chris_d52

I apologise if this has been answered elsewhere, but thought it easier to post my situation.

I had previously spent 2 years living in Auckland on a temp work visa and returned for personal reasons. The plan is to now move back to NZ for good in the new year. We won't be coming back!

I'm 39 and my wife is 43. It means we have about 25 years work left in us (less if we can help it!). We've both made similar number of years NI contributions towards the UK state pension.

HMRC have just sent my a Pension Statement. Using my NI record, I've currently paid 17 of 35 years NI contributions towards my UK state pension. I've just discovered that I can back pay 4 years contributions to top it up and have 21 years at the cost of £722.80 / year. This would be too good a deal to miss if I were to stay and live out my days in the UK. But as we're leaving the UK, is it really worth it?

It is my understanding that in order to qualify for the full NZ State Pension, a worker has to only pay 10 years contributions. Is this correct?

I have also read that when the time comes, your UK pension contributions are used to top the NZ pension first.

Is it worth me continuing to contribute towards my UK State pension if all I need to do is work 10 years in NZ and get the same pension regardless? Or do you get both pensions (unlikely)? The way I currently read it is that I will get the same amount, regardless of how much I've paid towards my UK contributions. Should I just forget what I've paid in the UK and bank on 10 years being paid during the rest of my working life in NZ?

Thanks in advance,

Chris

MrsFychan

You will need to speak to a tax/pension specialist on both sides of the water. The pension cannot be transferred into a KiwiSaver here and has to go to authorised QROPS funds. It can be a very sticky situation so you really do need to speak to the specialist who have the latest from Government so you are not stung badly.

Have a read here: UK Pension Transfer - 2018

scot47

In the past theer were variius links avaiable between bthe UK State Pension (based on NI Contributions including SERPS) and the NZ system. It is important to differentiate between the State Pension and other pensions that you may be entitled to. I would get specialist adbice. You could also contact the Overseas Branch on Natiuonal Insurance Contributions and ask them. They are based in Longbenton in Newcastle.

BEVS

Much depends on your resident status when you return to New Zealand.

For an NZ super ( state pension) you will need to be classed Residents at least.

No you cannot claim two state pensions. The UK pension amount due will be taken by NZ to offset the NZ superannuation pension paid. They have an agreement.

If you prefer to protect your UK state pension in case you do return to the UK - and who can know what the future holds - then topping it up now is sensible.

If you think you would prefer to have your UK pension rather than the NZ super annuation then just remember that the UK state pension is frozen.

NZ super can be applied for at the age of 65.

I will ping Chch4me. He really deals with overseas private pension transfers to NZ but he might be kind enough to clarify and correct any mistakes I have made.

chc4me

Hi Chris,
Due to the reciprocal Social Security agreement between NZ and the UK, you will qualify for a NZ state pension simply by living in NZ and being aged 65. Making extra National Insurance contributions will be a waste of money.

To qualify for a NZ State Pension, you must be age 65, living in NZ and have the right to live in NZ permanently. For UK ex-pats, time spent living in the UK counts towards the 10 years that Bev mentioned in her post, so do not worry about this. This is covered in the Social Security Agreement and in the Work & Income manual.

At retirement age, assuming you are living in NZ, you will apply for NZ Superannuation. Any UK State Pension amount that you are entitled to will be paid to the NZ Government (this offsets the cost to NZ) but you will receive the full NZ Superannuation amount. There are a few situations where collecting a UK State pension could be beneficial, for example, when the currency was at $3 to the Pound, or if you had delayed receiving your state pension and therefore entitled to a higher amount. However at the moment, the NZ pension is worth more than the UK State Pension, so most people collect the NZ state pension.

For general information, if you were to return to the UK, then time spent living in NZ counts as National Insurance "years", so again, topping up National Insurance years is likely a waste of money in this situation - eg those two years in Auckland should be added to your NI Contributions! Remember that the pension age in the UK is now 67. NZ is 65 but it could increase in the future.
Best wishes.

chris_d52

Thanks for clearing this up and thanks for everyone's input on the matter. As I have no intention of returning, I shall no longer be contributing to HMRC and concentrating NZ.

Much appreciated,

Chris

KiwiDreamer

BEVS this post is quite relevant to my circumstances so could I ask you that in the case of someone returning to the UK who is over 55 and has lived in NZ for 10 years and thus qualifies for NZ Super are these 10 years sufficient to qualify for 10 years National Insurance qualifying years in the UK even if you haven't worked for all those 10 years in NZ, i.e. is ten years in NZ considered to be the same as ten years paying National Insurance in the UK and so count towards the contributory years necessary to earn the UK state pension.

chc4me

Hi KiwiDreamer, Yes, 10 years of living in NZ is the same as 10 years of contributions to National Insurance in the UK.

If you are in receipt of a NZ Superannuation payment then you will be able to 'swap' this for a UK state pension on your return to the UK. If you are are not yet in receipt of a NZ Superannuation payment then the number of years living in NZ count towards National Insurance Contributions in the UK, as per the Social Security Agreement between the two countries. It does not require you to be working, it is based on length of living in NZ. You might like to contact the National Insurance International team to discuss your situation and check on your entitlements for when you return to the UK.

BEVS

I have been pondering exactly this myself for a while now. I felt

Huge thanks to Chc4me for making it clear .

KiwiDreamer

Chc4me, thank you very much for the fast reply and for that reassuring information.
BEVS I've also been confused about this for some time as well. I'll follow up on the information chc4me has provided and will update this thread in due course.

BEVS

It's a relief isn't it.

desmondo84

What about private pensions in the UK? If the kids return to the UK one day, I wouldn't rule out us following them. Best to just keep them in the UK?

BEVS

Depends on your age and circumstances.

Hopefully you have been declaring them on your NZ tax returns.

chc4me

Hi Desmondo84 - Difficult to say one way or the other, you need to take advice on your pensions to understand the advantages and disadvantages of transferring or not transferring. The right course of action might be right for one person, but wrong for the next. It might also depend on the type of private pension that you have, and any special benefits associated with the pension. There are many factors to be considered.

Bev, in terms of paying tax, NZ tax residents are required to declare pensions in payment (ie the income received), or pay NZ tax on lump sums received or transferred.