Having been involved in pension transfers since 1999 we have seen it all. What started out as a cottage industry helping New Zealanders and British expats that had moved to New Zealand get their pensions into the same the country that they lived in has grown into something bigger and ultimately better.
History can teach us a lot, because before the introduction of the Qualifying Recognised Overseas Pension Scheme (QROPS) regime in 2006 there were few rules around pension transfers to New Zealand. Indeed the only rule that really needed to be met was that you lived in New Zealand (and you had a letter from the taxman to prove it). UK pension providers didn’t know what to do half the time when a pension transfer request to New Zealand was made from them.
“A” Day and the introduction of QROPS to New Zealand
All that was brought into sharp relief when the UK’s HMRC went through a massive process called ‘Pension Simplification’ the ultimate end date of which was known as “A” Day (for some reason) and happened on 6 April 2006.
The short story was that in order to keep receiving pension transfers from the UK New Zealand schemes now had to register as QROPS. The requirements were not that onerous but only a handful of New Zealand schemes were initially registered.
Simultaneously “A” Day did two other things:
- It shed a spotlight on whether the UK was the best place for people to keep their pensions parked when they no longer lived in the UK
- It allowed people to transfer their UK pension to any country in the world (regardless of whether they lived there or not)
Suddenly, advisers realised that countries like New Zealand had why more favourable tax rules for pension payments than the UK did and so what started as a tickle of transfers out of the UK suddenly became a deluge.
New Zealand schemes did little other than effectively sell themselves as a tax haven in the initial phase of QROPS.
“D” Day for QROPS – New Zealand survives with changes
With the genie out of the bottle the HMRC attempted to put it back with a range of changes in 2012 that imposed restrictions on when and how people could access their funds from QROPS and closed down whole countries of QROPS (like Jersey and Isle of Mann).
At this point New Zealand schemes realised that they needed to be more sophisticated to attract business which was still growing steadily. Schemes now started to offer GBP bank accounts as investment options and some schemes gained a special tax status favourable to members of the scheme.
The deluge becomes a full flood of pension transfers – QROPS evolve
As the market developed a number of legislative changes in New Zealand and the UK precipitated a massive increase in the number of pension transfers to New Zealand. But with this increased demand for transfers came an increased demand for investment options and transparency on fees.
