Question on HM Forces Pensions

Old Mar 13th 2008, 9:27 pm
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Default Question on HM Forces Pensions

Hi

New here and have a question, I'm hoping someone can help me with.

We are seriously thinking of emigrating to NZ when hubby retires from RN in a few years time.

Does anyone know what the tax implications on his pension would be if we left the money to go inot our UK account once emigrating, or would it be better to have the money sent to NZ into an account there. Have been serarching everywhere for information on it but to no avail.

Many thanks for all your help.

Tracy
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Old Mar 25th 2008, 8:40 pm
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Default Re: Question on HM Forces Pensions

[QUOTE=Tracy24;6059720]Hi

New here and have a question, I'm hoping someone can help me with.

We are seriously thinking of emigrating to NZ when hubby retires from RN in a few years time.

Does anyone know what the tax implications on his pension would be if we left the money to go inot our UK account once emigrating, or would it be better to have the money sent to NZ into an account there. Have been serarching everywhere for information on it but to no avail.

Many thanks for all your help.

Tracy

You will get taxed on your husbands pension when paid in the UK at the appropriate rate (24% or 40%) depending on income.There is an agreement between UK and NZ that you wont be taxed twice, however when your money gets transfered to NZ, they will make up the difference in tax to match their own ie.24% to 33%.If you then start earning a wage in NZ it will be added to your pension income which will probably push you up to their hire rate of tax, 39%.

There is an alternative which we have looked at.You can get a Cash Equivalent Transfer Value (CETV) of your husbands pension. This allows for you to cash it in and transfer it to a Qualifying Registered Overseas Pension Scheme (QROPS) in NZ. A list can be obtained from the Inland Revenue.Depending on your husbands rank you will find it is worth quite a bit.The advantage is that you free up the cash value to invest in a NZ Superannuation scheme.You wont be taxed on the lump sum transfered and after five years you can access 40% of it tax free each year or just let it build up with your NZ contributions.Tax is only paid on interest earned which at the moment can be anything between 6 and 12% depending on the risk you wish to take.The other advantage is that it doesn't die with your husband. It can be passed on to you or your children with no inheritance tax unlike his Army Pension.

I'm not an expert so don't quote me.I've picked it up from doing my own digging.Some Pension transfer companies exist to help but they will charge around 3% to arrange.Tell your husband to ask for a CETV from his Pensions office. It takes about 3 weeks and you are entitled to one request a year. at least you will know how much it is worth.

We are both Police Officers and had the same dilema.Hope this helps.

Ade
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Old Mar 26th 2008, 6:55 pm
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Default Re: Question on HM Forces Pensions

Hi Ade

Many thanks for that information it's been a really good starting point.

Hubby is going to email a friend who has recently moved to NZ to see what they advise as well.

It's going to take a bit of looking into like you have said but we have the time now to start.

Many thanks again.

Tracy
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Old Mar 26th 2008, 10:18 pm
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Default Re: Question on HM Forces Pensions

Originally Posted by Tracy24 View Post
Hi Ade

Many thanks for that information it's been a really good starting point.

Hubby is going to email a friend who has recently moved to NZ to see what they advise as well.

It's going to take a bit of looking into like you have said but we have the time now to start.

Many thanks again.

Tracy
This is good to know as I need to do the same with my RM one as Ive over here already...did you know you can also claim your UK tax back when your over here?

'Tup Three' and 'splice the main brace' and all that!
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Old Mar 27th 2008, 9:50 pm
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Default Re: Question on HM Forces Pensions

Originally Posted by andrewmenet View Post
This is good to know as I need to do the same with my RM one as Ive over here already...did you know you can also claim your UK tax back when your over here?

'Tup Three' and 'splice the main brace' and all that!
"This info is for those that receive a British Armed Forces pension and wish to live in New Zealand.

OK I called the New Zealand Inland Revenue folks yesterday to get a definitive answer on my pension and this is the outcome.

You need to contact HM Revenue & Customs in the UK stating that you have or are emigrating to New Zealand. They will (eventually) send you a form (Form New Zealand-Individual 4) which you have to complete and send to the New Zealand Inland Revenue along with a copy of your pension P60. Once New Zealand Inland Revenue have confirmed that you are a New Zealand TAX resident your British Armed Forces pension will become UK TAX free


OK now the good bit. You get 4 years from the date of New Zealand entry before you have to declare your British Armed Forces pension, so it's TAX free in New Zealand too


You didn't for one minute think you were going to get away that easy did you? Now the kick in the knackers time

All the above is great...... but if you have a family and your total household income, including your British Armed Forces pension which you will have to declare at this stage, comes to more than about $65000 then it's not worth claiming Working Family Tax Credit


So in a nutshell with a family you get either tax free for 4 years pension or you pay TAX in either the UK or New Zealand* or you claim Working Family Tax Credit you work out which way you are better off.
You cannot have your cake and eat it I'm afraid


*The UK and New Zealand have a double tax convention so this is how it affects your pension. You can opt to pay tax on your pension in the UK and claim your UK personal allowance against it (New Zealand doesn't have this so you pay tax from the first £) and then pay the remaining tax % to the Inland Revenue in New Zealand."

This is advice from a friend - not me!!!!
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Old Mar 28th 2008, 4:05 pm
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Default Re: Question on HM Forces Pensions

Hi thanks for that will pass the information on to my hubby - he can deal with it from now on as it all gets too confusing for me I'll just carry on dreaming of what I'm spending his pension on LOL

No doubt once I start working out there we will be on over $60K so Mr Tax man will be our least favourite person as usual LOL but I'm sure he will love us! Hey ho no matter where we decide to emigrate to we are going to get stung for tax so may as well accept it now rather than nearer the time!

Thanks everyone for your help on this greatly appreciated.

Tracy
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