NZ Tax Bill Introduced - UK Pensions
#106
Re: NZ Tax Bill Introduced - UK Pensions
Hi CHC4ME
Was wondering if you would be able to answer a question or advise on a possible solution to my situation.
I am currently in NZ on a 3 year work visa and therefore unable to pay into Kiwi saver but my employer is accruing pension contributions for me which are held in their account. This is were it gets a bit tricky in that I do not intend to stay in New Zealand so the contributions will never be paid into a Kiwi saver. I would like to be able to get my hands on this money when I do leave so is there any other fund I could get my employer to pay the contributions to? One of my colleagues who is NZ citizen has been able to 'cash out' I was wondering if I could do the same.
Many thanks in advance
Was wondering if you would be able to answer a question or advise on a possible solution to my situation.
I am currently in NZ on a 3 year work visa and therefore unable to pay into Kiwi saver but my employer is accruing pension contributions for me which are held in their account. This is were it gets a bit tricky in that I do not intend to stay in New Zealand so the contributions will never be paid into a Kiwi saver. I would like to be able to get my hands on this money when I do leave so is there any other fund I could get my employer to pay the contributions to? One of my colleagues who is NZ citizen has been able to 'cash out' I was wondering if I could do the same.
Many thanks in advance
#107
Re: NZ Tax Bill Introduced - UK Pensions
For transfers before April 2012, that was (and is) an option and is commonly referred to as 'the old rules'. So yes you are correct. However for all transfers after that date, the rules are more restrictive and requires intimate knowledge of the rules.
#108
Just Joined
Joined: Mar 2014
Posts: 1
Re: NZ Tax Bill Introduced - UK Pensions
A correction is needed here. One of the advantages of a saving into a UK Pension is that you have tax relief on contributions. To say you paid tax on the money when you earned it is not quite right.
Effectively, you saved tax free and it grew tax free. The NZ IRD have given you the opportunity to pay a small amount of tax (on the first 15% of your transfer, that means the other 85% is tax free!!), and the benefit of paying this onetime tax is any withdrawals you make, no further tax.
Sounds like a great deal to me.
If you had of left the funds in the UK, you would pay tax on each and every withdrawal. That includes the initial 25% Pension Commencement Lump Sum and the monthly pension payment - for the rest of your life.
Of course, tax is only one consideration to a Pension transfer. There are pro's and con's for keeping it in the UK or making a transfer.
Effectively, you saved tax free and it grew tax free. The NZ IRD have given you the opportunity to pay a small amount of tax (on the first 15% of your transfer, that means the other 85% is tax free!!), and the benefit of paying this onetime tax is any withdrawals you make, no further tax.
Sounds like a great deal to me.
If you had of left the funds in the UK, you would pay tax on each and every withdrawal. That includes the initial 25% Pension Commencement Lump Sum and the monthly pension payment - for the rest of your life.
Of course, tax is only one consideration to a Pension transfer. There are pro's and con's for keeping it in the UK or making a transfer.
I have been looking for some advice around transferring my NHS pension from the UK to NZ and found your posts on this forum. I registered especially so I could contact you of further advice but as a newbie can't send you a PM to make contact! Could you please PM me as I am keen to get some advice before the April tax change :-)
Cheers
#110
Re: NZ Tax Bill Introduced - UK Pensions
A correction is needed here. One of the advantages of a saving into a UK Pension is that you have tax relief on contributions. To say you paid tax on the money when you earned it is not quite right.
Effectively, you saved tax free and it grew tax free. The NZ IRD have given you the opportunity to pay a small amount of tax (on the first 15% of your transfer, that means the other 85% is tax free!!), and the benefit of paying this onetime tax is any withdrawals you make, no further tax.
Sounds like a great deal to me.
If you had of left the funds in the UK, you would pay tax on each and every withdrawal. That includes the initial 25% Pension Commencement Lump Sum and the monthly pension payment - for the rest of your life.
