Secondly, although there is no formal capital gains tax in New Zealand, almost all capital gains are taxable in one form or another. This is particularly relevant for the taxation of investments, the rules for which are highly unusual. A key point to remember is that your taxable income can often exceed the cash receipts from dividends.

Thirdly, if you file a tax return in the UK the double tax agreement between New Zealand and the UK does NOT mean you do not have to file a tax return in New Zealand. If you are a New Zealand tax resident, and if you are required to file a tax return then you MUST include all your worldwide income. The only exception is if you qualify for the "transitional resident’s exemption".

The transitional resident’s exemption usually lasts for 48 months after the month in which you become a New Zealand tax resident. However, you can lose it if you apply for any benefits such as working for families, even if your application is rejected. In several cases we have dealt with significant tax charges arose on pension transfers after an application for working for families resulted in the premature termination of the transitional resident’s exemption. The tax paid far outweighed the working for families’ credits paid. Be sure to carefully check the implications of making a claim for benefits. Please note you CAN claim paid parental leave and still keep your transitional resident’s exemption.

Fourthly, if you have started to receive a pension from Britain it IS covered by the transitional resident’s exemption. Furthermore, on the basis that you are a New Zealand tax resident then the UK has no right to tax your pension.  Accordingly, you should apply for a "NT" (no tax) tax code for any pensions you may receive. 

Finally, unless you do so within the first four years of immigrating to New Zealand, transfers of pension schemes to New Zealand ARE taxable. This includes the 25% portion you can receive tax free in the UK. Tax can be payable even if you can’t access the pension scheme after transfer. We know from our experience and discussions with Inland Revenue that the complex tax treatment means there is widespread non-compliance in this area. Be aware that Inland Revenue regularly requests details of transfers from pension transfer companies and can also obtain information from HM Revenue and Customs. It is therefore very important you obtain tax advice BEFORE initiating a transfer. 

About the author:
Terry Baucher is a tax expert. His specialist areas of interest include cross-border tax, FBT, Inland Revenue audits and the sale and purchase of business assets. His book “Tax and Fairness” co-authored with Deborah Russell, MP published in May 2017. He has a track record of using FOI requests to deepen his understanding of tax law implementation. He makes regular presentations at seminars and contributes a regular column on current tax issues at Interest.co.nz and is frequently cited in the press. Terry’s professional memberships include the Accountants and Tax Agents Institute of New Zealand (ATAINZ). They represent SME business clients and make proactive representations to Inland Revenue regarding tax legislation that affects business owners. He is also a member of the British Chartered Institute of Taxation (BCIT) and the Society of Trust and Estate Practitioners (STEP).
 
To find out more about any of the tax issues raised in this blog post, please contact Terry on (09) 486 2600 or e-mail terry@baucher.tax. 


23rd August 2018

1.  A transfer of any description is NOT necessarily your most appropriate course of action.
2.  Even if you wish to proceed with a "transfer", a QROPS is NOT the only avenue open to you.

"So what are the options for my British pension if I'm a tax resident in New Zealand?"

There are three basic choices:

1. Leave your UK pension where it is.
2. Move your UK pension to a Self-Invested Personal Pension (SIPP).
3. Transfer your UK pension to a QROPS.

"What might be the reasons for me to consider a pension transfer?"
​
Without doubt, there are numerous potential advantages of transferring a British pension scheme if you're domiciled outside the UK, but that doesn't automatically mean it's suitable for you. Some of these benefits could include:

• Ease of ongoing administration and servicing in a local time zone
• Tax efficiencies
• Comparative cost of products
• Exchange rate considerations
• Death benefits
• Accessibility
• Flexibility and greater control of invested assets
• Investment choice and/or performance

There is no possible way of knowing which of these are relevant to you, until your personal situation has been determined, including your goals and objectives, and also detailed information about your existing UK pension scheme (or schemes), all of which can vary hugely.

