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NZ Tax Bill Introduced - UK Pensions

NZ Tax Bill Introduced - UK Pensions

Old Dec 6th 2013, 8:14 pm
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Default Re: NZ Tax Bill Introduced - UK Pensions

Another article from the Herald - reasonably balanced I thought:

http://www.nzherald.co.nz/opinion/ne...ectid=11168381
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Old Dec 9th 2013, 7:55 pm
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Default Re: NZ Tax Bill Introduced - UK Pensions

Hi all

Tried to understand if there is any urgency with regards to my situation, with the deadline coming in April. A NZer been living overseas, planning to return towards the end of 2014. Do I need to transfer my pension ASAP? I am 25 years from retirement, what is the sensible option for people who plan to return?

Any help is appreciated
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Old Dec 9th 2013, 8:08 pm
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Default Re: NZ Tax Bill Introduced - UK Pensions

Originally Posted by Cibuma
Hi all

Tried to understand if there is any urgency with regards to my situation, with the deadline coming in April. A NZer been living overseas, planning to return towards the end of 2014. Do I need to transfer my pension ASAP? I am 25 years from retirement, what is the sensible option for people who plan to return?

Any help is appreciated
Hi Cibuma and welcome to B.E.

Where are you and your pension fund currently based?

Last edited by Catchafire; Dec 9th 2013 at 9:34 pm. Reason: typo
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Old Dec 9th 2013, 9:18 pm
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Default Re: NZ Tax Bill Introduced - UK Pensions

Hi

Thanks for the welcome.
It is a private pension I have contributed into whilst contracting out in the UK. I expect a common scenario for a few NZ overseas people.
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Old Dec 9th 2013, 9:58 pm
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Default Re: NZ Tax Bill Introduced - UK Pensions

Hi All...

Good thread with some interesting points....Thanks

I arrived in 2005 & have left my pensions in UK & I have a couple of Q's about the new legislation if anyone could please help.

- If a UK pension is transferred to NZ , can it be split to different pension providors, or must it all be with 1 company.

- If transferred now into a non-Kiwi Saver fund, after say 20yrs of being outside UK & over age 55 can 100% be withdrawn or is the max 30% with 70% to provide income ?....If into a kiwisaver fund then 100% can be withdrawn at age 65, correct?

- Can a UK fund wthat was used to contract out of the "state second pension" also be transferred ?

- Once UK pension transferred to a suitable NZ fund ...Is there flexabilty to then transfer to other suitable NZ funds if decide to based on investemnt returns etc (without UK/NZ tax penalties)?


Many Thanks...

Last edited by Big Face; Dec 9th 2013 at 10:14 pm.
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Old Dec 10th 2013, 10:39 pm
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Default Re: NZ Tax Bill Introduced - UK Pensions

Originally Posted by Cibuma
Hi all

Tried to understand if there is any urgency with regards to my situation, with the deadline coming in April. A NZer been living overseas, planning to return towards the end of 2014. Do I need to transfer my pension ASAP? I am 25 years from retirement, what is the sensible option for people who plan to return
From 1 April 2014, returning residents will be able to apply a four year tax exemption in order to transfer a pension to New Zealand without a tax charge. Therefore for those currently overseas, there is less urgency than for those living in NZ and have been in NZ for more than 4 years.
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Old Dec 10th 2013, 10:53 pm
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Default Re: NZ Tax Bill Introduced - UK Pensions

Originally Posted by Big Face
- If a UK pension is transferred to NZ , can it be split to different pension providers, or must it all be with 1 company.
If you have more than one UK pension, then yes you can choose more than one NZ provider. However if you only have one UK pension, then that UK pension company will only pay it to one New Zealand provider. Some providers may have a minimum investment amount or may provide a lower fee if over a certain amount. Another point to note is that you can only have one Kiwisaver scheme, but no restriction on the number of NZ QROPS schemes you may have.

Originally Posted by Big Face
- If transferred now into a non-Kiwi Saver fund, after say 20yrs of being outside UK & over age 55 can 100% be withdrawn or is the max 30% with 70% to provide income ?....If into a kiwisaver fund then 100% can be withdrawn at age 65, correct?
The UK frowns on full withdrawals. I'm not saying it can't be done I'm just saying the UK have stated that the money is to be used for retirement purposes. Certainly from the age of 65, full withdrawal is possible. It should be noted that there have been 3 major changes in the last 9 years relating to pension transfers. Further changes in the next 20 years would not be unexpected. Also expect an increase to the retirement age would would impact Kiwisaver withdrawals too.

