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UK Pension Transfers - update for 2015

UK Pension Transfers - update for 2015

Old May 28th 2015, 12:42 am
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Default UK Pension Transfers - update for 2015

Greetings all,
Following a few questions relating to some media reports and the options available for those thinking of making a transfer from a UK pension savings scheme, it was thought timely to provide an update on recent changes.

1. From the 6th of April 2015, 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 are 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. Personally, I think the UK authorities will grant some type of exemption for KiwiSaver Schemes, but at this point in time, transfers can not be made to KiwiSaver Schemes. 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. Most allow withdraws from age 55, subject to maximum limits.

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.

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 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.

Last edited by chc4me; May 28th 2015 at 2:22 am. Reason: Added link for IRD Fact Sheet
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Old May 28th 2015, 2:30 am
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Default Re: UK Pension Transfers - update for 2015

brilliant information as normal.
I am making this a Sticky as it is something everyone will find useful to know
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Old May 28th 2015, 2:55 am
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Default Re: UK Pension Transfers - update for 2015

Thanks Chc4me once again for this very useful information especially on the tax situation.
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Old Jul 2nd 2015, 1:57 am
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Default Re: UK Pension Transfers - update for 2015

Update: HMRC have published a new list of QROPS schemes permitted to receive a transfer from a UK Pension. This list previously included 3,811 schemes worldwide, the new updated list contains just 663 schemes. In NZ there are 14 schemes although not all are openly available.

For those that have transferred pensions into KiwiSaver in the past, investors must be very careful particularly if making a withdrawal, and switching KiwiSaver providers when UK Pension money is included is likely to create UK tax penalties.

This area of advice can be quite technical and specialist advice is essential.
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Old Sep 15th 2015, 6:12 am
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Default Re: UK Pension Transfers - update for 2015

Thank you for the update chc4me. Do you know if the UK govt are being lobbied on these changes regarding gvt funded schemes? I'm in the position where I moved to NZ two years ago and was going to transfer my pension later this year. I completely missed the notifications of the changes. So now I'm locked in to my UK pension and even if I do get to transfer it in the future I will also have missed the NZ tax free window. I am guessing there must be others like me and I was expecting to see lots of activity challenging the UK get on this but I can't find anything. Do you know if discussions or lobbying is taking place or how I might go about challenging? Thank you
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Old Sep 16th 2015, 1:57 am
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Default Re: UK Pension Transfers - update for 2015

Hi chpchap, welcome to BritishExpats,
The UK Govt has previously been lobbied on the changes when the draft legislation was first released, however at this point in time the ability to transfer NHS and Teachers Pensions since April 2015 remains closed. There could be a future change but as you say, that could impact on the NZ tax free window.

I should mention that it is worth double checking if a scheme is Government Funded or not. A good example of this is Local Council Schemes, which are Final Salary Schemes but are not Government Funded and therefore can be transferred.
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Old Sep 16th 2015, 2:16 am
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Default Re: UK Pension Transfers - update for 2015

Thanks for the update some good information and worth the read. I have been trying for past 12 months to get my NHS pension transferred, due to emails not being received and documents not being completed on time I have now missed the deadline and have had to complete another form TV18, will it be taken in to account that I started the process last year? and will I still be able to transfer my pension
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Old Sep 16th 2015, 2:21 am
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Default Re: UK Pension Transfers - update for 2015

Originally Posted by Nabot890 View Post
Thanks for the update some good information and worth the read. I have been trying for past 12 months to get my NHS pension transferred, due to emails not being received and documents not being completed on time I have now missed the deadline and have had to complete another form TV18, will it be taken in to account that I started the process last year? and will I still be able to transfer my pension
Fun and games of UK Pension transfers!! If the signed transfer papers were submitted to the NHS before the 5th of April deadline, and the scheme that you are transferring into remains on the QROPS list, then we expect the transfer will complete.
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Old Jan 17th 2016, 1:03 am
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Default Re: UK Pension Transfers - update for 2015

Hi
We have a tax issue with a NHS pension that we transferred back in 2011, but due to the slowness of the NHS we missed the tax exclusion widow by a few weeks. The IRD are now looking to obtain their share of the taxes on this pension.