For example, depending upon the type (defined contribution or defined benefit) and size of a pension fund, the UK scheme may offer similar benefits to a QROPS from age 55 anyway – so the net result of choosing to "do nothing" could be better for you.

"Why do so many pension providers and advisers in New Zealand promote transferring UK pensions schemes in the first place, and then only focus on the QROPS option?"

Of course, there are qualified and diligent financial advisers who want to do the best for their clients.

However, without wishing to cast aspersions, inevitably some individuals and businesses will be motivated by the fees and commissions earned. Transferring to a QROPS can be a fairly straightforward, and easy-to-follow procedure, and there does seem to be a general lack of awareness about any other option. Indeed, at the time of writing and to the very best of our knowledge, GBPensions is the only company in NZ to be offering the alternative of moving pension/s into a SIPP.

"I have a company pension in the UK, but I don't know how much it's worth. What should I do?"

A sensible recommendation would be to seek qualified, objective advice from a specialist company, focused on service rather than product.

With a few basic details provided by you, GBPensions can find your UK pension scheme (or schemes), and obtain an accurate valuation. What does that mean for you? It means that you can then make an informed choice about what – if anything – you wish to do next.



 19 July 2018

What might be the reasons for transferring from one QROPS to another?

Everyone's circumstances will be different, so factors will vary in relevance and personal priority. However, in no particular order, these are some of the points to consider:
 
Past performance of the underlying investments
Although this is no guarantee of future performance, it can have a significant influence on final returns. Investments invariably can fall as well as rise and the original sum invested may not be returned.
 
Fund choice and selection
Thorough research of the chosen investments is critical, as are regular reviews and appraisals to ensure they continue to meet current needs, and that the overall portfolio still satisfies the client's attitude to risk. This should enable the client to "sleep easy" in the knowledge that they remain on track with personal goals.
 
Flexibility of investment options
A broad choice of investments in various currencies that can be switched between is important when maintaining a diversified portfolio. Diversification is an acknowledged method of mitigating risk.
 
Ongoing management costs
These can vary hugely between schemes and investments. The higher the fees, the stronger the underlying investments need to perform. This could result in the client holding higher yielding (and therefore probably, higher risk) investments than they might ordinarily be comfortable with, in order to offset the effect of these deductions.
 
Alternatively, lower fees might enable the client to hold lower risk investments, yet still receive the same net return. Just 0.5% pa could make a significant difference. After all, if you could save 0.5% every year on your mortgage, you'd probably seize that opportunity. Why not take the same attitude with your investment portfolio?
 
Tax efficiency
Different products can give different tax outcomes, depending on where the client is tax resident or in which country they intend to spend their retirement.
 
Ongoing service and maintenance support
This can be the straw that breaks the camel's back, when clients have issues surrounding their scheme or investments. All the positive points of a scheme are quickly forgotten if communication and support from the adviser and /or product provider are poor.
 
Conversely, what might be the disadvantages of transferring from one QROPS to another (or to a SIPP)?
 
All the aforementioned considerations can work equally for or against an existing or new scheme. However, regardless of whether a new scheme seems preferential to an existing one, a number of other factors need to be taken into account and again not necessarily in the appropriate order of importance, some of these are listed below:
 
Exit charges
These might be applied by the scheme itself and /or by the underlying investments. These fees alone could potentially lessen or completely negate the viability of a transfer.
 
Tax liability
This could arise, depending on the transaction and the tax jurisdiction of the client at the time of the transfer.
 
A scheme's rules and regulations
The existing scheme may have more favourable legislative terms than the proposed alternative.
 
Other costs
There may be fees from an adviser, portfolio manager or any of the parties associated with setting up the new arrangement or scheme.

If you're wondering whether you should transfer out of your current QROPS, it's important to be aware of all the various elements so that you can make a genuinely informed decision. For a friendly, no obligation chat about your options, please don't hesitate to get in touch with the GBPensions team.


