Go Back  British Expats > Living & Moving Abroad > New Zealand
Reload this Page >

UK Pension Transfers - updated for 2020

UK Pension Transfers - updated for 2020

Old Dec 3rd 2019, 12:35 am
  #1  
BE Enthusiast
Thread Starter
 
chc4me's Avatar
 
Joined: Jan 2011
Location: New Zealand
Posts: 441
chc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond repute
Default UK Pension Transfers - updated for 2020

This post is up to date as at 03/12/2019 and concerns private UK pension savings. It does not address UK State Pensions (see this post for info on State Pensions).

Background: The ability to transfer a UK pension to a Qualifying Recognised Overseas Pension Scheme (QROPS) began in April 2006. Since that time there has been 7 major changes to the rules either in NZ or the UK (or sometimes both). In other words, what may have been true in previous years, may no longer be relevant now. Before undertaking any action with a UK pension, it is vital to seek advice from a specialist adviser with experience and expertise in this complex sector.

1. Defined Contribution schemes (also known as money purchase schemes) and Defined Benefit Schemes (often referred to as final salary schemes) are permitted to be transferred.

2. UK Government funded final salary schemes cannot be transferred overseas (NHS, Teachers, Armed Forces etc). Those schemes will have to stay put until retirement. We originally thought there might be some exclusion clause that would allow overseas residents to transfer such schemes but this has not been forthcoming.

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 were 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. 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 14 qualifying QROPS scheme in New Zealand. Each one has advantages, disadvantages, different investment options, different fees and some may permit investing in difference currencies (such as GBP) while waiting for exchange rate movements.

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. If you are a returning resident, or have previously lived in NZ, then you may qualify for a general 4 year exemption. It is important to seek tax advice on this issue to avoid nasty shocks.

7. Since April 2015, the UK permits 100% withdrawals from a UK Pension scheme directly to the named holder. Tax may be withheld at source in the UK which you may be able to claim back if you are not tax resident in the UK. However a withdrawal from a UK Pension is a taxable event and tax is required to be paid on the FULL amount in New Zealand for NZ tax residents. This clause may be helpful for “Transitional Residents” over age 55 and recently arrived in NZ.

8. From April 2017, full flexibility is available for withdrawals from NZ QROPS schemes. Some schemes have instigated exit penalties if making a withdrawal within a set timeframe, you will need to check with the NZ scheme before making a decision to transfer. Not all schemes have exit penalties. To complicate matters further, the UK Govt have a 5 year and a 10 year “member payment provision” or may clawback UK tax relief. Advice is essential to avoid penalties and tax surprises.

9. Overseas Transfer Charge (OTC) – For new transfers from 9th March 2017, investors need to be aware of the OTC. This has been introduced by the UK authorities and is payable in certain situations. There are some exemptions including transferring your UK pension to a QROPS that is in the same country that you are living in. For example, if you live in NZ and transfer to a NZ scheme, then the exemption applies. However, if your circumstances change within 5 tax years of making the transfer, the OTC of 25% could become payable to HMRC. Transfers made before 09/03/2017 are excluded from OTC.

10. In the first point, it mentions “Final Salary” schemes can be transferred. This type of scheme is considered highly valuable and should not be transferred without expert advice. The UK Govt insist by law that a Pension Transfer Report is required before a transfer can take place, only UK regulated advisers are permitted to prepare these reports. The cost of such reports has been rising due to regulatory pressure in the UK and as at time of writing the cost is between £1,500 and £3,000. While this adds to the complexity, costs, and time that it takes to complete a transfer, it does mean you receive appropriate information to enable an informed decision.

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.
chc4me

chc4me is offline  
Old Jan 20th 2020, 4:26 am
  #2  
Just Joined
 
Joined: Jan 2020
Posts: 3
bonesyhead76 is an unknown quantity at this point
Default Re: UK Pension Transfers - updated for 2020

Hi,

Can you please direct me to the correct thread for Rep. of Ireland pension (PRSA)

I am trying to get it transferred to NZ but am having trouble finding a suitable agent.

