LolPen

I am a new migrant to NZ. I am drawing my UK Government pension and would like to know if I opt for the NZ Superannuation pension would the four year tax exemption for new migrants apply to it.

Many thanks

nzneville

I am not sure whether this is apples and apples. Is your UK Government pension the state pension that you recieve, or is it a work pension from employment in government service eg military etc? If it is the state pension, I understand that the four year tax exemption is not relevant to whether you opt to receive the New Zealand Superannuation instead of the UK state pension? The ral benefit of switching, if you qualify, is that your NZ Super is not prozen at the rate for when you qulified, but is increased each year, just the sameas for all New Zealanders who qualify.

LolPen

Thank you for yr message. It is my state pension. I was a bit confused as when I looked on the NZ pension website it shows NZ Superannuation rates both before and after tax.

nzneville

The rates before and after tax are because, when you reach 65, you can continue working and you have to declare what tax bracket you fit in. IRD then deduct tax at the standard rate before paying you, just a bit like paye in UK. So they show gross and net rates in the tables.
What you should do is to visit one of the MSD offices (make an appointment first) and talk to a Senior Persons Advisor, and see whether you will be better off applying to switch to the New Zealand Superannuation. Your UK State Pension is frozen forever at the rate that was applicable when you qualified for it, whereas by being on hte New Zealand rates, you enjoy the increases each year. However, there is always a catch to it. You need to be sure that NZ Super gives you more dollars than UK State Pension.
I cannot guide yu on what is best, because my own situation is more complicated. I enjoy better rates overall because I have lived here for so long and qualified under the residence rules for a top-up that was discounted by quite a lot because my wife was working and receiving UK state pension before the age of 65.
Not sure where you live, but the people in Upper Hutt and Wellington have been ver good in advising my wife and me.

LolPen

Thank you very much, your info has been very helpful.

nikkijane88

I was under the impression that you have to have been in New Zealand for a certain amount of time in order to receive the state pension here. As you are already in receipt of the UK state pension and you stated you are new to the country... Going by what I've read you'd have to continue taking the UK one. I could be wrong

nzneville

That's why the new immigrant should make an appointment and talk to somebody in MSD who can guide. There is probably a qualifying period.
I have just received this morning my new statement from MSD, showing how my New Zealand top-up has been calculated. It literally shows me how much gross the New Zealand pension is, then deducts my UK State Pension frozen when I was 65, and pays me the net amount, less tax on the net amount.

LolPen

That's interesting info. Thank you both for this help. I will definitely make an appointment with MSD.

nzneville

This is what you might find, regarding the residence qualification. It is in Section 8 of the New Zealand Superannuation and Retirement Income Act 2001, which you can peruse on the web. If this is the case, you may have to wait ten years and then be able to switch over.

8Residential qualification for New Zealand superannuation
No person is entitled to New Zealand superannuation unless the person—
(a)is ordinarily resident in New Zealand on the date of application for New Zealand superannuation; and
(b)has been both resident and present in New Zealand for a period or periods aggregating not less than 10 years since attaining the age of 20 years; and
(c)has also been both resident and present in New Zealand for a period or periods aggregating not less than 5 years since attaining the age of 50 years.

chc4me

There is a reciprocal agreement between NZ and the UK which treats ex-UK residents as though they are NZ'ers. Therefore the 10 year does not apply. Here is the link to Work & Income manual about this.

The NZ State Pension is payable from the age of 65 for those that qualify (i.e age 65 and a NZ citizen or permanent resident).

You have the option to continue to receive your state pension from the UK, although there will be no inflation increases, or you can 'swap' it in exchange for a full NZ State pension, called NZ Superannuation. Tax on the NZ state pension will be deducted at source.

Note that if you continue to receive payments from the UK after the end of your 4 year tax exemption on overseas income for "Transitional Residents", you are then required to declare payments for income tax in NZ.

LolPen

So I understand from your post that if I elect to take the New Zealand Superannuation it is not covered by the four year tax exemption that I would receive as a new migrant, and tax will be deducted on it from the start?

Many thanks

chc4me

It is important to clarify the 4 year exemption to avoid confusion.

1. First there is the "General Exemption for Pension Transfers" which applies for the transfer of a personal pension from a UK private pension into a NZ QROPS scheme. This exemption does not apply to your question.

2. For new migrants and some returning Kiwis that qualify, there is a "Transitional Residents" exemption. This exemption applies to income sourced from outside NZ. The purpose of the exemption is to allow you to arrange your financial affairs for tax purposes and declaring tax in NZ. While the Transitional Residency exemption is automatic, it is possible to opt out (perhaps due to foreign losses) or for the exemption to be withdrawn (if you receive benefits such as "Working for Families Tax Credits").

Coming back to your question, Transitional Residents is the exemption in this situation. As it is only for foreign sourced income, payments from NZ sources (such as a NZ State Pension), would not qualify. If receiving the NZ State Pension, tax will be deducted at source at your nominated tax rate.

Here is a link to the IRD website regarding Transitional Residency.

The above is information only and should not be relied apon, tax is a technical area and advice from a suitable Accountant is encouraged.

LolPen

Thank you very much for info. Kind regards Laurence