stevejallen2003

I have a significant value (>STG100k) tied up in a UK pension plan. I left the UK more than 5 years ago and am now living here in the USA. I understand that a direct transfer into a 401k here in the US is not possible.

I have approached a number of companies here in the USA that have experience in moving funds out of the UK via New Zealand. Apparently NZ has an agreement in place that allows transfers from UK pension schemes into a NZ pension scheme. Under NZ regulations, the funds can then be released as cash without penalty and transferred to anywhere you like (including a bank here in the USA).

Does anyone have any experience and advice on this?

Also, what will be the tax implication of bringing this money into my US bank account? The company I am in discussions with says that I have to seek separate advice on taxation...

Any help/advise much appreciated.

Patrick Hasler

Withdraw all the funds, place the cash in a secure envelope and send it to P Hasler care of .... the garbage bin outside KFC, Queensbury, NY to arrive on saturday 15th august at 12.00 noon.


.................. Or else

im9907620

Steve,

you need to be very careful. take a look at this...

"Qualifying foreign private annuity" means an entitlement of a natural person to benefit from a pension or annuity provided by a foreign entity while the person is resident in New Zealand, if-

1. The consideration for the entitlement to the pension or annuity is provided to the foreign entity-
1. At a time when the person is not resident in New Zealand; or
2. At a time when the person is resident in New Zealand falling before the first day of the 4th income year succeeding the income year in which the person last becomes a resident of New Zealand; or
3. From the accumulated balance or proceeds of an interest of the person in a superannuation fund and that interest is commuted or transferred in anticipation of, or following, the person ceasing to be a resident of New Zealand; and ...

To be a QFPA within the definition of that term in section OB 1, a pension or annuity must meet certain criteria. One requirement is that the consideration for the QFPA must be provided "at a time when the person is resident in New Zealand falling before the first day of the 4th income year succeeding the income year in which the person last becomes a resident of New Zealand".

It would appear that you have to be a NZ resident at some point - surely sensible??

There are a number of firms looking to make money out of QROPS plans and most don't give a stuff about the tax consequences for the client - why would they after they have been paid and are not regulated with no come back??

There are other QROPS threads on these boards - take a look in the Trailer park. If the US do not recognise UK transfers to a US plan why would they recognise a NZ pension.

Bottom line is, you should be concerned with the US tax impact. If you leave your plan in the UK it benefits from the UK-US tax treaty. If you move it outside the UK then it no longer benefits from this.
Proper QROPS will only pay out an extra 5% tax free cash compared to the UK, but the death benefits are more flexible and less onerously taxed.

Depends on your age and circumstances, but unless you have £200k + then QROPS are rarely worth the admin and adviser fees. Construct a good portfolio now with your UK plan before the market goes back up. If your Uk plan is an employer based scheme then it might not be in your best interests to transfer it anyway.

stevejallen2003

im9907620

Many thanks for your good advice.

My pension is doing little in the UK. Indeed it has gone backwards in the last 2 years.

Frankly I would rather get my hands on the cash, pay whatever taxes are due and then re-invest what is left than leave it to a pension fund to drive further into the ground.

What I would like to determine is whether the scheme proposed is the ONLY way to unlock these funds from a UK pension fund, or are there other ways? What is the most tax efficient way to do this, and take the funds out as cash?

Any thoughts/ideas most welcome.

Bluegrass Lass

do a search of QROPS on the USA forum. It's been discussed before. That will really tell you what most of our thoughts are.

Bob

which is that it's just not going to happen...

im9907620

Steve, I 'hear' your disappointment with your pension funds. To be fair, most investments have gone down with a bang over the last 12-18 months, the fact that yours is in a pension is no different. The key thing is having it monitored or reviewed on a regular basis (no less than annually) by yourself or good adviser. That might have softened the fall and should help on the way back up. A cheaper pension contract would also help. All these things should help going forward.

I suspect that your real disappointment lies with the lack of management or monitoring of your plan. Don't beat yourself up over this - most people are exactly the same for one reason or another - but now is the time to put it right maybe?

I note that you are willing to pay 'taxes' to get your money out and re-invest, but re-invest in what? Most pensions and investments are likely to go back up over the next 2-3 years so I wouldn't be too harsh or overly cynical of Pensions.

A good QROPS plan will allow you to withdraw 30% at retirement age (55 from next April for UK nationals) and that, together with little or no tax on death is still attractive. However, there is no cash- out option for UK pensions unless for clients who are terminal ill.

New Zealand QROPS plans are currently on a knife edge of being suspended by the HMRC. If that happens, then any numbers of legitimate UK nationals in that or any other offending plan are likely to be tarred with the same brush and, worse still, be stuck in suspended NZ pension indefinitely.

By the way, what some firms don't make clear is that even if you transfer to NZ QROPS the fund will be taxed at up to 33% on its earnings, whereas it wouldn't be taxed at all in a UK plan or other QROPS say in IoM or Channel Islands.

Steve, I think you really need to think about what you want most - is it to get your hands on cash to spend (not 2 simply re-invest), is it to get your pension into Dollars, achieve some decent growth with a make-over of your funds, or just transfer your pension offshore. The answer I suspect is a combination.