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New Tax on non-NZ personal & occupation pension plans to hit migrants old and new

New Tax on non-NZ personal & occupation pension plans to hit migrants old and new

Old Feb 23rd 2013, 7:06 pm
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Default Re: New Tax on non-NZ personal & occupation pension plans to hit migrants old and new

Originally Posted by Genesis View Post
Is it any wonder why some of us get very bitter about NZ? 1st the finance house scandal and now this...back dating a law that said you WOULD be tax free and now saying 'we want to tax you come to think of it' AFTER we have done the deal!!
It's appalling. Do you think the NZ Government secretly wants all British immigrants to return to UK and no more to arrive?

All corporate expats tend to get out after 4 years because of NZ taxing your home-based pension fund annually even though you are not seeing any income from it as yet because duh it is your pension.
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Old Mar 10th 2013, 3:55 am
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Default Re: New Tax on non-NZ personal & occupation pension plans to hit migrants old and new

Thanks to everyone who has contributed and I have read all responses and articles but am still unclear on a few points

1. when does the 4years exemption start - is it when my visa was granted which for me was March 2009 or when we actually landed which was August 2009 as I am now wondering if I have missed the 4 years exemption boat

2. I am in kiwi saver scheme , would it be beneficial transferring directly into this

3. As there have been questions about pension transfer companies and their knowledgeseems to be debatable - can anyone suggest a competent company

Many thanks - you clever people
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Old Mar 10th 2013, 5:06 am
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Default Re: New Tax on non-NZ personal & occupation pension plans to hit migrants old and new

Originally Posted by Genesis View Post
I have been in touch (quite a while back prepping for this eventuality) with the huge UK service provider of my pension on behalf of Plod in the UK and they have clearly stated to me that they cannot give historical values, only present ones.
Thats only unwillingness on their part, the entire financial industry world-wide keeps excellent historical values/records (of everything), for their own, regulatory and taxation reasons. Its future values they have a hard time knowing.

Think about it, every pension prospectus is stuffed full of great rising charts on their funds (that they want to sell you), past/historical performance. Knowing how your pension was invested at the time makes it quite straightforward to then calculate its actual value at any point in time. You may want to try it if only to know whether to challenge IRD's guesstimate of the same valuation.

Of course your provider won't want to do it, that is a bit of work they aren't paid for, and they don't need to comply with every random request for historical valuations from IRD's around the world.
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Old Mar 10th 2013, 5:18 am
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Default Re: New Tax on non-NZ personal & occupation pension plans to hit migrants old and new

Originally Posted by bolton1 View Post
Thanks to everyone who has contributed and I have read all responses and articles but am still unclear on a few points

1. when does the 4years exemption start - is it when my visa was granted which for me was March 2009 or when we actually landed which was August 2009 as I am now wondering if I have missed the 4 years exemption boat

2. I am in kiwi saver scheme , would it be beneficial transferring directly into this

3. As there have been questions about pension transfer companies and their knowledgeseems to be debatable - can anyone suggest a competent company

Many thanks - you clever people
1. From the date that you arrived. IRD sent me a letter to remind me that my four years was at an end.

2. You need financial advice, the answer to this will depend on your personal circumstances. Kiwisaver is more restrictive about when you can access the money than non-kiwisaver schemes so I didn't go with that option.

3. I was very happy with the one that I used but it is still early days yet so I am not keen to provide a recommendation even though they have been brilliant so far!

Originally Posted by simonsi View Post
Thats only unwillingness on their part, the entire financial industry world-wide keeps excellent historical values/records (of everything), for their own, regulatory and taxation reasons. Its future values they have a hard time knowing.

Think about it, every pension prospectus is stuffed full of great rising charts on their funds (that they want to sell you), past/historical performance. Knowing how your pension was invested at the time makes it quite straightforward to then calculate its actual value at any point in time. You may want to try it if only to know whether to challenge IRD's guesstimate of the same valuation.

