What is a QROPS
In straightforward terms, a QROPS is a pension scheme set up outside the UK that mimics a UK pension scheme, because it follows most of the same rules set in the UK. And because a QROPS mimics a UK pension scheme the UK authorities will allow people to transfer their pensions into them.
Types of NZ QROPS
Broadly speaking the three types of New Zealand QROPS schemes:
- Portfolio Investment Entity (PIE) schemes
- Investment Platform Schemes
- Single Member schemes
It is important to understand the differences between these types of schemes.
Advantages of NZ QROPS
The main advantages:
- Payments from NZ QROPS are NZ tax-free
- Invest in local currency or GBP
- Full scheme transparency at all levels – including fees
- No inheritance tax
- Excellent and stable regulatory environment
Tax within NZ QROPS
The first thing to understand is that New Zealand adopts a very different tax regime on superannuation than the United Kingdom – in fact the tax treatment is almost completely the opposite.
The four key factors for determining tax within a NZ QROPS are:
- Whether you are a transitional resident (or non-tax resident)
- If your a New Zealand tax resident what level of earnings you have
- Whether your investments will be held in offshore funds and assets or in New Zealand funds and assets
- Are the investments going to be denominated in foreign currency
Myths about NZ QROPS
There are a number of ingrained myths within QROPS market that are often not the case, the most typical we see are:
- Myth 1: You need to convert your funds to NZ dollars
- Myth 2: Never touch a final salary scheme
- Myth 3: All QROPS are the same
