Justcol

I have two small frozen pension funds in the UK
I'm planning on chucking em in my kiwisaver in 18 months
time when I I'm 55 and can access them.

Will I be liable for any UK tax on them ?

BEVS

Have you been currently declaring them on your NZ tax return as investments ?

I can't remember how long you have been here Col nor when you came.

quiltman

As I understand it, you can take 25% of the pot tax free, but if you take the rest out you will be taxed at your marginal rate- 20% or 40%. A lot of folks in the UK are being caught out on this , they think "My pension fund is £60,000 , I'll withdraw it and buy a nice car/boat/holiday etc". £15,000 is tax free but they get slapped with a bill for 20% or 40% on the balance of £45,000!
you do not say what the value of your frozen pensions are but if they are small, they may come under the exemption for small funds - I forget the correct title but some years ago I had a frozen pension fund of just over £1,000 which I withdrew when I reached 55. No tax was payable as it met the conditions.
found it!
Taking a small pension as a cash lump sum | The Pensions Advisory Service

I see it's now up to £10,000 fund value!

Justcol

Read the stuff in the link, didn't understand any of it.
One is £28k the other is £11.Both have been frozen for about 15 years.
I'm 55 in 18 months time so thought I'd whack em in me kiwisaver then

It seems there's a lot more to it

Clappy

They might be small but taxation of pensions in the UK is complicated and the taxation of overseas pensions in New Zealand is complicated. Throw into the mix that both countries have radically changed the rules in recent years and the cost of doing the wrong thing could dwarf the cost of getting advice in the first place from someone that knows what they are talking about.

On top of that, I wouldn't be so sure that Kiwisaver would be the best destination for the funds, unless you don't have one already - and even then only for a limited amount not necessarily all of it. Again, this needs professional advice based on your personal circumstances!

LittleGreyCat

Just Googled, and found
UK Pension Transfers > UK Pension Transfers
Looks like you will just have to make your mind up this year if you intend to transfer.

As far as I can see there is no need to wait until you are 55 to transfer pension pots.
The 55 age is when you can start drawing it (in the UK at least).

I am assuming that these are your only UK pension pots.

Looking at KiwiSaver you can't start drawing anything until you are 65 in NZ - so I'm not sure where the age of 55 comes in.

I assume (but may be wrong) that you could start drawing on a UK pension pot (including a 25% lump sum free of UK income tax) when you are 55. Assuming you want the pension to be paid in the UK and taxed in NZ.

You would have to ask the NZ tax people how much you would pay on the 25% free of UK tax (first guess is that you wouldn't be paying UK tax anyway so the 25% thing is irrelevant). I think that once the pension is "activated" in the UK - that is you start drawing money from it - you have to decide if you want to buy an annuity or to keep the pension as "cash" in a SIPP and draw down sums to suit.

As already suggested if you want an NZ based pension then probably best to research NZ (or International) pension funds which will pay a pension in NZ. KiwiSaver may not give you the best return.

All very complicated; you have a number of linked decisions to make.

1. Do you want to draw the money in the UK at 55 (if you are allowed)?
   
2. If so, do you want to draw from two separate schemes (more complicated) or transfer them into a single scheme?
   
3. If so do you want to use one of your existing pension providers, or move both sums to a new scheme? This is often a good move because some pension providers are better than others for management costs etc. and you want to get the most income from your pension pot.
   
4. Do you want an annuity or income drawdown? This will govern your choice of pension provider.
   
5. Do you want to draw the money in NZ at 65? (I assume that the KiwiSaver rules apply to other pensions).
   
6. The big one - which is more tax efficient - drawing the pension in the UK or drawing the pension in NZ? I think if you draw in the UK you will just pay normal NZ income tax (but may lose out on the 25% tax free deal you get in the UK). Drawing in the UK carries currency risk as well.
   
7. Another big one - if your choice is to draw a UK based pension at 55 or transfer the money to an NZ fund to draw at 65 then how lucky do you feel? Drawing at 55 from the UK gives you income for 10 years. Investing in NZ gives you growth for 10 years but 10 years less of life to draw the money.
   
8. Haven't really looked at pension provision in NZ - first look seems mainly based around Super and not private pension schemes - but the rules for drawing money out of the scheme may be more favourable in the UK than NZ.

See also
We are starting a project to compare QROPS pension transfer fees to New Zealand funds; we are seeking reader input to complete a comparison table | interest.co.nz

Mostly it looks as though you may have to take professional advice.

Hope this helps - has just left me quite confused.

Edit: Looks as though you can withdraw your KiwiSaver pension pot tax free at 65 - so a transfer in may be more tax efficient, depending on the taxes and charges on the transfer. You can use money already in KiwiSaver to pay these taxes and charges.

Justcol

Wow, thanks for that

I'm just going for a lie down in a darkened room
while I try and take it all in

chc4me

Pensions and transferring to NZ is complicated at best, there are many traps and tax issues to be aware of.

1. KiwiSaver schemes can not accept a transfer from a UK Pension. In the past they could, but not now (the UK decided Kiwisaver did not qualify)
2. You can transfer to a New Zealand Superannuation scheme that has been recognised by HMRC. There are approximately 10 schemes in NZ permitted to receive transfers. A transfer made to a recognised scheme is not subject to tax in the UK, providing you follow the rules.
3. If transferring to a NZ scheme, then you will be able to access some of the money at age 55, and the rest can be drawn down over time.
4. A transfer made within 4 years of arriving in NZ is tax free. After 4 years, tax is payable on a portion of the amount that arrives.
5. Due to changes in UK pension rules, it is now possible to withdraw the full amount from the UK. However, this will incur a tax liability here in NZ (and you will need to declare non-uk tax status so that the UK do not deduct tax as well).
6. If you choose to leave the pensions in the UK, then any withdrawal from the pensions will be subject to NZ tax.

Hope the above is helpful, however it is wise to seek advice before making any decision.

Justcol

I've contacted a couple of pension transfer companies so will see what's the best route from them

scrubbedexpat094

Mr Big Sticks has had assistance from chc4me and can thoroughly recommend him for you to talk to.

He's so busy at work and with the theatre company plus me telling him that I'm going home next year that he hasn't made any decisions yet as what to do with his pensions. But he would definitely use Dai.

chc4me

Kind words, thank you

scrubbedexpat094

Hey, you're welcome. It's the truth that's all.

Justcol

1)
I didn't even know this was his proffesion
Shows how much notice I take

2)
Going home, whad'ya mean going home

BEVS

I am SO pleased you've posted chc4me.

Justcol. You could do worse than talk with this chap.

LittleGreyCat

@chc4me

Useful information - can I just check one thing?

I have a small(ish) second pension pot in a SIPP which is now enabled for draw down (although I haven't drawn much down yet).

In the UK I can draw some or all of it at any time, subject to paying UK income tax.

Once in NZ {touches wood} I think that I will be free of UK income tax and will have a 4 year tax holiday from NZ income tax.

It appears, then, that I could draw down the full amount of my SIPP in the first 4 years of being NZ tax resident without paying any income tax.

Sounds to good to be true, but may not be.

Does this tax free draw down seem possible?