chc4me

Not quite accurate - because you are in a final salary scheme, you didn't have to buy an annuity anyway.

Not quite true - you will need to pay the taxman first and that could be a size-able chunk of your retirement money.

Also not quite true. A final salary scheme does not grow in the conventional sense. The retirement benefits are based on the number of years worked for the company and your income.

The 'Golden age for pensions in terms of returns' has no effect what-so-ever on a Final Salary scheme. It would be a benefit to the Employer because high investment returns means the Employer would be able to contribute less capital to the scheme to provide retirement benefits for the employees.

Pensions are not straightforward and the answer for one person will be different to the next. My suggestion.... always make an informed decision (after assessing the correct information).

ktyler1961

I'll get back to you on that. My mates a pension specialist and I'm going round to a barbie at his house in a couple of weeks,. Adree about the tax though...in certain circumstances.
But getting back to the original poster, he is too young to worry and his deferred pension is money in the bank

Browner_

This is certainly a complex area. I am about to transfer over a significant sum from a UK Pension to a QROPS NZ Pension Scheme ( I am over 55 already) and I think I need to declare 15% on my tax return for this year, 2014/15 so I should pay about 5% of the transfer value in tax. As I had applied to do this before 1/4/2014 I believe I can still do this and it looks better than the alternative of bringing over the transfer post 1/4/2014.
So with the remainder of the fund that is left in my QROPS, is that still subject to further NZ income tax when I make withdrawals in the future, I have read lots of stuff on this topic and its just not clear!

svetla_altevs

Hi there
I'm new to the forum and planing to move to NZ in few months.
Talking about pensions is like Chinese to me so apologies if my question sounds stupid...
I've been a midwife in UK for 5 years on pension scheme and will have a midwife job in NZ.
I was advised by a friend to take all the many paid on the scheme as it is a good amount and will help to settle in NZ but I have a feeling that I will regret later...
Any advice will be highly appreciated - shall I transfer my pension or not and how it works?
Thanks in advance!!!

chc4me

Hi Browner,

There are 3 options for consideration and you are fortunate in that you will be able to select the option that is best for you (i.e the lowest tax).
1. Because you qualify for the 'Amnesty' rate, you can select to pay tax on the first 15% of the transferred amount only.
2. However the new rules might actually be in your favor depending on when you arrived in NZ. If you arrived after 1 April 2008 then you are eligible for a lower rate.
3. You may be eligible for the "rules that applied at the time". This could work in your favor depending on the type of scheme that you have, the currency effect and other factors.

A tax opinion will provide you with the right information for the cost of $500 and could end up saving a significant sum.

In terms of your other question, any withdrawals you make from your QROPS fund is not taxed (i.e nothing to declare). However any investment income and growth within the QROPS fund is taxed on the first 5% of that income/growth and paid by your QROPS scheme, you do not declare this in your personal tax return.

All the best.

BEVS

I've tried to understand how this worked. Bit of a nightmare TBH.

I'd agree with that,if one has the $500 to spare.

Browner_

Thank you very much, I think I actually understood that.

So does a Kiwisaver operate like the QROPS you describe, ie investment growth is taxed, but withdrawals aren't subject to income tax? I wasn't aware of that.

sophonax

Sorry to bump this old thread... I've just joined this site as I have lived in the UK for 16 years, & returned to NZ almost 3.5 years ago. I am starting to look at my options for transferring back my UK pension, & this seems like a good place to start, in order to receive some sound, impartial advice.

What circumstances exist for a returning kiwi to qualify for no tax payable, if the transfer has occurred within the first 4 years?

chc4me: is this something you can answer, here?

Many thanks!

chc4me

The 4 year exemption for pensions is a general exemption and returning NZ'ers can qualify, providing you have not received the exemption in previous years. I have attached the IRD Fact Sheet which clearly states this - which is good news for you!

sophonax

Thanks for that, chc4me.

I have also found the following info under the below link, which may prove helpful to some of you, out there.

''For non-residents & visitors: Moving to New Zealand
Temporary tax exemption on foreign income for new migrants and returning New Zealanders

From 1 April 2006, people becoming tax residents in New Zealand may qualify for a temporary tax exemption on some of their foreign income. This temporary tax exemption is available to those who:

qualify as a tax resident in New Zealand on or after 1 April 2006, and
are new migrants or returning New Zealanders who have not been resident for tax purposes in New Zealand for at least 10 years prior to their arrival in New Zealand (transitional residents).
The exemption can only be granted once in a lifetime.

The exemption

The temporary tax exemption for foreign income is for 4 calendar years (up to 49 months). The exemption starts on the day you qualify as a tax resident and ends 48 months after the month you qualified as a tax resident."

Temporary tax exemption on foreign income for new migrants and returning New Zealanders (For non-residents & visitors)

Chocoholics

Hi Chc4me,
Great posts with lots of information - thank you! I have 2 small pensions in the UK, but my understanding is the law is going to change soon in the UK so that I don't have to take an annuity and I can opt to have the whole lot paid into my bank account from age 55. (They are not final salary Civil service pensions). Since I manage all my own investments this is a huge deal in my case. Have I understood this right? I'm guessing there will be tax implications.

I have no idea which country I will be in when I retire which doesn't really help!

chc4me

Yes the law is changing which will allow full withdrawal of your pension, but you will have to pay tax on the withdrawal. We are still working through the details to fully understand the impact (tax in the UK, Tax in NZ, both or only one?, tax on some of the money, or tax on all of the money?). I might start a new thread once the law is actually in place so that I can share the info.
Thanks for your excellent question.