12th June 2018

Royal wedding radio and television audiences
 
The marriage of HRH Princess Elizabeth to Phillip Mountbatten on 20th November 1947 was not broadcast on television, but had a worldwide radio audience of 200 million.

Princes Margaret's marriage to Anthony Armstrong-Jones in 1960 was the first royal wedding to be televised, and attracted an estimated 20 million viewers.

More than 500 million tuned in for Princess Anne's wedding to Mark Phillips in 1973, making it the most watched special event on a single channel (at the time).

​Prince Charles and Lady Diana Spencer in 1981 had more than 750 million viewers.

Who was St George?
Feast day: 23rd April

George isn't just the patron saint of England, but also Catalonia, Genoa, Portugal and Georgia (to name a few), as well as farmers, soldiers and, believe it or not, syphilis sufferers.

It's thought that he was born in Cappodocia (Turkey), died in Lydda (Israel) in 303 AD, and never actually visited England. He was probably a soldier, possibly an officer, in the Roman army. The image of him as a knight in armour on horseback first appeared in the 11th century. Then in the 13th century, the story of George slaying the dragon in order to liberate the city of Silene (in Libya) became popular as part of Jacobus de Voragine's The Golden Legend (which was translated and published in English about 200 years later).

George was a martyr, persecuted and executed for refusing to renounce his Christianity by Emperor Diocletian. He was canonised by Pope Gelasius in 494 AD.

It was Edward III who declared him to be the Patron Saint of England in 1348 when he founded the Order of the Garter. St George's Cross still appears on the Garter badge, and it remains the highest order of chivalry.

​He apparently lived a very modest life, likely becoming a monk at quite a young age, eating only bread, vegetables and herbs, and drinking only water. In fact, he became known as Aquaticus or The Waterdrinker. He founded 12 monasteries, and was named Archbishop of Wales at the Synod of Brevi in 550 AD.

It's claimed he performed several miracles, including restoring the sight of a blind man and bringing a boy back to life by splashing the child's face with tears.

David died in 589 AD, and was canonised by Pope Callactus II in 1520.

When he was 16, Patrick's life took a nasty turn. He was kidnapped by Irish raiders and sold into slavery. It seems he worked as a shepherd in either Co. Antrim or Co. Mayo, and it was during this bleak time that he turned to Christianity.

He escaped from his captors after six years – hearing the voice of God in a dream telling him it was time to leave Ireland. He studied at a monastery and, after 12 years, he returned to Ireland with the Pope's blessing as a bishop. Things didn't go entirely smoothly, as there are various reports of run-ins with local chieftains and druids but, for the best part of 20 years, he travelled up and down the country preaching, and establishing churches and schools.

There is some debate over where he's actually buried, but there is a permanent memorial in Downpatrick, Co. Down.

In the 8th century, King Oengus I of the Picts built a monastery in modern day St Andrews (where the university now stands) after the saint's relics were brought there.

Legend says that Oengus II prayed to St Andrew on the eve of a critical battle against an English force from Northumberland. He was promised victory, despite being heavily outnumbered, if he honoured Andrew as Scotland's patron saint. The day dawned, the clouds formed the shape of a saltire and Oengus' army were indeed victorious.

Andrew was adopted as patron saint of Scotland in 1320, after the signing of the Declaration of Arbroath. He is the patron saint of several other countries too, including Greece, Russia and Barbados.

Reference sources:
english-heritage.org.uk
historic-uk.com
historyextra.com
irish-genealogy-toolkit.com
history.com
bbc.co.uk/history
telegraph.co.uk/news

23rd April 2018

The number of Brits moving to New Zealand may increase over the next few years, as the country seeks to attract construction workers to help with its largest ever infrastructure and housing programme. The Building and Construction Industry Training Organisation (BCITO) says that an additional 65,000 workers will be required over the next five years. They also report that, although demand for construction workers has previously focused on Auckland, there is now significant demand around the country. (You can read more in this article from The Telegraph.)
 
