Many returning New Zealanders and British expatriates transfer their UK pensions to New Zealand for the QROPS advantages on offer. The reasons that they do this are varied and can range from wanting the funds closer to home so that they can be managed more easily to protecting themselves from any nasty future legislative changes. Most peoples reasons vary although we have found some common threads tend to dominate once people fully grasp the implications of a pension transfer.
Payments from NZ QROPS are NZ tax-free
Distributions from New Zealand superannuation schemes are tax free as they are considered capital distributions rather than income payments. This means when it comes time for you to receiving funds from your New Zealand QROPS you do not need to declare anything in your New Zealand tax return, these are unique NZ QROPS advantages. This is also good news if you leave New Zealand as the New Zealand QROPS will stay pay you tax free from New Zealand, so you will not suddenly need to transfer your pension if you change countries.
Invest in local currency or GBP
Many schemes offer funds denominated in sterling, New Zealand dollars, Australian dollars and more. This means that members of these schemes can switch between sterling investments and local currency denominated investments as they choose. This can make a significant difference in retirement as exchanges have been extremely volatile since the Brexit vote in the UK.
No need to purchase an annuity
As New Zealand schemes do not make income payments, only capital distributions, you never have to purchase an annuity. Therefore, if you wish to leave the scheme after you have started to receive your ‘income for life’ you can, unlike if they were in drawdown or had purchased an annuity in another foreign QROPS. Furthermore, you would receive the full remaining value of their scheme on transfer (subject to individual scheme exit charges).
Excellent and stable regulatory environments
New Zealand has an excellent regulatory body, with wide ranging powers, in the Financial Market Authority (FMA) see http://www.fma.govt.nz/ govern New Zealand superannuation schemes. In addition the Inland Revenue (the New Zealand tax authority) see http://www.ird.govt.nz closely monitor superannuation schemes tax compliance (as well as having been responsible for the set up of the KiwiSaver industry in New Zealand). Every scheme must be individually registered with and extensively reviewed by both the FMA and the Inland Revenue.
The FMA and Inland Revenue set policy that is important to New Zealand superannuation and not specifically designed to maximise QROPS outcomes. This is important as it makes QROPS a by-product of New Zealand legislation rather than the focus of it – which is friendlier for the HMRC.
English speaking by heritage
Being English speaking is crucial for most members as it means the following:
- All governing documentation is in English and not open to interpretation in another language
- All relevant authorities websites are understandable and complaints processes easy to follow
A large British expat population
New Zealand has inward migration from the United Kingdom of around 15,000 people a year (and significant outward migration as young New Zealanders seek work in the United Kingdom), so NZ QROPS advantages are that there are already many New Zealanders and British expats in the schemes already. These strong permanent and temporary people flows require mechanisms to ensure portability of property, funds and pensions easily – this is recognised by both governments. This provides New Zealand QROPS industry with a natural hedge, as QROPS are required to assist the migrants in their settlement. Indeed, United Kingdom pension transfers were occurring to New Zealand long before the introduction of QROPS legislation – so this is not a recent phenomenon.
Full scheme transparency at all levels – including fees
Financial disclosure requirements in New Zealand are designed to protect the interests of the investor in financial products and services. The level of disclosure required for New Zealand schemes is second only to perhaps Australia, which is why many New Zealand QROPS investment statements run to 30 plus pages. This means that the member can satisfy himself or herself on every point prior to investing in the QROPS.
Furthermore, fee disclosure is completely transparent in New Zealand so there can never be any hidden fees leading to nasty surprises for the member in the future.
No inheritance tax
On death, a New Zealand scheme will typically pay out 100% of your remaining superannuation scheme benefits to your nominated beneficiaries. Such a payment will be free of any inheritance tax payments in New Zealand.
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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.
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.
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!
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.
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.
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.
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.