Of course your provider won't want to do it, that is a bit of work they aren't paid for, and they don't need to comply with every random request for historical valuations from IRD's around the world.
I suspect the Plod pension is a Defined Benefit scheme rather than a Defined Contribution scheme.

It is next to impossible to determine the value of a defined benefit scheme, the cost of providing specified amounts at retirement will depend on the annuity rates that prevail at the time the person retires and also investment performance in the interim. You can make assumptions about those but the world can change enough to invalidate those assumptions in a fairly short space of time.

Last edited by Clappy; Mar 10th 2013 at 5:29 am. Reason: A bit more info to add.
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Old Mar 10th 2013, 7:45 am
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Default Re: New Tax on non-NZ personal & occupation pension plans to hit migrants old and new

You may be able to withdraw all or part of your savings early if you're buying your first home, emigrating or suffering financial hardship or serious illness.

http://www.kiwisaver.govt.nz/already/get-money/
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Old Mar 10th 2013, 9:28 am
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Default Re: New Tax on non-NZ personal & occupation pension plans to hit migrants old and new

Originally Posted by Clappy View Post
I suspect the Plod pension is a Defined Benefit scheme rather than a Defined Contribution scheme.

It is next to impossible to determine the value of a defined benefit scheme, the cost of providing specified amounts at retirement will depend on the annuity rates that prevail at the time the person retires and also investment performance in the interim. You can make assumptions about those but the world can change enough to invalidate those assumptions in a fairly short space of time.
C'mon, they can just run the calculation forward or back on any timescale they choose, any actuary worth his salt can do that - and they keep records of the calculations they were making. So to find out the figure at any point in time is relatively easy - agree it is full of assumptions but knowing what assumptions were being made at any point in time should be perfectly possible, after all a continual stream of such calculations are being made over time as actual transfers are made and advisors test the worth of transfers in many other cases. I've transferred a defined-benefit scheme so I have some experience...
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Old Mar 11th 2013, 2:31 am
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Default Re: New Tax on non-NZ personal & occupation pension plans to hit migrants old and new

Originally Posted by simonsi View Post
C'mon, they can just run the calculation forward or back on any timescale they choose, any actuary worth his salt can do that - and they keep records of the calculations they were making. So to find out the figure at any point in time is relatively easy - agree it is full of assumptions but knowing what assumptions were being made at any point in time should be perfectly possible, after all a continual stream of such calculations are being made over time as actual transfers are made and advisors test the worth of transfers in many other cases. I've transferred a defined-benefit scheme so I have some experience...
As you said it is their unwillingness to do it. And neither myself or the IRD cannot make them do it. I assume the IRD will have some kind of calculation (if this all goes through and they want the shirt off our backs) to establish its approximate worth upon arrival here in April 2005.
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Old Mar 11th 2013, 3:41 am
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Default Re: New Tax on non-NZ personal & occupation pension plans to hit migrants old and new

Originally Posted by Genesis View Post
As you said it is their unwillingness to do it. And neither myself or the IRD cannot make them do it. I assume the IRD will have some kind of calculation (if this all goes through and they want the shirt off our backs) to establish its approximate worth upon arrival here in April 2005.
Best you can do I think will be to ask IRD for the calculation they use and make sure the assumptions they have used are in the right ballpark...
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Old Mar 11th 2013, 4:59 am
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Default Re: New Tax on non-NZ personal & occupation pension plans to hit migrants old and new

Originally Posted by simonsi View Post
Best you can do I think will be to ask IRD for the calculation they use and make sure the assumptions they have used are in the right ballpark...
Indeed. Nothing else for it eh? It just makes me so angry that you embark upon a deal with all the facts and then they change the facts to fit their desire for more taxation. Or have I got it wrong? Have I missed summat and the IRD ARE being fair? Maybe the QROPS provider lied to me about all the tax free stuff? Was it all really promised us tax free so long as we stuck to all the rules (as we did)??
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Old Mar 11th 2013, 10:53 pm
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Default Re: New Tax on non-NZ personal & occupation pension plans to hit migrants old and new

