Transferring UK Pensions: Frequently Asked Questions
- What criteria is required to transfer my UK Pension?
You have to have permanently emigrated to New Zealand with no intentions of returning to the U.K. You must have either been granted permanent residency or have submitted an application. - Should I transfer my UK pension fund to New Zealand?
For many UK ex patriots your pension fund will be the second biggest "investment" after your home.
Refer to "Reasons to transfer my UK Pension". - Do I have to have a super scheme in NZ to transfer my UK pension into?
Yes. If you decide to transfer your UK pension funds, UK regulations require that they must be transferred to an approved or registered superannuation scheme that is also a QROPS (Qualifying Recognised Overseas Pension Scheme) in New Zealand. If you get this wrong you could be liable for up to 55% penalty tax. - Should I transfer my UK pension fund to NZ, even if I think I may return to the UK to retire?
No. Once you have made the transfer to a NZ pension you cannot transfer back to your UK pension plan as if nothing had happened, you have given up all your rights to your UK pension. - Who handles my money and how safe is it? All transfers are paid directly by your UK Pension fund into the New Zealand HMRC, QROPS approved superannuation fund. We do not use a trust account, or handle your money so the transfer is secure.
- How long does it take to transfer my UK Pension?
Each pension transfer is different as each individual has different circumstances. The rule of thumb is that a normal transfer will take between 3 to 4 months (the shortest 6 weeks and the longest 10 months). Generally the delay is the UK pension provider arranging transfer papers and confirming transfer figures. Generally we undertake for you a lot of correspondence and phone call follow ups. - What are the main benefits to transferring my UK pension to New Zealand?
- Enables you to keep track of your pension plan and gain more control of your funds without affecting their earning power. You won't need to be concerned whether the fund is merging, closing or going out of existence.
- You no longer need worry about exchange rate fluctuations affecting your pension payouts.
- You will not be paying bank fees for each transfer (may be as a high as £18 per transfer)
- You will have more information and control on the companies holding your retirement savings.
- Easier to access your money in retirement.
- If you die with a UK pension scheme your spouse can get up to 2/3 of the pension you would have received. If you both die your pension dies with you, however, If you both die leaving qualifying dependent children , your UK pension could continue for as long as you fulfil the schemes eligibility criteria. With New Zealand superannuation plans all of your remaining investment becomes part of your estate and is passed on to your children, heirs. - What are the tax issues that need to be considered?
- Under the new FIF (Foreign Investment Fund) rules introduced in New Zealand in April 2007 your UK pension is exempt tax.
- If you retain your UK pension and it pays a regular benefit this is deemed income and you will need to pay tax on it in New Zealand.
- If your funds are transferred to a NZ approved superannuation plan under current legislation you are not taxed when you withdraw funds.
- Under the new FIF rules an immigrant to New Zealand is exempt from paying tax on overseas income for up to four years. - Can I get my UK pension paid directly into my bank account?
No, it is a requirement of the UK legislation that the money can only be paid into an approved New Zealand HRMC, QROPS approved superannuation plan. - Do you charge a fee for your pension transfer service?
Emphatically YES, because you need impartial advice on such a complex and important issue. If it is in your best interests to retain the status quo we want to be able to say so, but receive remuneration for the time and experience involved in assisting you to reach that decision. Should you ultimately transfer your benefits to New Zealand we will, at your request offset our charges against any initial commission received, with any excess being reinvested. Or reinvest all the initial commission and charge you separately.
Contact Alison Renfrew at Click here to email us - Why don't I just transfer the pension myself?
You can transfer the pension yourself, but the process is complex, and can be very frustrating and confusing. Do you have the necessary understanding of your actions and how they might impact on your future financial security? If you get it wrong it could cost you thousands of pounds. Our UK Pension Transfer service will save you time, money and stress. - I have already started to draw income from my UK pension can I still transfer the lump sum?
No, once your pension is being paid out as regular income you can no longer transfer what would have been a lump sum. - Will I be eligible for New Zealand Government superannuation payments?
To be eligible for New Zealand Superannuation you need to be aged 65 or over and a legal resident of New Zealand, having lived here for ten years since age 20. Five of those years have to be since you turned age 50. Contact Work and Income Support on 0800 552 002 or at www.winz.govt.nz. For current after tax rates of New Zealand Superannuation click here. - Should I transfer my UK pension to a NZ Superannuation plan before I leave the UK?
No, you need to be a permanent resident in New Zealand before your UK pension plan can be transferred. We recommend waiting until you are living and working in New Zealand before you make any sort of decision on this. At present entitlement to New Zealand superannuation is not asset tested. The NZ Government will off-set pension income you are paid by the UK Government against your NZ Government Superannuation entitlement. How much would I get if I qualify for New Zealand superannuation? - Can I withdraw cash from my pension fund once the transfer is complete?
Yes, but this is dependent on restrictions imposed by your UK scheme. It may be possible to take up to 40% in cash, but sometimes the transferring scheme can insist that the whole amount is 'locked in'. This is an area often abused by some New Zealand advisers and getting it wrong could result in penalties being applied. Our recommendation is that your UK pension money was saved for your long term retirement savings so keep to this plan and put it aside for your retirement savings. Besides if the UK Government gets to hear that this facility is being abused it may rescind the regulations permitting it! - UK Pension Simplification Rules 2006 - How will they affect your Pension Transfer?
On the 6th April 2006 the "pension simplification" regulations came into effect in the UK.
Under these rules every overseas pension fund that wants to accept transfers from the UK must be approved as a "Qualifying Recognised Overseas Pension Scheme" (or QROPS). All QROPS schemes have to report back to HMRC any payment made to a member in respect of the amount that was transferred from the UK. This will include the date, amount and "nature of the benefit" and the current address of the member.
NOTE: HMRC will apply a 40% tax on the transfer value if the UK pension is transferred to a non QROPS fund.
The regulations state that the earliest retirement age (the earliest age at which funds can be withdrawn) is 55 years. In addition the maximum withdrawal in the first year is limited to 25% of the pension without incurring any tax liability. Anything above this could incur a tax liability of 40%. To be a QROPS approved fund reporting of all withdrawals is required to be provided to the UK authorities. Additional contributions and/or investment growth are not subject to the UK tax penalties.
Please also refer to the "Seven traps of transferring your UK Pension
