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 Recognised Overseas Pension Scheme (ROPS) which is the overseas scheme status required before HMRC will allow the transfer of UK pension benefits to proceed.
The rules around pension transfers are complex and you should seek advice before proceeding to transfer. Some of the main issues are:
TAX – there is a four year window (known as the lump sum exemption period) in which a transfer can be made free of NZ 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.
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 New Zealand 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 defined benefit schemes will apply an early retirement adjustment.
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 allow you to access a 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. Specialist tax advice is also recommended.
Saturn Portfolio can provide advice on and arrange UK pension transfers and has staff with more than 10 years of experience in this area. Please contact us for further information if you are considering transferring your UK pension benefits to New Zealand.