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Your UK Pensions in New Zealand

Your UK Pensions in New Zealand

You may have already heard that you can transfer your UK personal and occupational pensions to New Zealand, but there is a great deal of confusion and even some misinformation around about what you can and can’t do with your UK pensions when you emigrate – so read on for a beginners guide to New Zealand pension transfers.

If you’ve been working for a few years you’ll probably have a fairly healthy pension pot tucked away – but what happens to your UK retirement savings when you emigrate to New Zealand?

You Can Transfer your UK Pensions to New Zealand 

You may have already heard that you can transfer your UK personal and occupational pensions to New Zealand, but there is a great deal of confusion and even some misinformation around about what you can and can’t do with your UK pensions when you emigrate – so read on for a beginners guide to New Zealand pension transfers.

The most important thing to understand initially is that you don’t have to transfer your pensions to New Zealand. I think it is a good idea to wait until you have decided to permanently settle in New Zealand before you make any decisions about whether or not to transfer your pensions – I have met some migrants who have been pressured in to making irreversible decisions about their UK pensions before they emigrated, only to find that the solutions they were offered were inappropriate and expensive.

The only time limit you need to be aware of is that you can’t transfer your pensions to New Zealand once you have purchased an annuity in the UK. This should give you plenty of time to decide whether it is the right course of action for you – you certainly don’t need to be running around trying to make important decisions about your pensions while you’re still in the UK sorting out the myriad of other things you need to do before you emigrate.

The Advantages of a New Zealand QROPS

Once you decide to take a look at transferring your pensions you’ll hear a lot about QROPS. A QROPS is a Qualifying Recognised Overseas Pension Scheme, which is basically an overseas pension fund that can accept transferred UK pensions. The QROPS rules govern your pension until you have been outside the UK for 5 complete tax years, and specify that you cannot take benefits from your overseas pension any earlier than you would have been entitled to them had you left your pensions in the UK.

The consequences of making a withdrawal from your QROPS when you are not supposed to are fairly dire – HM Revenue and Customs can claw back an unauthorised payment charge and penalties of up to 55%. But once your 5-year QROPS reporting period has expired the rules of the fund you have transferred in to take precedence, which in New Zealand means that you can take advantage of more flexible access to your retirement savings once you retire and even to an extent before you retire.

Other benefits to transferring your UK pensions to New Zealand include:

  • ease of administration (you can consolidate several UK pensions in to one easy-to-manage NZ pension),
  • tax efficiency (you can take your New Zealand pension pot as a tax-paid lump sum) and
  • control (New Zealand pensions can give you a wide range of investment choice).

But it is very important to understand that when you transfer your pensions you forfeit any income guarantees that may be built in to your UK pensions – your fund value will depend on the performance of the investments in your New Zealand pension scheme. You also lose any spouse or dependants pensions and annual increases that may be built in to your UK pension.

The Importance of Currency Control

If you decide to transfer your pensions to New Zealand you should ensure that you have some control over the exchange rate at which your UK pensions are converted from Pounds to Dollars. Better New Zealand QROPS give you a good degree of currency control, allowing you to hold your transferred funds in Pounds while you wait for an exchange rate you are happy with. When you consider the continued volatility of the Pound to NZ Dollar exchange rate, this represents a significant opportunity to maximise your pension pot.
Your UK pension is a valuable asset – possibly your second-biggest asset after your house. Many Brits who emigrate to New Zealand choose to transfer their pensions to New Zealand, but it is important that you make an informed decision on whether transferring your pensions is the right choice for you. I would be delighted to answer any questions you may have, and to send you a free copy of our comprehensive New Zealand Pension Transfer Guide.

Broadbase International Ltd offers expert impartial advice on your financial situation as a migrant to New Zealand, and specialise in helping migrants from the UK with pension transfers. Check their website for more tips on making the most of the financial opportunities you’ll find in New Zealand. Disclosure statements are available on request and free of charge.

©Jeremy Henderson – www.broadbaseinternational.com