Of course, tax is only one consideration to a Pension transfer. There are pro's and con's for keeping it in the UK or making a transfer.
Effectively, you saved tax free and it grew tax free. The NZ IRD have given you the opportunity to pay a small amount of tax (on the first 15% of your transfer, that means the other 85% is tax free!!), and the benefit of paying this onetime tax is any withdrawals you make, no further tax.
Sounds like a great deal to me.
If you had of left the funds in the UK, you would pay tax on each and every withdrawal. That includes the initial 25% Pension Commencement Lump Sum and the monthly pension payment - for the rest of your life.
Of course, tax is only one consideration to a Pension transfer. There are pro's and con's for keeping it in the UK or making a transfer.
many thanks chc4me
#111
Re: NZ Tax Bill Introduced - UK Pensions
Hi guys.
KiwiAnt will be able to see your PM via the email address they registered with.
Other way is to send a BE email. GO to the profile and use that option.
KiwiAnt. You may think to contact chc4me direct via a business email.
However, I do hope you stick around this little NZ forum and join in.
KiwiAnt will be able to see your PM via the email address they registered with.
Other way is to send a BE email. GO to the profile and use that option.
KiwiAnt. You may think to contact chc4me direct via a business email.
However, I do hope you stick around this little NZ forum and join in.
#112
Re: NZ Tax Bill Introduced - UK Pensions
We're just looking at transfer of UK pensions to NZ. However the hubby is very reluctant to do anything with his (MPS) Mineworkers Pension. Any advise or thoughts on this would be appreciated.
#113
Re: NZ Tax Bill Introduced - UK Pensions
Hi Boopy,
Transferring pension savings is not always the right action, sometimes the retirement benefits are very valuable and are well worth continuing with those benefits. On the other hand, there are advantages of making a transfer to a NZ scheme. I always suggest finding out the advantages and disadvantages or any action (or inaction) so that you make an informed decision.
Transferring pension savings is not always the right action, sometimes the retirement benefits are very valuable and are well worth continuing with those benefits. On the other hand, there are advantages of making a transfer to a NZ scheme. I always suggest finding out the advantages and disadvantages or any action (or inaction) so that you make an informed decision.
#114
Just Joined
Joined: Dec 2009
Posts: 4
Re: NZ Tax Bill Introduced - UK Pensions
Your posts are really informative chc4me thank you for taking the time to post. I'd be really grateful if you can help me understand what's what from the contradictory advice I've been given from two advisors, one in UK other in NZ
I have a UK final salary teacher pension which I can draw down from age 55 as lump sum and annuity. I'm 42 and I've been living in NZ for one year.
My UK pension advisor says I should leave this pension in the UK unless I am terminally ill, in which case under the policy guidelines I could withdraw it then. My NZ advisor has told me to transfer it to NZ ASAP into QROPS and absolutely before March this year. It was from reading your posts that I realised I had up to 4 years to decide (if I read correctly?) and that I didn't have to meet the March 2014 deadline.
I'm a higher tax payer in whichever country I live - NZ or UK if that's relevant? My UK pension remains open for top up as a final salary pension for the next 4 years. So if I were to go back to UK to work in that time I would automatically contribute back into this pension pot (unlikely but not impossible) and I have a kiwi saver here. I really have no idea what to do - my gut instinct is to leave the index linked final salary pension in the UK because those benefits are worth more than tax savings later down the line?? I have a UK bank account won't the UK pension just be paid directly into that when I retire?
Very confused! Thank you for any advice
I have a UK final salary teacher pension which I can draw down from age 55 as lump sum and annuity. I'm 42 and I've been living in NZ for one year.
My UK pension advisor says I should leave this pension in the UK unless I am terminally ill, in which case under the policy guidelines I could withdraw it then. My NZ advisor has told me to transfer it to NZ ASAP into QROPS and absolutely before March this year. It was from reading your posts that I realised I had up to 4 years to decide (if I read correctly?) and that I didn't have to meet the March 2014 deadline.
