HMRC regulations slowing the pace of international pension transfers, but values remain high

Transfers to QROPS are still popular with expats, and people returning home from working in the UK. Since QROPS started in April 2006, some 123,100 retirement savers have transferred a massive £11.41 billion into offshore pensions. Our analysis suggests New Zealand accounts for about a sixth of all the transfers, so that is around £2 billion.    

With so much money having been transferred in the past, people are now thinking about moving it from one scheme to another

In 2018, over 5,000 people switched funds from a UK pension their existing QROPS – a 6% increase on the previous year. Here in NZ there is anecdotal evidence of more QROPS to QROPS transfers with people becoming aware they are not locked in to the scheme they transferred their UK pension to. Better accessibility and lower fees are incenting people to look at their options.  


International transfer numbers have fallen as HMRC intervention has sought to stem the tide

The total value of transfers for the past year was £640 million – slightly down in value on the year before, HMRC report states, “This is the fifth consecutive annual decline in the value of transfers, notably lower than the £1,760 million peak value of transfers in 2014-15.“ 

The 2014-2015 year was an anomaly as it had been well telegraphed that unfunded public sector pension transfers were about to be stopped after 6 April 2015 and there was a rush by people to exit their scheme.  These schemes represent 40% of all private pensions in the United Kingdom.

From March 2017, HMRC has levied an overseas transfer charge(OTC) of 25% of the value of the fund moved into a QROPS, subject to certain exemptions, such as if the pension is based in the same country as the retirement saver lives. This has stopped international advisers coming to countries like New Zealand and convincing people to transfer their UK pensions to places like Malta and Gibraltar.  For New Zealand this has been a positive development and has not generally effected the level of transfers to the country.

Average transfer value have risen significantly since 2011

The rising average transfer value can be put down to two key factors: the buoyant financial markets increasing the value of many pension holders assets; and the low yields on bonds driving up defined benefit transfer values.   The higher transfer values have kept the transfer market to New Zealand reasonably constant over the past couple of years. However, we have noted an increased trend to transfer and remain invested in sterling denominated funds as the exchange rate has remained below a seeming psychological barrier of two dollars to the pound. There is no right or wrong time to transfer a UK pension, what important is that anyone with a UK pension stays abreast of the issues impacting their pensions value, the tax on it and their accessibility to it. Basically, it’s a good idea to constantly review your position.

 
 

 

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straightforward and painless

Until now I'd imagined my UK pension funds being locked away behind all manner of firewalls and bureaucratic hurdles to access on retirement. Before committing the one surviving official document of my English OE to the bin - a single page detailing my private pension details - I contacted you out of curiosity. The result feels a little like winning lotto.

Peter W

very stress free

Thank you Cambel for your help and guidance throughout this process in getting my pension transferred (very stress free for me). It is greatly appreciated and I would certainly recommend you and Charter Square to others who are interested in transferring their pension.

David R, New Zealand

You guys rock!

I just wanted to say a great big thank you to you and your team. You are all totally awesome. I received a cheque yesterday from the Prudential to apologise for the ‘recent inconvenience’ that I had experienced. Thank you for doing this for me. You guys rock!

Noelle B, New Zealand

professional, insightful

Charter Square were professional, insightful and a pleasure to work with. They rose to the challenge of consolidating my overseas pensions and bringing them home with minimum fuss for me and maximum effort on their part.

Jens H, New Zealand

thorough, professional and prompt

Very thorough, professional and prompt service from the team at Charter Square. Thanks for making the bewildering world of pension transfers super simple.

Jules T, New Zealand

Best party to deal with

Thank you kindly for keeping in touch with me. For now, I will not be moving my pension. I will however be keeping your details and referring back to you when I wish to pursue. You by far are the best party to deal with, no nonsense, professional and in my opinion genuine. I do sincerely thank you for your advice to date.

GE, New Zealand

Freedom

Securing the freedom to use savings that are actually ours to work with has been stressful in the extreme. While I never planned on giving up there were many times when the current (UK) holder made the whole process seem well beyond my determination and ability. It’s easy to look at the 36 month history of this claim with the benefit of hindsight, but the conclusion is that employing Charter Square in the first instance would have been wise had I been able to anticipate the red-tape that appears to have been deliberately created to stall access.

CP, Auckland