Can anyone recommend a pensions / tax expert in the Auckland region. As we need someone to guide us, so we do not step into any further booby traps. Westpac did not alert us to any of these issues when we transferred our pension to them, they were just happy for the business. But we do not have the $$$$$ that the IRD potentially want, so we also need to find the best way to pay them when the bill comes in, using either our pension or KiwiSaver, whichever is best. HELP
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Old Jan 17th 2016, 8:33 pm
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Default Re: UK Pension Transfers - update for 2015

Originally Posted by nero View Post
Hi
Can anyone recommend a pensions / tax expert in the Auckland region. As we need someone to guide us, so we do not step into any further booby traps. Westpac did not alert us to any of these issues when we transferred our pension to them, they were just happy for the business. But we do not have the $$$$$ that the IRD potentially want, so we also need to find the best way to pay them when the bill comes in, using either our pension or KiwiSaver, whichever is best. HELP
Nero - I've sent you a PM
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Old Feb 28th 2016, 7:03 pm
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Default Re: UK Pension Transfers - update for 2015

Thankyou
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Old Feb 28th 2016, 7:11 pm
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Default Re: UK Pension Transfers - update for 2015

Just wanted to say that if you have transferred your NHS pension, and the IRD are after you for the tax related to the transfer. I tried to obtain my date of residency figures from the NHS just two figures required, and the NHS wanted £405 for that. Which I was astonished at especially as the first chap I spoke to found the details in a matter of minutes.

I was trying to obtain these figures in order to pay just 5% tax rather than 15%. But it was not worth it in the end, and be warned, you will need all of these figures if the IRD audit your tax claim, and they probably will as they are looking to reclaim as much money as they can from the small people. As the IRD does not seem to have the appetite or balls to go after the big tax dodgers.
Have a great Monday.
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Old Mar 7th 2016, 2:38 am
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Default Re: UK Pension Transfers - update for 2015

Hi NeroAgainst all odds the NHS have actually approved my transfer of funds after 18 months of trying, pulling my hair out, spending vast amounts on phone calls etc. However due to the massive delay I am now out of my 4 year "grace period" and have to start looking at the tax implications. Were the IRD helpful? did you speak to a tax specialist and were they helpful?
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Old Mar 7th 2016, 2:57 am
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Default Re: UK Pension Transfers - update for 2015

I used a tax accountant, who has been helpful. The key problem is getting the NHS to give you the info the IRD will require to reduce the amount of tax you pay, without costing $$ The NHS wanted £405 just to give me a couple of dates that the IRD wanted.
The IRD were not helpful, they just told us that we had to tell them how much we owed them, the retrospective law is not easy to understand. Good luck, you may have enough information to get them to be kind to you. But I really think it is an income generating excercise by the government. Good luck
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Old Mar 7th 2016, 7:42 pm
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Default Re: UK Pension Transfers - update for 2015

Originally Posted by Nabot890 View Post
Hi NeroAgainst all odds the NHS have actually approved my transfer of funds after 18 months of trying, pulling my hair out, spending vast amounts on phone calls etc. However due to the massive delay I am now out of my 4 year "grace period" and have to start looking at the tax implications. Were the IRD helpful? did you speak to a tax specialist and were they helpful?
There appears to be a difference between Nero's position and Nabot's position. Nero transferred in 2011 when different tax rules applied, hence the need to ask the NHS for additional information. Nabot, having transferred since the rules changed in April 2014, is able to apply the "Schedule Method" which taxes a portion of the transfer based on the number of years since the end of the 4 year tax free window.

Nabot, I've sent you a PM.
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