And this is not just the case for construction workers. According to figures provided to the NZHerald by Immigration NZ, only 40% of last year's migrants who arrived under the business and skilled migration categories are confirmed as remaining in Auckland, compared to 51% in 2012/13. Canterbury, Wellington and the Waikato were the next three most popular locations. Massey University sociologist and immigration expert Prof Paul Spoonley shared some interesting thoughts about the whys & wherefores in this article, acknowledging the efforts of the previous Government and changes in regional economies.

Immigration checklist – don't forget about your UK pension!
 
If you're one of the thousands of Brits who'll be relocating to New Zealand in 2018, wherever you settle – from Kaitaia to Invercargill, and anywhere in between! – remember to consider the options for your UK company or private pension.
 
You could choose to leave it where it is, move it to a SIPP or transfer it to a NZ QROPS, and it's generally preferable to make a decision sooner rather than later due to the potential New Zealand tax implications. As you're probably aware this is a complex financial area, not least because you're dealing with both UK and NZ legislation. Please make sure you receive qualified, informed advice which is focused on your personal needs, priorities and circumstances.

Sources:
Stuff.co.nz/business
Immigration NZ
Statistics NZ
 
15th January 2018

Christmas gift ideas for Brits – books
 
Brits can be a traditional lot, and, in spite of being able to access a plethora of stories and information online, there's nothing quite like curling up with a good book. There are some cracking new titles, including:

Christmas gift ideas for Brits – movies and TV
​
So many great TV shows and movies to choose from, but here's our choice of viewing with a distinctly British flavour.

Christmas gift ideas for Brits – toys and games

For those who'd rather switch off the TV during those long summer evenings, hopefully one of this lot will help while away the hours. GBPensions is not responsible for any family arguments which may ensue.

Hopefully this list proves helpful and saves you a bit of stress at what can be a frantic time of year.

However and wherever you're spending the festive season, everyone at GBPensions wishes you and yours a happy and relaxing summer holiday.
​
We have tried to find and show NZ-based buying options for all gift ideas. Images and links are provided for information purposes only. Items may be available from multiple sources and prices may vary. It's advisable to check DVD /Blu-ray compatibility.


10th December 2017

To transfer or not to transfer, that is (still) the question

The three main options for people living in NZ with retained benefits in UK pension schemes have not altered. In other words, having weighed up the various pros & cons, you can still either:

• leave your UK pension where it is
• transfer it to a NZ QROPS (Qualifying Recognised Overseas Pension Scheme)
• switch/transfer it to a SIPP (Self-Invested Personal Pension).

What changed with QROPS in 2017?

There were two major rule changes this year for QROPS (or ROPS, as they are now frequently referred).

Firstly, in March the Chancellor of the Exchequer introduced a 25% Overseas Tax Charge for transfers of UK pension schemes to QROPS registered in different jurisdictions to where the member resides, unless both the scheme and the member are in the European Economic Area (EEA).

Fortunately, the exemption clause applicable when both the individual and pension savings are in the same country allows NZ tax residents to transfer to a NZ QROPS without being liable for this tax charge (although there could be implications if they subsequently permanently relocate from NZ). You can read about this in more detail in this earlier blog post.

Then, in April the "70% rule" was removed from QROPS withdrawal conditions, allowing people to take 100% of their fund from age 55. You can read about this in more detail in this earlier blog post.

What changed with SIPPs in 2017?

SIPPs were not directly affected by any of this year's rule changes. However, the removal of the aforementioned 70% rule effectively means that accessibility of funds from age 55 is the same for QROPS and SIPPs.

A SIPP may still offer one key advantage over a QROPS, and that's the ability to defer the payment of NZ tax. For anyone outside their 4-year NZ transitional tax period (and under the age of 55), a transfer to a QROPS will likely generate a NZ tax liability which cannot be paid from the scheme itself. Conversely there's no immediate tax liability if someone chooses to move to a SIPP; this only occurs when benefits are drawn at age 55. So, instead of having to pay immediately and out of their own pocket, clients can pay from funds received when they make their withdrawal which is when the liability falls due.