Thanks
bonesyhead76 is offline  
Old Feb 6th 2020, 10:49 pm
  #3  
Just Joined
 
Joined: Dec 2013
Posts: 4
Cibuma is an unknown quantity at this point
Default Re: UK Pension Transfers - updated for 2020

[QUOTE=chc4me;12772952]
10. In the first point, it mentions “Final Salary” schemes can be transferred. This type of scheme is considered highly valuable and should not be transferred without expert advice. The UK Govt insist by law that a Pension Transfer Report is required before a transfer can take place, only UK regulated advisers are permitted to prepare these reports. The cost of such reports has been rising due to regulatory pressure in the UK and as at time of writing the cost is between £1,500 and £3,000. While this adds to the complexity, costs, and time that it takes to complete a transfer, it does mean you receive appropriate information to enable an informed decision.

Thanks chc4me for the in depth analysis around the state of play.
What is the easiest way to find people who can produce this UK based report? Do you have any company names that have the qualifications to produce it?
Thanks cibuma


Cibuma is offline  
Old Feb 6th 2020, 11:21 pm
  #4  
BE Enthusiast
Thread Starter
 
chc4me's Avatar
 
Joined: Jan 2011
Location: New Zealand
Posts: 441
chc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond repute
Default Re: UK Pension Transfers - updated for 2020

[QUOTE=Cibuma;12803060]
Originally Posted by chc4me View Post
What is the easiest way to find people who can produce this UK based report? Do you have any company names that have the qualifications to produce it?
The number of UK Advisers completing such reports has dropped dramatically over the last few months, and costs have increased. A list of UK registered Financial Advisers is available at the Financial Authority Conduct website. Please note that the UK Adviser reports are only required for Final Salary Schemes, not Defined Contribution schemes.
Warm regards
chc4me is offline  
Old Jun 21st 2020, 7:17 am
  #5  
Forum Regular
 
Joined: Jul 2014
Location: Beachlands, Auckland
Posts: 228
desmondo84 is just really nicedesmondo84 is just really nicedesmondo84 is just really nicedesmondo84 is just really nicedesmondo84 is just really nicedesmondo84 is just really nicedesmondo84 is just really nicedesmondo84 is just really nice
Default Re: UK Pension Transfers - updated for 2020

I was told today that you should switch your pension over to NZ within 5 years or face additional taxes - is that 'generally' true?
desmondo84 is offline  
Old Jun 22nd 2020, 3:48 am
  #6  
BE Enthusiast
Thread Starter
 
chc4me's Avatar
 
Joined: Jan 2011
Location: New Zealand
Posts: 441
chc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond reputechc4me has a reputation beyond repute
Default Re: UK Pension Transfers - updated for 2020

Hi Desmondo84, Please refer to point 6 in the first post:

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. If you are a returning resident, or have previously lived in NZ, then you may qualify for a general 4 year exemption. It is important to seek tax advice on this issue to avoid nasty shocks.
chc4me is offline  
Old Jun 22nd 2020, 6:22 pm
  #7  
Forum Regular
 
Joined: Jul 2014
Location: Beachlands, Auckland
Posts: 228
desmondo84 is just really nicedesmondo84 is just really nicedesmondo84 is just really nicedesmondo84 is just really nicedesmondo84 is just really nicedesmondo84 is just really nicedesmondo84 is just really nicedesmondo84 is just really nice
Default Re: UK Pension Transfers - updated for 2020

Oooh, looks like I def need some advice.

Seems to be a few companies out there - any recommendations?
desmondo84 is offline  
Old Jun 23rd 2020, 1:41 am
  #8  
Somewhere
 
BEVS's Avatar
 
Joined: Oct 2003
Location: Below
Posts: 35,605
BEVS has a reputation beyond reputeBEVS has a reputation beyond reputeBEVS has a reputation beyond reputeBEVS has a reputation beyond reputeBEVS has a reputation beyond reputeBEVS has a reputation beyond reputeBEVS has a reputation beyond reputeBEVS has a reputation beyond reputeBEVS has a reputation beyond reputeBEVS has a reputation beyond reputeBEVS has a reputation beyond repute
Default Re: UK Pension Transfers - updated for 2020

Originally Posted by desmondo84 View Post
Oooh, looks like I def need some advice.

Seems to be a few companies out there - any recommendations?
I recommend chc4me
BEVS is offline  

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information

Copyright © 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.