In some cases it could be better to leave it under Her Majesty’s care, however there are differences in rules, taxation and benefits between the UK and NZ Pension systems which we think you need to know about. These differences can often add up more NZ dollars in your pocket rather than British pounds in someone else’s!
New Zealand pension options are more flexible, are paid tax free, and your pension will not die when you die – our benefits page explains some of the advantages of transferring your pension in more detail.
In some situations it may be more advantageous for you to leave your pension in the UK. The UK Government provides generous tax relief on pension savings in UK registered pension schemes, and some UK Pensions have guaranteed benefits – that is why we advise you to carefully consider all the options and take appropriate financial, legal and taxation advice.
The NZ Financial Markets Authority (FMA) has information on their website about transferring UK Pension funds – see here.
Disclaimer: The information in this web site is general information and not specific to any particular case. It is designed to help you understand the implications of transferring your UK pension to New Zealand, and to assist you to decide what is best for your own situation
Should I transfer my pension from the UK?
This is a very uniquely personal question and will depend upon many factors, including your commitment to your new life in New Zealand and whether it is actually financially advantageous for you to transfer your pension.
We recommend you take the time to obtain relevant financial and taxation advice, as once we have completed your transfer you have given up all rights to your UK pension. If you have any thoughts of returning to live permanently in the UK then don’t transfer your pension!
How much can I have now?
You may be able to access some of your transferred pension value immediately, depending upon certain conditions. New UK rules which commenced on 6th April 2015 allow greater pension freedoms, and the UK Finance Bill 2017 makes further changes. We’ll explain the options to you, and organise any withdrawal to be paid directly into your nominated Bank Account if this is what you choose.
Your UK Pension will be transferred to a registered New Zealand Superannuation Scheme, which is registered by Her Majesty’s Revenue & Customs as a Qualifying Recognized Overseas Pension Scheme (QROPS). We give you the option of keeping your funds in a UK Pounds Sterling portfolio if you prefer, and we’ll help you decide which $NZ portfolio will be best for you once the currency conversion is made from Sterling to NZ Dollars. When you do make a withdrawal , your funds are usually paid tax free in New Zealand without exit penalties.
How do I go about transferring my pension?
We will manage the entire pension transfer process for you – this involves obtaining the required documentation from your UK Pension provider, organising a suitable (QROPS) superannuation scheme in New Zealand to receive your transfer, and keeping you informed as to the status of your transfer application. We act with your authority and on your behalf, however at all times your funds remain in your ownership and control.
What is a QROPS (qualifying recognised overseas pension scheme)?
This is a scheme that meets certain criteria set by Her Majesty’s Revenue and Customs (HMRC) to receive pension transfers without penalty tax. In some circumstances you may be able transfer to a scheme that is not registered as a QROPS, but you will incur the UK penalty tax regime.
Does it matter if I haven’t already got a NZ Superannuation Scheme?
No, we will arrange a qualifying recognized overseas pension scheme (QROPS) for you. In order to complete the transfer it is a requirement that you are a member of an approved scheme in New Zealand and that your UK funds are paid directly into your New Zealand scheme.
Do I get to choose how my funds are invested?
Yes. Within the QROPS Superannuation fund we set up for you there are many options that range from Cash and Conservative Portfolios, to Balanced and Growth Portfolios. You decide how your pension transfer is invested, and we can switch funds between portfolios as often as you like.
What are the rules around withdrawals?
As outlined above, withdrawals from the UK pension scheme will be subject to rules from both your new QROPS Scheme in New Zealand and the UK HMRC QROPS rules, which are determined by UK Government legislation. A QROPS scheme in New Zealand can be viewed as an extention of the UK Pension system, although in New Zealand you are not required to purchase an annuity, and future withdrawals from your NZ scheme are non-taxable.
Can I leave my pension in the UK for a while before transferring it to New Zealand?
Yes you can. There is no legal requirement to transfer your pension to New Zealand, however leaving your pension in the UK could create a tax liability for you depending on your individual circumstances.