There may be other valid reasons for someone choosing to move to a SIPP rather than transfer to a QROPS but, as always, these must be considered on an individual basis.

An interesting side-effect of QROPS rule changes

Every week we hear from people who've been contacted by offshore financial advice firms, keen to handle their UK pension transfer. (LinkedIn seems to be the most common method of stalking expats). Based on recent feedback, there's been a noticeable shift in these companies' tactics. Whilst they still seem to be unreservedly recommending a pension transfer in all cases, it would appear that they now favour SIPPs over QROPS.

Without wishing to besmirch anyone, GBPensions would like to offer the following explanation and observations:

There are numerous "advisers" around the world operating from jurisdictions that, unlike NZ or the UK, have little, if any, regulation of financial services providers and products. Many providers of QROPS and SIPPs allow such advisers to use their products, and consequently there is little control of the advisers and their actions, nor any protection or redress for clients.

Prior to the UK's March 2017 rules changes, these advisers were selling QROPS products to people around the world like they were going out of fashion. From our own experience, this has caused severe problems for NZ resident clients because the overseas advisers have no knowledge of the NZ tax implications for the client – nor do they seem to care. The transfer to a NZ QROPS can help mitigate the effect of NZ taxation, but advisers operating in Jurisdiction A, selling a QROPS registered in Jurisdiction B to a client living in NZ can exacerbate the tax position considerably.

The aforementioned rule changes were purposely introduced by the British Government to thwart the actions of advisers like this, and mean that few people will now benefit from transferring to a QROPS outside of their own country of residence.

Not unsurprisingly, within days, overseas advisers started extoling the virtues of transferring to SIPPs.

GBPensions' director, Tony Chamberlain, comments, "QROPS and SIPPs have become a commodity used by unregulated and unscrupulous advisers who generally have no financial services qualifications of any credibility, and operate from dubious overseas jurisdictions."

Why are so many UK DB pension schemes in deficit?

According to figures released by PwC in April, the total UK DB pension scheme deficit was $530 billion at the end of Q1 2017.

There are two key factors which, over the years, have accumulated to bring us to this staggering statistic:

People are living longer

In 1970, life expectancy for British men was 68.7 years, and for women it was 75 years. Today, it's 79.4 years and 83.1 years respectively. This has put all pension schemes (including the UK State Pension, of course) under increased strain as members draw on them for longer. However, it may be worth noting that life expectancy has actually fallen over the past few years. If this trend continues, it could ease some of the pension deficit burden, as reported by The Telegraph.
 
Interest rates and gilt yields are low

Defined benefit pension schemes are similar to annuities, in that they have to provide a guaranteed retirement income. When a DB pension scheme's cash equivalent transfer value (CETV) is being calculated, an actuary will base their figures on the risk-free investment return offered by UK gilt yields.
 
Gilts (or Government-backed securities) provide a guaranteed return to a set future date. Using current data, the actuary discounts the cost of future pension payments to determine the CETV and, therefore, transfer value.
 
As gilt yields fall (in other words, if interest rates are low) the cost of providing that guaranteed retirement income rises, due to the additional capital required. Conversely, if interest rate and gilt yields rose, then less capital would be required to meet the guaranteed figure and the transfer value would be lower.
 
The inverse funnel

This potentially very attractive scenario of high transfer values has seen a surge in enquiries from members seeking to move their money out of their existing DB pension schemes.  Ultimately, what this could mean is that there will be less in the pot for those members who remain.

What might happen if a DB pension scheme is wound up by the company?
 
For anyone in this situation, we would urge you to speak to your pensions representative and /or an NZ independent financial adviser as soon as possible. Everyone's circumstances will be slightly different; personalised professional advice is crucial.
 
In the case of British Airways, the scheme may be frozen and no new members will be permitted to join. BA is now talking about shifting all its employees into a "more flexible" scheme which they say will offer "improved benefits" for staff currently enrolled in the BA Retirement Plan.
 