Originally Posted by Big Face
- Can a UK fund that was used to contract out of the "state second pension" also be transferred ?
Yes. Contracted out SERPS or State Second Pension can be transferred.

Originally Posted by Big Face
- Once UK pension transferred to a suitable NZ fund ...Is there flexibility to then transfer to other suitable NZ funds if decide to based on investment returns etc (without UK/NZ tax penalties)?
Yes, it can be transferred to another provider as long as you remain within the rules that relate to your UK pension derived funds.

Good questions, thanks.

Last edited by chc4me; Dec 10th 2013 at 10:56 pm.
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Old Dec 11th 2013, 12:01 am
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Default Re: NZ Tax Bill Introduced - UK Pensions

Originally Posted by chc4me
From 1 April 2014, returning residents will be able to apply a four year tax exemption in order to transfer a pension to New Zealand without a tax charge. Therefore for those currently overseas, there is less urgency than for those living in NZ and have been in NZ for more than 4 years.
Thanks chc4me for the reassurance. Will contact you later on as you will obviously be swamped with more urgent scenarios to deal with up until April.

Is there still a tax advantage for submitting into a uk pension for this and next years tax years? Just wondering if it makes sense to try maximize my uk pension contributions.
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Old Dec 11th 2013, 1:12 am
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Default Re: NZ Tax Bill Introduced - UK Pensions

Originally Posted by Cibuma
Is there still a tax advantage for submitting into a uk pension for this and next years tax years? Just wondering if it makes sense to try maximize my uk pension contributions.
You are referring to contributing into a UK Pension while you are living in the UK and therefore obtaining tax relief in the UK. To answer your question there is still a tax advantage for contributing to a scheme while you remain in the UK. For specific advice, you should consult a suitable adviser.
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Old Dec 11th 2013, 3:15 am
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Default Re: NZ Tax Bill Introduced - UK Pensions

Originally Posted by chc4me
If you have more than one UK pension, then yes you can choose more than one NZ provider. However if you only have one UK pension, then that UK pension company will only pay it to one New Zealand provider. Some providers may have a minimum investment amount or may provide a lower fee if over a certain amount. Another point to note is that you can only have one Kiwisaver scheme, but no restriction on the number of NZ QROPS schemes you may have.



The UK frowns on full withdrawals. I'm not saying it can't be done I'm just saying the UK have stated that the money is to be used for retirement purposes. Certainly from the age of 65, full withdrawal is possible. It should be noted that there have been 3 major changes in the last 9 years relating to pension transfers. Further changes in the next 20 years would not be unexpected. Also expect an increase to the retirement age would would impact Kiwisaver withdrawals too.



Yes. Contracted out SERPS or State Second Pension can be transferred.



Yes, it can be transferred to another provider as long as you remain within the rules that relate to your UK pension derived funds.

Good questions, thanks.

Thanks for your time/replies chc4me....

As often happens Q & A's lead to more Q's...

- On looking at HMRC QROP (Dec1, 2013) list there are 53 listed entries for NZ of which 13 specifically state "Superannuation" as opposed to KiwiSaver or not specified, so guess thats the limit of my providors if thats the type of scheme i prefer ?

On looking at various "Pension Transfer specialiists" websites etc I have seen one saying your funds will be invested in: "....the ******** ****** ****** New Zealand QROPS ..."

Yet the specific name mentioned isnt on the (current) QROP list....

- Do QROP funds get authorized/de-selected (regularly)?

- If so, and I went into a QROP fund that is subsequently de-selected forcing a transfer to another QROP fund ? Would penalties apply as it would be an "unauthorized transfer" ?

Cheers
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Old Dec 11th 2013, 8:10 am
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Default Re: NZ Tax Bill Introduced - UK Pensions

Hmmmm....I made a further post which was definately showing earlier but has since vanished ?