I'm a higher tax payer in whichever country I live - NZ or UK if that's relevant? My UK pension remains open for top up as a final salary pension for the next 4 years. So if I were to go back to UK to work in that time I would automatically contribute back into this pension pot (unlikely but not impossible) and I have a kiwi saver here. I really have no idea what to do - my gut instinct is to leave the index linked final salary pension in the UK because those benefits are worth more than tax savings later down the line?? I have a UK bank account won't the UK pension just be paid directly into that when I retire?
Very confused! Thank you for any advice
#115
Re: NZ Tax Bill Introduced - UK Pensions
My UK pension advisor says I should leave this pension in the UK unless I am terminally ill, in which case under the policy guidelines I could withdraw it then. My NZ advisor has told me to transfer it to NZ ASAP into QROPS and absolutely before March this year. It was from reading your posts that I realised I had up to 4 years to decide (if I read correctly?) and that I didn't have to meet the March 2014 deadline.
When considering a pension transfer it's important to consider the rules and regulations in both countries and it is often difficult finding advisers who have an such knowledge.
My UK pension remains open for top up as a final salary pension for the next 4 years. So if I were to go back to UK to work in that time I would automatically contribute back into this pension pot (unlikely but not impossible) and I have a kiwi saver here. I really have no idea what to do - my gut instinct is to leave the index linked final salary pension in the UK because those benefits are worth more than tax savings later down the line??
Just one important point, transfers from Teachers Pensions, NHS, and most Govt agencies can take 3 to 6 months. If you do decide to make a transfer before the end of your 4 year exemption, allow enough time for completion.
Hope that helps. And welcome to NZ.
Last edited by chc4me; Mar 16th 2014 at 4:13 am.
#116
Re: NZ Tax Bill Introduced - UK Pensions
chc4me.
Have you a link that would better show your business email and website please?
Have you a link that would better show your business email and website please?
#117
Just Joined
Joined: Jan 2005
Posts: 4
Re: NZ Tax Bill Introduced - UK Pensions
Hi,
my husband and I both were teachers in the UK and moved here in Sept 2006. We have just recently heard about the new tax laws relating to overseas pensions and a Britannia representative scared us by telling us of his tax bill of $7000! We are unsure whether to start the transfer or leave both of our pensions in the uk. We have a kiwi saver here ad are not sure if our teachers pensions are worth much as we only worked for 12 years and I had 3 maternity leaves in that time. We feel that doing something now is a bit of a knee jerk reaction but would like any advice that is going. Thanks
my husband and I both were teachers in the UK and moved here in Sept 2006. We have just recently heard about the new tax laws relating to overseas pensions and a Britannia representative scared us by telling us of his tax bill of $7000! We are unsure whether to start the transfer or leave both of our pensions in the uk. We have a kiwi saver here ad are not sure if our teachers pensions are worth much as we only worked for 12 years and I had 3 maternity leaves in that time. We feel that doing something now is a bit of a knee jerk reaction but would like any advice that is going. Thanks
#118
Re: NZ Tax Bill Introduced - UK Pensions
As with any financial matter, gather all of the information and then make an informed decision.
Best wishes.
#119
Re: NZ Tax Bill Introduced - UK Pensions
Basically, you would only pay tax on your pensions once either in UK or NZ, regardless of when or how many years down the line?? Is that right?
#120
Re: NZ Tax Bill Introduced - UK Pensions
If you remain living in NZ and your husband keeps his fund in the UK, then he retires and receives benefits from his pension fund, tax will be payable in NZ on each amount for as long as those payments continue.
If your husband transfers his pension to NZ, a one time tax will be payable on the amount transferred but when it comes time to receive benefits from the NZ Pension fund, then no further tax is payable.
You either pay tax in the future on all payments made out of the pension OR you pay a one time tax on the transfer of the pension to a NZ scheme. As previously stated, tax is only one reason. There are advantages and disadvantages.
Hope that helps.