Of course, you’ll have many questions about how and why to transfer your UK pension scheme to New Zealand. Here are some of the most common queries that GBPensions hear. Hopefully these, along with Meet The Team and Transfer Your Pension answer your immediate concerns. Links to GBPensions’ Jargon Buster should help translate some of the technical financial stuff too.
To discuss any aspect of your UK pension transfer in greater detail, please do contact us.
The growth in a UK pension scheme is allowed to roll up virtually free of tax for UK residents. However, a NZ tax liability accumulates annually on the growth of a UK pension scheme, if the member is a NZ resident, even if they are not old enough to access the funds! The tax liability is accumulated annually until scheme proceeds are paid out, either by transfer or withdrawal of benefits from age 55. Therefore the longer the member and their UK pension scheme remain in different countries, the bigger the potential NZ tax liability will be.
Transferring a UK pension scheme to a NZ scheme that is also a QROPS, can help mitigate, if not totally eradicate, this potential tax liability. In some cases it may be more beneficial to transfer to a SIPP than to a NZ QROPS. You may even choose to leave your UK pension where it is. The important thing is to gain an accurate picture of your situation, so that you can make an informed and appropriate decision.
A pension transfer to a SIPP or NZ QROPS may not be relevant or appropriate in all instances. The decision whether to transfer or not is complex, and it is important to consider the benefits, risks and disadvantages before determining if a transfer is suitable. GBPensions recommends that all clients seek independent financial and tax advice, personalised to their individual circumstances.
- Potential mitigation of NZ tax liability on receipt of overseas funds, be that by transfer or withdrawal of benefits.
- Retirement benefits payable from NZ schemes are treated as exempt income with no tax payable in NZ.
- Death benefits payable from NZ schemes are made 100% free of NZ income tax – payments from a UK scheme are not after age 75.
- Potentially larger lump sums can be paid without deduction of tax from NZ schemes compared to UK schemes.
- Some NZ schemes can hold funds in various currencies, thereby allowing currency exchange rate risk to be mitigated, whereas most UK schemes have no such facilities.
- Transfers to a SIPP can potentially allow up to 100% of the UK funds to be withdrawn without a UK or NZ tax liability.
Whilst the motivation to transfer a pension scheme might appear to offer benefits, many factors need to be taken into account before an informed decision can be made. Some factors will be more important than others for anyone contemplating a transfer, and the list below outlines only some of those that need to be carefully considered:
- Is the transfer value sufficient to generate returns in the receiving scheme, of an equivalent value to those being given up in a defined benefit (DB) scheme
- Currency conversion rates
- Costs and fees incurred in the transfer process itself and those of the schemes involved
- Exit penalties
- Tax implications
- Loss of guaranteed benefits and therefore potential security
- Legislative changes
- Personal jurisdictional and domiciliary changes
- Accessibility of benefits or funds
- Investment risk and returns
If a transfer can be made within the first four full tax years of becoming tax resident in NZ, the member generally will have no NZ tax liability. If a transfer is made after the four year period a NZ tax liability will theoretically start to accumulate on an annual basis and become payable on a later transfer or withdrawal of benefits from age 55. The longer the transfer is delayed, the greater the potential NZ tax liability.
Read what QROPS means.
Whilst at GBPensions we do not provide advice on currency exchange, we do believe the reasoning behind delaying a transfer due to poor conversion rates is flawed.
If your sterling funds are in a UK scheme when the exchange rate improves, the only way to get them into your currency of favour might be to transfer them to a QROPS that holds that currency, as very few UK schemes have currency conversion facilities. However, because the transfer process can take many months, the exchange rate is likely to change by the time funds arrive in the QROPS.
If a pension transfer is appropriate, there is no reason for you to delay the process. The reason for this is that you can park the transferred funds in a QROPS until you feel the time is right to convert to the currency of your choice. Funds can then be converted within the QROPS significantly quicker than the time it takes to transfer.
In the vast majority if cases, the answer will be no. If you are a NZ tax resident, transferring your UK pension to a legitimate NZ QROPS is an authorised payment and so no unauthorised payment charges will apply. However, an individual’s circumstances need to be carefully considered, which is why GBPensions always recommends that clients seek specialist tax advice.
GBPensions only advises on NZ superannuation schemes that are registered under the Financial Markets Conduct Act 2013 and which have been recognised by Her Majesty’s Revenue and Customs (HMRC) as QROPS.
Because no two individuals’ situations are the same there can be no definitive answer to this question. There are many things to consider, which may include what are you giving up with your current scheme, what your benefits are, and general tax issues. At GBPensions, we always consider whether a transfer to a QROPS or SIPP is better for our prospective clients as we are able to offer both options.
Over the years, GBPensions’ team has arranged pension transfers to New Zealand from more than 150 UK pension providers.
