What is the four-year window?
During your first four years as a New Zealand tax resident (including New Zealanders returning after 10 years’ absence), you may be able to transfer your UK pension without NZ tax liabilities. Therefore, it could be beneficial to act during these 48 months.
Becoming a resident and becoming a tax resident could be slightly different – which is one of the reasons that GBPensions always recommends seeking independent tax advice. We regularly work alongside a couple of international /cross-border tax specialists, including Terry Baucher and Chris Heffernan.
If you’d like to know more, here’s a Q+A with GBPensions director Tony Chamberlain: GBPensions on YouTube – the importance of specialist tax advice for your UK to NZ pension transfer.
When should I start thinking about a potential UK to NZ pension transfer?
These days, the typical timeframe for a pension transfer is about 12 months. We’ve had some take as long as 20 months.
Why such a long process? One reason is that many of the UK companies have no external email systems – and even if they do, they won’t accept electronic or facsimile signatures. In other words, all the documentation has to be sent via the postal service, and clients need to put pen to paper and sign their names. (To try and mitigate some of the delays, GBPensions has set up a postal drop box and telephone service in the UK.)
Then there are administrative hurdles. Unfortunately, the process doesn’t always run smoothly. On our clients’ behalf, Tony spends many a long hour on the phone either clarifying that information has indeed been provided as required or chasing up missing paperwork.
Again, to learn more about this, here’s Tony: GBPensions on YouTube – timings and timeframes for your UK to NZ pension transfer.
With all this in mind, and to take advantage of the four-year potentially tax-free window, it makes sense to act sooner rather than later. You may choose not to proceed with the transfer – but at least you’ve made an informed decision and not missed out on potential benefits purely because of bad timing.
Can I transfer my UK pension scheme if I’ve been a tax resident in New Zealand for more than four years?
Even if you’ve been a New Zealand tax resident for more than four years, it’s still worth investigating your pension transfer options. Yes, there could be a tax liability, but this might not be as big as you fear and could be mitigated by other advantages. These benefits might include ‘flexibility’ options – to be able to receive more of your money as one or more lump sums, the ability to hold funds in GBP or NZD, or even consolidation of different UK schemes.
It costs nothing to ask GBPensions to obtain and collate the necessary information for you, and you’re under no obligation to proceed with a transfer once we’ve done so. What’s important is you have all the details you need to make the choice that’s most appropriate for you.