Pension transfer times have increased dramatically since the introduction of new regulations in the UK form 6 April 2015. In a raft of legislative changes the HMRC:
- Now require UK pension schemes to undertake their own due diligence on the schemes that they are transferring to
- Require any transfer of a defined benefits scheme where the value is over GBP30,000 to get an independent report from an FCA registered adviser
- Have put additional onus on schemes to ensure that the client does want to transfer
What all of the above means is that often the UK pension providers are taking their time making pension payments as they check on the receiving schemes, or send out an endless stream of letters to their members reconfirming that they wish to transfer their pensions. All of the above changes have seen pension transfer times increase from a standard 6 to 12 weeks out to between 3 and 6 months. The length of delays can have all kind of consequences for people transferring their pensions.
Delays can lead to an additional tax bills amongst other things
For New Zealand residents who are transferring their pensions these long delays can often mean that they are pushed into another tax year in New Zealand after having made the decision to transfer. This happens when a pension transfer arrives after 1 April in a new tax year. This can have the consequence of increasing the tax liability of an individual on their pension transfer. It is important to understand the timings on a pension transfer as a small delay could lead to up to an additional 1.85% of your pension being lost as tax.
The recent volatility in the exchange rates and financial markets can mean that the value on the date that the transfer completes can be very different from when the process was started. Therefore, monitoring the transfer and minimising timings (or sometimes pushing them out where required) can lead to significant value differences.
Efficiency in dealing with UK providers and transfers is the key
Our proprietary process for transferring UK pensions helps to mitigate delays and ensure a speedy transfer, by utilising our UK team to continuously contact and chase UK pension providers in the right time zone, as well as deliver all the requirements for a pension transfer in advance of being asked for them by the UK providers.