Foreign Superannuation tax rules may mean that you end up having to pay tax on the growth in your UK pension fund, even though you are not in the UK. Taxation rules on overseas superannuation schemes changed on 1st April 2014 in New Zealand, and as this is a complex area we always recommend that you seek specialist tax advice for your individual circumstances.
How long does the transfer process take?
UK Pension providers vary widely in the speed of their response to transfer enquiries, but normally transfers take between 3 to 6 months.
I have already transferred my UK Pension to a NZ QROP Scheme. Can I now transfer to your scheme?
Yes, if the Trustees of your existing scheme approve the transfer. Normally this is allowed, provided the new scheme we set up for you is also a QROPS scheme and has similar rules.
Will I be able to transfer my UK Pension funds?
Normally yes, if you are not already drawing your pension, and usually the UK scheme only allows this if you have emigrated from the UK permanently. Some UK schemes will require proof of emigration such as a letter from a New Zealand employer – this usually applies to occupational schemes (UK workplace pension scheme). There are also other rules imposed by HMRC in the UK which are outlined below.
What are the rules surrounding pension transfers from the UK?
New pension transfer laws were introduced in the UK on 6 April 2006 and updated from 6th April 2012. Non-UK pension providers must be a QROPS scheme recognised by HM Revenue & Customs (HMRC), otherwise the transfer is deemed an unauthorised payment and will incur a penalty/tax charge. (40% unauthorised payments charge and, possibly, up to a 15% unauthorised payments surcharge).
Under the UK Finance Bill 2017 legislation, transfers to QROPS requested on or after 9 March 2017 will be taxable unless, from the point of transfer, both the individual and the pension savings are in the same country, both are within the European Economic Area (EEA) or the QROPS is provided by the individual’s employer.
If this is not the case, there will be a 25% tax charge on the transfer and the tax charge will be deducted before the transfer by the scheme administrator or scheme manager of the pension scheme making the transfer.
It also widens the scope of UK taxing provisions so that, following a transfer to a QROPS on or after 6 April 2017, they apply to payments out of those transferred funds in the five tax years following the transfer.
No UK tax charges apply if you are resident in New Zealand, and you do not make any withdrawals from your NZ QROPS scheme until at least 5 clear tax years after leaving the UK.
What are the obligations of a QROPS scheme?
In order to gain QROPS status, a Scheme Provider must abide by the rules set down by the UK HMRC as regards pension payments to a member, and the reporting to HMRC of any payments made.
This reporting requirement is for a period of at least 10 years. In addition to this, the scheme manager of the QROPS making a transfer is jointly and severally liable for any tax charges, and where there is a tax charge, they are required to deduct the tax charge and pay it to HM Revenue and Customs (HMRC).
Do I have to make additional contributions to the transferred amount?
No, we can set up a ‘lump sum only’ Superannuation plan for you, or you can make regular ongoing contributions to your new scheme in New Zealand if you wish.
Can I withdraw cash from my pension fund once the transfer is complete?
This depends upon the UK HMRC QROPS rules, which do change from time to time.
Currently the rules are that if you have reached the UK minimum retirement age of 55, then you have unlimited access to your pension funds.
We can advise you of the latest QROPS rules, and help with other investment advice if needed.
If I have already started to draw income from my UK Pension, can I still transfer the lump sum?
No, once your pension is being paid out as regular income you can no longer transfer the lump sum.
Who controls my pension during the transfer process?
At all times your funds are kept in your name either directly by the superannuation fund provider in New Zealand, the pension provider in the United Kingdom, or by the Trustees of each of these respectively. At no time are the funds not in your name.
Can I transfer my UK Pension to a KiwiSaver scheme?
Some KiwiSaver schemes used to have QROPS approved status, however all KiwiSaver schemes were removed from the UK QROPS list on 6th April 2015. Kiwisaver schemes now cannot be used for UK Pension transfers, however there are other NZ Superannuation schemes which we can recommend for your UK transfer.
What about other NZ Superannuation Schemes – can I transfer them to my new Scheme also?
Yes, as above, if the rules are similar and your existing scheme Trustees approve, then you can transfer your Pension or Superannuation to a new Scheme with us to save on fees and join our FeeCap program.
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