Although the following list is by no means exhaustive*, it does give the names of the major companies with whom we have dealt. If you do not see your scheme’s name here, please do not worry. Many UK pension schemes have merged and now operate under a different name or are administered by a new company. Even if not, GBPensions will be pleased to develop a new relationship in order for you to move your pension to NZ.
- Accenture (BT Pension Scheme)
- AJ Bell Management Limited
- Amalgamated Metal Corporation Pension
- AMEC Corporate Pensions
- Aon Hewitt Limited
- Arcadia Group Pensions
- Ark Life Assurance Company Limited
- Armed Forces Pension Scheme
- Axa Sun Life
- AXA Wealth Limited
- BAE Systems Pension Scheme
- Banks Hoggins O’Shea Pension Fund
- Barclays Bank UK
- Barclays Life Assurance
- Beales Pension Scheme
- Blackrock Pensions Administration Centre
- BOC Pension Services
- BP UK Pensions and Benefits
- British Airways Pensions
- British Gas Staff Pension Scheme
- British Steel Pension Scheme
- Canada Life
- Capita Employee Benefits
- Capita Hartshead
- Citi (UK) Pension Plan
- Civil Service Pensions
- Clerical Medical Investment Group Limited
- Coca-Cola Great Britain
- CPRM Limited
- Croydon Council
- DHL Trustees Ltd
- Draftfcb London
- Eaton Electric Ltd
- Fidelity international
- Fidelity Life Pensions Management
- Friends Life – Bristol
- Friends Life – Salisbury
- Fugro Holdings Ltd
- Furness Withy (Chartering) Ltd
- GEC Marconi Avionics
- Goodwill Financial Services
- Great Western Ambulance Services NHS Trust
- Greater Manchester Pension Fund
- Guardian Financial Services
- Hanover Pensions
- HSBC Life (UK) Limited
- HSC Pensions Service
- Industry Wide Mineworkers Pension Scheme
- James Hay Pension Trustees
- Jardine Lloyd Thompson
- Jardine Motors Group
- JIB Pension Scheme
- JLT Benefit Solutions Limited
- Joy Global
- Kent County Council
- Killik & Co
- Kraft Foods UK Ltd
- Lancashire County Council
- Legal & General Assurance Society
- Lincoln Financial Group
- Lloyds TSB
- Logica Pensions
- London Borough of Hillingdon
- Lothian Pension Fund
- LV = Retirement Solutions
- Manulife Financial Customer Service
- Mercer Limited
- Merchant Investors
- Merseyside Pension Fund
- MHA Pensions
- Mineworkers Pension Scheme
- Morgan Stanley & Co Ltd
- National Insurance Contributions
- NatWest Life
- New Ireland Assurance Company
- NFC/ Excel Pensions Department
- Nortel Networks UK Pension Plan
- Northern Foods Trustees Limited
- P & O
- Phoenix Life
- Plascoat Systems Limited
- Proctor & Gamble
- Punter Southall
- RBC cees Limited
- ReAssure (all other schemes)
- ReAssure (ex Barclays)
- Renault Retail Group
- Rentokil Initial
- Royal London
- RPMI Limited
- Sanlam Investments and Pensions
- Scottish Equitable
- Scottish Life
- Scottish Office Pensions Agency
- Scottish Public Pensions Agency
- Scottish Widows
- Skandia UK
- St. James’s Place
- Standard Life
- Sun Life of Canada
- Teachers Pension
- Tektronic UK Pension Plan
- Tesco Pension Trustees Limited
- TFL Pension Fund
- The Civil Service Pensions
- The Co-operative Investments
- The Equitable Life Assurance Society
- The Highland Council
- The Mars UK Pensions Administration Team
- The Mount School
- The Pension Trust
- Thomas Tilling Pension Trust
- Tioxide Pension Fund
- Towers Watson
- Trigon Pensions
- UBS Benefits Service Centre
- Unilever Pensions Team
- Universities Superannuation Scheme Ltd
- University Hospital Bristol Hospital Trust
- Virgin Money Unit Trust
- Visa Bureau Ltd
- Volkswagen Group Pension Scheme
- Wesleyan Assurance Society
- West Midlands Pension Fund
- West Midlands Police
- WH Smith Pension Trust
- Windsor Life Assurance Company Ltd
- Winterthur Life
- Worcestershire County Council
- Xafinity Paymaster
- Zurich Assurance Ltd
* There are several reasons for this, including:
Many of the UK insurance companies have merged. So, for example, Scottish Amicable is now owned by Prudential. Therefore even though Scottish Amicable is not on the list, this does not mean that GBPensions has not dealt with one of its schemes. Rather, it is likely that our advisers communicated with Prudential in doing so.
This list contains a number of HR and Trustee /Administrators, such as Towers Watson and Aon Hewitt. These companies administer schemes for other UK employers, whilst also having their own staff schemes.