UK Pensions – Guide Rules from 1 April 2014
#46
Re: UK Pensions – Guide Rules from 1 April 2014
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).
#47
Moonbeast
Joined: May 2006
Location: Manchester, UK
Posts: 144
Re: UK Pensions – Guide Rules from 1 April 2014
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).
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).
But getting back to the original poster, he is too young to worry and his deferred pension is money in the bank
#48
Re: UK Pensions – Guide Rules from 1 April 2014
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!
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!
#49
Just Joined
Joined: Sep 2014
Posts: 1
Re: UK Pensions – Guide Rules from 1 April 2014
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!!!
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!!!
#50
Re: UK Pensions – Guide Rules from 1 April 2014
This is certainly a complex area. I am about to transfer .... 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?
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?
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.
#51
Re: UK Pensions – Guide Rules from 1 April 2014
A tax opinion will provide you with the right information for the cost of $500 and could end up saving a significant sum.
.
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#52
Re: UK Pensions – Guide Rules from 1 April 2014
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.
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.
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.
#53
Just Joined
Joined: Feb 2015
Location: Wellington
Posts: 2
Re: UK Pensions – Guide Rules from 1 April 2014
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!
#54
Re: UK Pensions – Guide Rules from 1 April 2014
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!
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!
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!
#55
Just Joined
Joined: Feb 2015
Location: Wellington
Posts: 2
Re: UK Pensions – Guide Rules from 1 April 2014
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)
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)
#56
Forum Regular
Joined: Nov 2014
Posts: 76
Re: UK Pensions – Guide Rules from 1 April 2014
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!
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!
#57
Re: UK Pensions – Guide Rules from 1 April 2014
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!
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!
Thanks for your excellent question.