Has it been removed/moderated ?....or is it me being mad !
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Old Dec 11th 2013, 7:30 pm
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Default Re: NZ Tax Bill Introduced - UK Pensions

Bigface,

You are correct about the QROPS list. There were huge changes in April 2012 which resulted in ALL NZ schemes removed from the list. Many schemes decided not to reapply for QROPS status therefore the options are somewhat limited. Not really an issue as long as there is one scheme that provides a flexible solution that meets your requirements and is fair in fees etc.
If the scheme that you transfer your UK Pension savings to is not on the QROPS list then it is likely to be an unauthorised payment and result in penalties of up to 55% levied by the UK authorities.
New funds may appear on the list from time to time. Schemes can also be removed which has happened in recent times. If you entered into a scheme which was then removed from the list, further investigation would be required. It would depend on why the scheme was removed. If it meets QROPS rules at the time of your investment then generally no penalties. If the scheme was breaking QROPS rules or didn't meet the QROPS definitions then penalties may apply (55%). HMRC have released some guidance around this issue in recent months if you're interested.
Before making any investment you should check the terms, the fees, withdrawal penalties, investment options, currency options, and expected servicing. Hope that helps.
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Old Dec 11th 2013, 8:35 pm
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Default Re: NZ Tax Bill Introduced - UK Pensions

Originally Posted by chc4me
Bigface,

You are correct about the QROPS list. There were huge changes in April 2012 which resulted in ALL NZ schemes removed from the list. Many schemes decided not to reapply for QROPS status therefore the options are somewhat limited. Not really an issue as long as there is one scheme that provides a flexible solution that meets your requirements and is fair in fees etc.
If the scheme that you transfer your UK Pension savings to is not on the QROPS list then it is likely to be an unauthorised payment and result in penalties of up to 55% levied by the UK authorities.
New funds may appear on the list from time to time. Schemes can also be removed which has happened in recent times. If you entered into a scheme which was then removed from the list, further investigation would be required. It would depend on why the scheme was removed. If it meets QROPS rules at the time of your investment then generally no penalties. If the scheme was breaking QROPS rules or didn't meet the QROPS definitions then penalties may apply (55%). HMRC have released some guidance around this issue in recent months if you're interested.
Before making any investment you should check the terms, the fees, withdrawal penalties, investment options, currency options, and expected servicing. Hope that helps.
Thanks chc4me...very helpful as always...

I had a surf around the HMRC website about QROPS & was surprised(dismayed!) to see this quote....

"...The fact a scheme has been given a QROPS number by us or appears on the published list of schemes on our website should not be read by you as quarantee that the scheme meets the requirements..."


So, if the HMRC cant guarantee a a name on QROP their list is authorized/suitable , I presume a NZ "transfer specialist", or an NZ fund who state they are a QROP or NZ financial advisor also cant make any gauarantees ?...ie the invidual wears all the risk ?

Are there NZ laws in place like the FSA to offer some protection to the invidual if mis-(sold) advised ?

...and just to clarify a previous Q/A if i can...if moving more than 1 x pension to NZ & wanting to start more than 1 x QROP fund (non-kiwisaver) in NZ...

- Does the transfer have to go into the seperate funds from the start..or can it all be put in 1 fund initially (for ease of transfer perhaps?), and then split & moved to other qualifying funds in due course ?

Thanks for your time...

Cheers
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Old Dec 11th 2013, 9:37 pm
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Default Re: NZ Tax Bill Introduced - UK Pensions

Schemes 'self certify' that they meet the requirements of QROPS and make this declaration to HMRC. HMRC then 'Recognise' the scheme as a Qualifying Recognised Overseas Pension Scheme. Note there is no Authorised or Approved status in the wording ...

Financial Advisers in New Zealand are bound by the Financial Markets Authority, particularly the Financial Advisers Act and the Code of Professional Conduct for Authorised Financial Advisers (Check that your adviser is an Authorised Financial Adviser). Part of this code requires advisers to belong to a Dispute Resolution Scheme which gives you more scope should you feel aggrieved (mis-sold).

I would need to do some more research in relation to your question about splitting the fund. It would depend on which scheme you transfer it to and the attitude of that scheme. A number of schemes have exit penalties in the first 2 years, so make sure you are fully aware of all terms and conditions. Alternatively, contact me for further information.
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Old Dec 11th 2013, 10:17 pm
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Default Re: NZ Tax Bill Introduced - UK Pensions

Originally Posted by Big Face
Hmmmm....I made a further post which was definately showing earlier but has since vanished ?
Has it been removed/moderated ?....or is it me being mad !
I can't see sign of a post being deleted. If that happens an edit note is left.

Mind you, I had to chop a couple of threads around the past few days , so maybe it got caught up somehow.

I don't know.
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