In general terms, if a scheme is closed a member should lose none of the benefits that they have accrued up until that point. And, if a member has already retired, there should be no changes to their income.
 
A pension scheme may choose to transition to the Pension Protection Fund, which was established to:
 
"…pay compensation to members of eligible defined benefit pension schemes, when there is a qualifying insolvency event in relation to the employer and where there are insufficient assets in the pension scheme to cover Pension Protection Fund levels of compensation."
 
If this happens, it is conceivable that members on the point of retirement will be unable to make any withdrawals for up to 3 years, and that the funds available will have no relevance to the true transfer value.
 
Are you a NZ resident who might have a UK Defined Benefits pension scheme? Here's what to do next.

If you worked for a national or multi-national company whilst in Britain then it's likely you were given the option to join their DB/final salary pension scheme.
 
Not sure? By providing GBPensions with a few basic details (such as your name, date of birth and the approx. dates you worked at the organisation/s) we can investigate on your behalf. Please be assured: this in no way commits you to transferring your pension scheme/s to New Zealand. It is purely an information-gathering exercise in order to help you make an informed decision.
 
To learn more about how we work, please see Transfer Your Pension or give us a call on 0800 427 693 (+64 9 414 2089 from overseas).

30th October 2017

References:
telegraph.co.uk – Life expectancy dip could wipe £310bn from rising UK pension hole
telegraph.co.uk – BA plans to move all employees into new pension scheme next year
theguardian.com – Final salary pension deficit of biggest listed firms in UK 'hits £137bn'
ftadviser.com – BA proposes new pension scheme
Office for National Statistics

 Specifically, Philip Hammond announced that:

• the "70% rule" will be removed from the conditions that a pension scheme has to meet to be an "overseas pension scheme" or "recognised overseas pension scheme."

 
We can confirm that this change did indeed take effect on 6th April 2017, which means that when they reach age 55, members of QROPS can now withdraw 100% of their fund. Funnily enough, this is something of a reversal by HMRC, who amended the QROPS rules in 2012 precisely to prevent this happening!

Here at GBPensions, we feel this is generally good news for clients, as it endorses our view that they should be allowed to access as much of their fund as soon as possible in order to gain control of their retirement funding, and to benefit from prevailing rules before the goal posts inevitably move again.

This legislative amendment also brings a parity that was previously lacking, as our QROPS clients now have the same access to their fund at age 55 as our SIPP (Self-Invested Personal Pension) clients.

If a member does decide to make a complete withdrawal, it is entirely up to them what they choose to do with their money. But being able to take that lump sum certainly allows a client to take control of their retirement funding and does open the door to potentially more flexible investment options.

Ensure you understand all of the issues before deciding on a full withdrawal
 
Many QROPS rely on their members remaining as long as possible in order to ensure the viability of the scheme over the longer term. Consequently, we're aware of a number of QROPS that have already amended the terms of their scheme, or are considering doing so.
 
These amendments largely impose exit fees on members should they decide to withdraw their entire fund from the QROPS at age 55, in the very first few years of investment. In an ideal world, of course we'd prefer no exit charges for our clients, but we acknowledge they have to exist to protect all members in the QROPS and to ensure its long-term viability.
 
Every person's circumstances are different, which has caused some confusion within the pensions industry on how the exit fees are applied. In many cases clients will be no worse off than they would have been based on the old rules.
 
In general terms, exit charges of up to 3% can now apply, but these fees depend on a number of factors, including the age of the QROPS member, how long they've been invested with the scheme, and the amount they wish to withdraw. Every case has its own particular set of circumstances, which is why we're going to great lengths to go through all this with our clients to ensure they understand if or how they might be affected.

If you are unsure about the new rule changes or if new exit charges might affect you, please get in touch and we'll happily clarify the situation. As always, we want you to have accurate and relevant facts to help you make an informed and appropriate decision.


28th August 2017