qrops all grown up

 

NZ QROPS attracting lots of UK pensions

For many years transferring a pension from the UK to New Zealand was not considered easy with confusing legislation and tax compliance issues. All that changed in late 2013 when the Inland Revenue proposed a tax amensty on UK pension transfers that suddenly thrust the decision of whether to transfer under peoples noses. This led to a wall of UK pension transfers hitting New Zealand and putting UK pension transfers into the consciousness of British expats, New Zealanders and others who had lived and worked in the UK.
 
Since then UK pension transfers have become mainstream with over $1.75billion being transferred into New Zealand schemes over the last five years (as shown in the graphic below). New Zealand is now one of the largest destinations for UK pension transfers.
 
Amount of transfers to NZ
Source: Annual reports of New Zealand superannuation schemes that are listed as QROPS
 
 

Investment options got relevant

The New Zealand always featured as the best destination for a UK pension transfer because of its favourable tax regime, but it previously lagged behind in investment options and sophistication. This has been a blessing, as New Zealand QROPS have not developed high fee portfolio bonds like those seen in Malta and Gibraltar. Instead they have set to develop fully transparent fund offerings where clients have access to reputable fund managers, with full visibility of all fees and returns.
 
The New Zealand QROPS industry has developed investment diversity quickly with most QROPS now offering sterling, New Zealand dollar and Australian dollar denominated funds. The sterling funds have certainly been popular with most transferees since the Brexit vote, especially as there is more control over when they can be converted into dollar funds. This level of control and flexibility is in sharp contrast to the previous system of waiting for the desired exchange rate then starting a transfer which then took six months by which time the exchange rate was anyone’s guess.