Should I transfer my UK pension fund to New Zealand?
For many UK ex patriots your UK pension fund will be the second biggest "investment" after your home. Decisions made on the future of this asset without proper advice can be financial suicide.
We charge a fee for our work because this decision is so important.
Do I have to have a super scheme in NZ to transfer my UK pension into?
Yes. If you decide to transfer your UK pension funds, UK regulations require that they must be transferred to an approved or registered superannuation (QROPS) scheme in New Zealand.
Should I transfer my UK pension fund to NZ, even if I think I may return to the UK to retire?
No. Once you have made the transfer to a NZ approved superannuation fund you cannot transfer back to your UK pension plan as if nothing had happened. You have given up all your rights to your UK pension.
Who handles my money and how safe is it?
All transfers are paid directly by your UK pension fund into the New Zealand approved superannuation fund. We do not use a trust account or personally handle your funds.
What are the main benefits of transferring my UK pension to New Zealand?
You can keep track of your pension plan and gives you more control of your funds without affecting their earning power.
No worries about exchange rate fluctuations affecting your pension payouts.
No need to pay bank fees for each transfer (may be as a high as ?18 pounds per transfer)
More information and control on the companies holding your retirement savings.
Easier to access your money in retirement.
You may be able to access up to 40% of the value immediately.
If you die with a UK pension scheme your spouse can get up to 2/3 of the pension you would have received. If you both die your pension dies with you. If you both die leaving qualifying dependent children, your UK pension could continue for as long as you fulfill the schemes eligibility criteria. With a New Zealand superannuation plan all of your remaining investment becomes part of your estate and this can be passed on to your children or heirs.
What are the tax issues that need to be considered? If you leave your funds in your UK pension, you need to declare this and pay tax on any growth made by your UK pension scheme on your NZ tax return. This applies to schemes where contributions have been paid out of income as part of your trade, vocation, or profession.
If you retain your UK pension and it pays a regular benefit this is deemed income and you will need to pay tax on it in New Zealand.
If your funds are transferred to a NZ approved superannuation plan under current legislation you are not taxed when you withdraw funds.
Can I get my UK pension on transfer paid directly into my bank account?
No, UK legislation requires that the money only be paid into an approved New Zealand superannuation Plan.
Do you charge a fee for your services?
YES, because our advice is professional and you need professional and impartial advice on such a complex and important issue. In the event that it is in your best interests to leave your pension in the UK, then we want to be able to say so. However, as with any professional service it is important that we receive remuneration for the time and experience involved in assisting you to reach that decision. If you do decide to transfer your UK pension to New Zealand we may offset our charges against any initial commission received.
Contact Jim Dowsett on: jim@ukpensions2nz.co.nz
Can't I just transfer the pension myself?
You could transfer the UK pension yourself, but the process is complex, and can be very frustrating and confusing. Do you have the necessary understanding of your actions and how they might impact on your future financial security? If you get it wrong it could cost you thousands of pounds. Our UK pension transfer service will save you time, money and stress.
I have already started to draw income from my UK pension can I still transfer the lump sum? No, once your pension is being paid out as regular income you can no longer transfer what would have been a lump sum.
Will I be eligible for New Zealand Government superannuation payments? To be eligible for New Zealand Superannuation you need to be aged 65 or over and a legal resident of New Zealand, having lived here for ten years since age 20. Five of those years must be since you turned age 50. Contact Work and Income on 0800 552 002 or refer to their web site www.winz.govt.nz.
You have two options for receiving your UK pension. The first "special banking arrangement" is only suitable if your UK pension is less than your NZ entitlement. The UK Department of Social Security pays your UK pension into a special bank account at Westpac Trust in New Zealand every 4 weeks. Work and Income NZ withdraw your pension and it offsets your NZ entitlement. The account is held in your name but you cannot access it. You do not have to worry about the exchange rate or paying additional tax.
The second option, "direct payment option", the UK Department of Social Security pay you directly. You will need to pay New Zealand tax on your UK pension. The New Zealand superannuation payment is reduced by the amount of your UK payment. You may need to pay provisional tax on your UK pension.
Should I transfer my UK pension to a NZ Superannuation plan before I leave the UK? No, you need to be a permanent resident in New Zealand before your UK pension plan can be transferred. We recommend waiting until you are living and working in New Zealand before you make a decision. At present entitlement to New Zealand superannuation is not asset tested. The NZ Government will off-set pension income paid by the UK Government against your NZ super entitlement.
Can I withdraw cash from my pension fund once the transfer is complete? Yes, in certain conditions it may be possible to take up to 40% in cash, but sometimes the transferring scheme can insist that the whole amount is 'locked in'. This is an area often misunderstood by some New Zealand advisers and getting it wrong could result in tax penalties being applied. We recommend that your UK pension money be saved for your long term retirement as you originally planned.
UK Pension Simplification Rules - Affect on Pension Transfer On the 6th April 2006 the new "pension simplification" regulations came into effect in the UK.
Under these rules every overseas pension fund that wants to accept transfers from the UK must be approved as a "Qualifying Recognised Overseas Pension Scheme" (or QROPS). All QROPS will have to report back to HMRC any payment made to a member in respect of the amount that was transferred from the UK. This will include the date, amount and "nature of the benefit" and the current address of the member.
Note: HMRC will apply a 40% tax on the transfer value if the UK pension is transferred to a non QROPS scheme.
The new regulations state that the earliest retirement age 55 (the earliest age at which funds can be withdrawn) is to rise to 55 years in 2010. In addition the maximum withdrawal in the first year will be limited to 25% of the pension without incurring any tax liability. Anything above this will incur a tax liability of 40%. To be a QROPS, reporting of all withdrawals is required to be provided to the UK authorities. Additional contributions and/or investment growth are not subject to the UK tax penalties.
