Type "UK pension to NZ" (or similar) into any search engine, and you're presented with numerous companies extolling the various benefits of transferring your British pension to a New Zealand Qualifying Recognised Overseas Pension Scheme (QROPS).
Some of these organisations have "QROPS" or "transfer" as part of their name or may even be promoting their own QROPS product, so you could be forgiven for thinking that transferring to a QROPS is the only viable option.
This is categorically NOT the case!
- A transfer of any description is NOT necessarily your most appropriate course of action.
- 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:
- Leave your UK pension where it is.
- Move your UK pension to a Self-Invested Personal Pension (SIPP).
- 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
- 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