When planning your retirement in New Zealand you need to consider the benefits and risks of transferring your pension from the United Kingdom to New Zealand. The benefits are:
- Being able to consolidate all your pensions with a single provider in your new country
- Being able to access some or all of your Pension funds.(subject to HMRC Flexi access rules)
- Previously, from age 55, you can generally access up to 30% of your original transferred sum, plus all growth credited to your account meantime (unless at that stage you haven’t been a non-UK tax resident for at least 5 years, in which case you can access only up to 25% of your original transferred sum, plus all growth credited to your account meantime, without UK tax applying). You can also receive an annual income derived from the remainder (70% or 75%) of the original transfer value from age 55
- Reduce currency risk with future Pension payments and avoid having to pay NZ Income tax on your overseas Pensions.
- More flexible options as far as how you take your pensions at retirement
- Reduce the risk of your UK Pension being lost or underfunded or wound up in the UK
- More control as to what you have at retirement by being able to invest to suit your needs
- Your Pension assets become yours to own and control
- If you die the remaining funds are left to your estate.
- Move My Pension uses experienced Financial Advisers who can assist you with other aspects of your financial affairs.
- Disclosure statements for these Advisers are available on request and free of charge.
Some of the risks of moving your UK pension to NZ
There are, however, potential risks and disadvantages of transferring a UK personal or company pension fund to New Zealand. These include:
- You could be transferring the funds to New Zealand at a time when the exchange rate is less favourable to you than a time in the future
- The amount of money you will receive should you leave your Defined Benefit Scheme which forms your lump sum in New Zealand may not be sufficient to generate equivalent returns over your lifetime to those in the Defined Benefit Scheme
- There are costs associated with transferring and investing your pension to a New Zealand QROPS (qualifying recognised overseas Pension scheme) . We will explain these clearly.
- Depending on your UK scheme, you could be giving up some insurance cover
- The performance of New Zealand QROPS is not guaranteed. The Scheme could perform better than either or both the projected return and the historical return of your UK scheme or an alternative QROPS, and erode your retirement income
- The current tax situation may change so the transfer of the pension to New Zealand may be less favourable to you at any given time. We recommend you seek independent tax advice plus see the IRD 1024 information sheet dated April 2014 for more detail
- The investment fund you select when you invest in to the New Zealand QROPS Scheme could be inappropriate – resulting in you taking either too much or too little risk to achieve your financial objectives for this money. Move My Pension Financial Advisers are qualified to discuss this with you and give you the benefit of their advice. Disclosure statements for these advisers are available on request and free of charge.
- Once transferred to New Zealand, you may not be able to transfer your pension back to the same UK scheme. There are personal pension plans in the UK that will accept transfers from overseas QROPS – but it is highly unlikely a transferred Defined Benefit Scheme can be transferred back to the same Defined Benefit Scheme in the UK.
