We can advise whether you are able to transfer your UK pension benefits based on the UK scheme you hold.
Benefits are transferred to a New Zealand Registered Overseas Pension Scheme (ROPS) which is the overseas scheme status required before HMRC will allow the transfer of UK pension benefits to proceed. By transferring to a ROPS the pension holder continues to receive UK tax relief but this is subject to withdrawal restrictions.
The rules around pension transfers are complex and you should seek advice from an adviser who specialises in this area. Currently the main issues are:
TAX: there is a four year window in which a transfer can be made free of tax, with NZ tax applying after that time irrespective of whether the benefits are drawn in the UK or are transferred to NZ. This is a complex area and we recommend you contact us to discuss your situation before proceeding to transfer.
SCHEME ‘GUARANTEES’ – contrary to popular belief, UK final salary scheme benefits are not guaranteed as they are subject to the ability of the sponsoring employer to fund the scheme. You therefore need to understand the extent of such ‘guarantees’ based on your personal situation.
DEATH BENEFITS – NZ superannuation schemes allow for the full value of the fund to be paid to your beneficiaries in the event of your death. This is similar to UK Personal Pensions. If you hold UK final salary benefits, you should understand how your scheme treats your benefits on your death, particularly if you have children.
ABILITY TO RETIRE EARLY WITHOUT PENALTY – Some Superannuation Funds allow you to retire from age 55 and without penalty. You can also draw benefits from UK schemes from age 55 although many will apply an early retirement penalty, typically around 3-4% for each year below the normal retirement date for the scheme.
ESTATE PLANNING – a transfer to a New Zealand ROPS removes you from liability for UK Inheritance Tax.
ACCESS TO BENEFITS – understanding how much you can take as a lump sum and how much as income and when are very important considerations.
CURRENCY EXCHANGE RISKS – understand the potential impact of exchange rates on your pension income and benefits.
INVESTMENT CHOICE – Some New Zealand ROPS Superannuation Funds provide you with access to an extremely wide choice of investments. This enables your adviser to construct an investment portfolio for transferred funds based on your personal risk tolerance and your personal objectives. To this end we offer a tailored investment solution for our clients who decide to transfer their UK pensions.
It is very important that you understand both the advantages and disadvantages of a transfer, so you can make an informed decision on whether to proceed. This understanding should be based on your personal situation and not on what you hear from your friends and family. Each individual has their own unique situation and your decision should be based on your own personal circumstances and requirements.
Saturn Portfolio has advisers who have been providing advice on and arranging UK pension transfers since the introduction of the UK’s QROPS laws back in 2006. Please contact us for further information on whether to transfer your UK pension benefits to New Zealand.