The results of the UK general election in early June were a shock to many – not least Prime Minister Theresa May! The various political reasons which led to the delayed opening of Parliament may also have been indirectly responsible for the omission of any mention of pensions in the Queen's Speech. However, that doesn't mean that there's nothing to report on from the world of British and Kiwi pensions.
Confusion over "hard Brexit" vs. "soft Brexit", and inconclusive election results did little to improve Sterling's performance on the foreign exchanges. In fact, in mid-July it hit an 8-month low against the Euro.
GBPensions' advisers quite often hear concerns from potential clients about how a poor GBP to NZD rate could affect their pension transfer. But it has been our long-held opinion that this factor alone should not necessarily be the reason to postpone the decision. There are a number of reasons for this:
- When transferring to a NZ QROPS (Qualifying Recognised Overseas Pension Scheme), it is possible to hold the transferred funds in Sterling rather than immediately converting to NZ Dollars
- If you choose to move your pension into a SIPP (Self-Invested Personal Pension) then no currency conversion is required, since a SIPP is a UK registered product and therefore is automatically held in Sterling. GBPensions are unusual in New Zealand in that we offer this option to our clients. You can read more about the potential benefits of choosing to shift your pension into a SIPP here.
- An in specie transfer could be another option. This is when the underlying assets held in one scheme are transferred direct to another scheme. In other words, the funds or investment portfolio currently held within a UK scheme can remain invested exactly where they are, but can be moved from the UK scheme into a new SIPP or NZ QROPS as a whole and completely intact, without first being converted into cash.
QROPS could still be "wide open to mis-selling"
In an interview with International Adviser, the global head of an international pensions firm stated that the UK's Financial Conduct Authority's (FCA's) latest legislative changes fail to tackle several important issues, including the serious problem of unregulated "advisers". (Please note: in order to read this article in its entirety you will be required to register with International Adviser).
The views expressed in the aforementioned article are those of the editor and contributor, and do not necessarily reflect those of GBPensions. However, in June we compiled this article: Considering a pension transfer? 8 questions to ask your financial adviser.
We would encourage you to share this guide with any of your friends and family who may be thinking of moving their British pension to New Zealand. Whilst by no means definitive, we hope it can be a solid starting point and offer some level of protection against unscrupulous fraudsters.
2017 Global Retirement Index is published
The Global Retirement Index (GRI) is produced annually by Natixis. It rates 43 developed countries on their "retirement security ranking" based on 4 key categories (and their various sub-categories):
- Finances in retirement
- Quality of life
- Material well-being
Norway, Switzerland and Iceland claim the Top 3 spots, with Brazil, Greece and India being the lowest. New Zealand comes in at No.5, one place higher than Australia. These are the only two countries within the Top 10 from outside Western Europe. The UK is now ranked lower than the USA, having dropped from No.16 in 2016 to No.18.
You can read the full Global Retirement Index 2017 here.
$486,000 required for a "comfortable retirement" in Auckland
The NZHerald's money editor, Tamsyn Parker, spoke recently to Dr Claire Matthews of Massey University's Financial-Education Centre. Based on Statistics New Zealand's household economic data about the spending habits of the over-65s, Massey have updated their calculations about the cost of retirement in a major NZ city.
They now estimate that a married couple require $486,000 of their own savings on top of their Superannuation entitlement in order to have a comfortable standard of retirement living. In other words, to be able to enjoy a few of life's little luxuries.
If, having read this pensions news summary, you have any queries about your own circumstances and pension transfer options, please don't hesitate to get in touch with GBPensions.
As always, our general advice is that it's better to ask the questions and collate the facts in order to make an informed choice. In some cases it may be beneficial to leave your pension where it is, but at least if you understand your current situation you can consciously make this decision rather than leaving things to chance.
27th July 2017