For many years, GBPensions’ advisers had consistently expressed their concerns about KiwiSavers that were (Qualifying) Recognised Overseas Pension Schemes (QROPS or ROPS), but which promoted early withdrawals for first home purchases or to pay a tax liability generated as the result of a transfer of a foreign superannuation scheme. We always felt that these criteria were not within QROPS rules and could, therefore, be classed as “unauthorised payments.”
Subsequently, on 6th April 2015 HMRC removed all KiwiSaver accounts from their list of ROPS. Although none of GBPensions’ clients were affected by this change in legislation, over the past few months we have (understandably) received a steady stream of enquiries relating to UK pensions previously transferred into KiwiSavers.
In order to clarify the situation, these are the questions GBPensions’ advisers hear most frequently, and our current* responses to them.
Can I transfer my UK pension into a KiwiSaver?
No. On 6th April 2015, HMRC removed all KiwiSaver accounts from their list of ROPS. However, you can certainly move your British pension scheme to New Zealand; there are still more than 30 NZ QROPS available (as per the latest HMRC ROPS list, updated 2nd November 2015).
Why are KiwiSavers no longer on HMRC’s list of ROPS?
According to HMRC, funds transferred from a UK pension scheme must be locked into a QROPS until the investor is aged 55, except in cases of ill health (as defined under UK law). However, KiwiSavers allow early withdrawals for a number of additional reasons: permanent emigration, buying a first home and severe financial hardship, in strict contravention of HMRC’s requirements.
I transferred my UK pension scheme into a KiwiSaver prior to 6th April. Can I move these funds from the KiwiSaver into a QROPS?
Unfortunately not. Your pension fund is now locked into that KiwiSaver until at least statutory retirement age (currently 65). For New Zealand residents, KiwiSaver accounts can only be transferred into other KiwiSaver accounts and QROPS can only be transferred between QROPS or other UK pension schemes. Any movement of the funds, therefore, would be viewed as an “unauthorised withdrawal” and would attract a financial penalty, potentially up to 55% of the original sum invested.
I had been considering transferring my UK pension into a Kiwsaver. What should I do now?
You can still move your pension from Britain to New Zealand, but it will have to go into a NZ superannuation scheme that is not a KiwiSaver, but is a QROPS. Before taking any decision about your UK to NZ pension transfer, we recommend that you seek impartial advice from a suitably qualified financial adviser. GBPensions’ advisers are independent and have no allegiance to any particular service provider or product. If you choose to speak to us, you can be assured that your best interests are our team’s sole priority.
* The information within this article is correct at the time of writing (2nd November 2015). GBPensions will provide updates if the situation changes again.