chc4me

Greetings all,

This update takes into account changes in the UK Budget 2017. Background: The ability to transfer a UK pension to a Qualifying Recognised Overseas Pension Scheme (QROPS) began in April 2006. Since that time there has been 7 major changes to the rules either in NZ or the UK (or sometimes both). In other words, what may have been true in previous years, may no longer be relevant now. Before undertaking any action with a UK pension, it is vital to seek advice from a specialist adviser with experience and expertise in this complex sector.

1. Defined Contribution schemes (also known as money purchase schemes) and private final salary schemes CAN be transferred.

2. UK Government funded final salary schemes can not be transferred overseas (NHS, Teachers, etc). We think there might be changes in the future, but right now that's the situation. Those schemes will have to stay put until retirement.

3. If transferring a UK Pension savings scheme to NZ, it must be transferred to a Qualifying Recognised Overseas Pension Scheme (QROPS for short).

4. Some KiwiSaver schemes previously qualified, however from 6th of April 2015, KiwiSaver schemes were no longer permitted to receive transfers. This is due to the ability to make withdrawals before age 55 in certain circumstances, such as Financial Hardship and Permanent immigration from NZ. What if you have previously made a transfer to KiwiSaver? No problem, it just continues as before - withdrawals available from age 65.

5. There are approximately 10 qualifying QROPS scheme in New Zealand. Each one has advantages and disadvantages, as well as different fees.

6. Transfers from a pension scheme to a NZ scheme is a taxable event. If a transfer is made within the first 4 years of arriving in NZ, then no tax is payable on the transfer. After the 4 year anniversary, tax is payable to the NZ IRD based on a sliding scale and the number of years since the end of the 4 year anniversary. More information is available with the IR1024 fact sheet on this issue. If you are a returning resident, or have previously lived in NZ, then you may qualify for a general 4 year exemption. It is important to seek tax advice everytime.

7. Since April 2015, the UK permits 100% withdrawals from a UK Pension scheme directly to the named holder. However this would be taxable event and tax is required to be paid on the FULL amount in New Zealand. This rule may be helpful for investors over age 55 and recently arrived in NZ.

8. From April 2017, full flexibility will be available for withdrawals from NZ QROPS schemes. However, a 10 year member payment provision may apply. Advice is essential.

9. Overseas Transfer Charge (OTC) – For new transfers from 9th March 2017, investors need to be aware of the OTC. This has been introduced by the UK authorities and is payable in certain situations. There are some exemptions including transferring your UK pension to a QROPS that is in the same country that you are living in. For example, if you live in NZ and transfer to a NZ scheme, then the exemption applies. However, if your circumstances change within 5 years of making the transfer, the OTC of 25% could become payable to HMRC.

This area of financial advice can be quite technical, one question can lead to another and what is right for one person may not be right for another. Please seek advice from a suitable Adviser before making any financial decisions.

Best wishes.

ChrisRobinson

Our experiences may be useful. I went to NZ in 2005 and reached 65 in 2012.

NZ Pension, Super, cut in and was easy to set up but the rate was low. I got mail from them asking about my UK State Pension rights and I supplied the details. I was offered two alternatives, both were a pain and pretty worthless, the NZ Pension was to be reduced by the sum contributed from UK so no gain for a lot of work.

Yo can let them sort your UK pension automatically, the UK Pension is paid to NZ Super and they just pay you the normal full NZ Pension or you can have the UK Pension paid to you and they adjust the NZ pension each month to allow for the exchange rate changes. We did that and are very pleased we did since we returned to UK and the UK Pension was immediately transferred back to us here without the usual delays and aggravation caused by getting money out of a NZ public service. I cannot vouch for it personally but we understand it can take 4 - 6 weeks for Super to stop collecting your UK pension and get that sum repaid to you in UK.

I am disabled and getting the right or any benefits is a battle in NZ but it varies with location, in Northland with very high rates of unemployment just getting seen at the WINZ office is challenging and stressful, on the North shore in Auckland they are almost pleased to see you!

ReturningKiwi14

Thanks chc4me

I'm doing research into moving pensions now...heard some scary stories about commission charged, so trying to speak to people to get an idea of 'normal'....
Or if I can do it myself
Cheers

chc4me

ReturningKiwi - I'll send you a private message on this. Thanks.

tease

Hi chc4me

I am a British national and have residency in NZ. I have converted 2 pensions into a single drawdown pension in the UK. I have already taken my 25% tax free lump sum.

My question is when we return to NZ to live is it possible to transfer the rest of my pension to NZ?

Many thanks

Ian

chc4me

Hi Ian,
If your pension is in 'Drawdown' then yes you can obtain a transfer value and complete a transfer to a NZ scheme. However if you have converted to an Annuity, then under the terms of that annuity, the funds can not be transferred.
Warm regards
chc4me