| | Transferring UK Pensions:
Frequently Asked Questions
- Should I transfer my UK pension fund to New Zealand?
For many UK ex patriots your pension fund will be the second biggest "investment" after your home. To make decisions on the future of this without all the facts is financial suicide. That is why we charge a fee for our work. We will undertake an extensive study of your benefits this will include many of the following: its current security, the options contained within it, the ongoing charges, the quality of the investment manager , underlying guarantees, provisions for death benefits both before and after the stated retirement date, the rate of return needed to replicate guaranteed benefits given up, current nominations or trust provisions.
- 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 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 pension 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 NZ Approved superannuation fund. We do not use a trust account or handle your money.
- What are the main benefits to transferring my UK pension to New Zealand?
- Enables you to keep track of your pension plan and gain more control of your funds without affecting their earning power. You won't need to be concerned whether the fund is merging, closing or going out of existence.
- You no longer need worry about exchange rate fluctuations affecting your pension payouts.
- You will not be paying bank fees for each transfer (may be as a high as 18 pounds per transfer)
- You will have more information and control on the companies holding your retirement savings.
- Easier to access your money in retirement.
- 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, however, If you both die leaving qualifying dependent children , your UK pension could continue for as long as you fulfill the schemes eligibility criteria. With New Zealand superannuation plans all of your remaining investment becomes part of your estate and is passed on to your children, 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 paid directly into my bank account?
No, it is a requirement of the UK legislation that the money can only be paid into an approved New Zealand superannuation plan.
- Do you charge a fee for your pension transfer service?
Emphatically YES, because you need impartial advice on such a complex and important issue. If it is in your best interests to retain the status quo we want to be able to say so, but receive remuneration for the time and experience involved in assisting you to reach that decision. Should you ultimately transfer your benefits to New Zealand we will, at your request offset our charges against any initial commission received, with any excess being reinvested. Or reinvest all the initial commission and charge you separately.
Contact Alison Renfrew at Alison@ukpensionstonz.co.nz .
Why don't I just transfer the pension myself?
You can transfer the 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.
WilI 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 have to be since you turned age 50. Contact Work and Income on 0800 552 002 or at www.winz.govt.nz.
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 any sort of decision on this. At present entitlement to New Zealand superannuation is not asset tested. The NZ Government will off-set pension income you are paid by the UK Government against your NZ super entitlement. How much would I get if I qualify for New Zealand superannuation?
Can I withdraw cash from my pension fund once the transfer is complete?
Yes, but this is dependent on restrictions imposed by your UK scheme. It may be possible to take up to 60% in cash, but sometimes the transferring scheme can insist that the whole amount is 'locked in'. This is an area often abused by some New Zealand advisers and getting it wrong could result in penalties being applied. Our recommendation is that your UK pension money was saved for your long term retirement savings so keep to this plan and put it aside for your retirement savings. Besides if the UK Government gets to hear that this facility is being abused it may rescind the regulations permitting it!
UK Pension Simplification Rules 2006 - How they affect your Pension Transfer?
On 6th April 2006 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 have to report back to HMRC any payment made to a member in respect of the amount that was transferred from the UK. This includes 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. The earliest retirement age is 55 years. In addition the maximum withdrawal in the first year is limited to 25% of the pension without incurring any tax liability. Anything above incurs a tax liability of 40%. To be a QROPS fund 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.
Phone: 0064 4 471 0662 Alison Renfrew
Fax: 0064 4 471 0615
e-mail: Please complete the fact finder form or email ukpensions@LYFORDS.co.nz
[ Comparison UK vs NZ pensions- transfer UK pension to NZ ] [ Taxation Issues - UK NZ Pension Transfers ] [ UK NZ Pensions FAQ ] [ Glossary of UK pension terms ]
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