Originally Posted by Genesis View Post
It just makes me so angry that you embark upon a deal with all the facts and then they change the facts to fit their desire for more taxation. Or have I got it wrong? Have I missed summat and the IRD ARE being fair? Maybe the QROPS provider lied to me about all the tax free stuff? Was it all really promised us tax free so long as we stuck to all the rules (as we did)??
One of the problems has been the confusion and uncertainty of taxation in the Pension area and how the IRD have treated Pensions. By the IRDs own admission, "the current rules for taxing foreign superannuation are complex, inconsistent and lacking in overall cohesion." (Source: Officials issues paper July 2012).

The IRD are saying that the current law and the law that has been in place for a number of years, DOES provide for taxation of foreign superannuation and therefore the IRD are applying the law that is in place. Is it fair? Not in my opinion.

As some have already stated, misinformation has been provided by IRD officials (normally via telephone), their adviser or their tax accountant. In the case of the last two parties, might be worth a call and ask how they might rectify the situation if you have been provided with incorrect advice.

Genesis, I seriously doubt that lies have been told.

To add to the confusion, the IRD produced a booklet called "Overseas Private Pensions" (IR257) which stated that "If no pension or other income is received from the scheme, there will be no taxable income." The IRD have since withdrawn this guide which has previously been available since at least 2009.

Once the Bill is presented to parliment and further information is available, I'll post an update at that time.
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Old Mar 11th 2013, 11:02 pm
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Default Re: New Tax on non-NZ personal & occupation pension plans to hit migrants old and new

Thank you ChC4me

By the way, you seem to have lost your link in your signature.
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Old Mar 12th 2013, 2:17 am
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Default Re: New Tax on non-NZ personal & occupation pension plans to hit migrants old and new

Originally Posted by chc4me View Post
One of the problems has been the confusion and uncertainty of taxation in the Pension area and how the IRD have treated Pensions. By the IRDs own admission, "the current rules for taxing foreign superannuation are complex, inconsistent and lacking in overall cohesion." (Source: Officials issues paper July 2012).

The IRD are saying that the current law and the law that has been in place for a number of years, DOES provide for taxation of foreign superannuation and therefore the IRD are applying the law that is in place. Is it fair? Not in my opinion.

As some have already stated, misinformation has been provided by IRD officials (normally via telephone), their adviser or their tax accountant. In the case of the last two parties, might be worth a call and ask how they might rectify the situation if you have been provided with incorrect advice.

Genesis, I seriously doubt that lies have been told.

To add to the confusion, the IRD produced a booklet called "Overseas Private Pensions" (IR257) which stated that "If no pension or other income is received from the scheme, there will be no taxable income." The IRD have since withdrawn this guide which has previously been available since at least 2009.

Once the Bill is presented to parliment and further information is available, I'll post an update at that time.
No I don't think the firm that sold me the QROPs transfer were pulling the wool over our eyes I think they too believed that this was a kosher tax free way to bring over our pensions. Changing the rules post hocta proc is just not cricket, innit? Thank you also for all your help in this complex area that I know stuff all about.
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Old Mar 12th 2013, 8:45 am
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Default Re: New Tax on non-NZ personal & occupation pension plans to hit migrants old and new

Thanks everyone - this has been really helpful and I will watch out for an update
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Old Oct 31st 2013, 11:10 am
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Unhappy Re: New Tax on non-NZ personal & occupation pension plans to hit migrants old and new

Any updates? I will start receiving a smallish NHS pension in April 2015 and am really unsure whether to keep it or transfer it to a QROPS here in NZ before then. Despite trawling the NHS/IRD sites i cannot work out what tax i may be paying. I understand there is a double tax agreement but can't work it out.
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