Driving information into the transfer process
Getting fully informed about your unique set of circumstances and your UK pension is the first step in any pension transfer process. This lets you understand exactly what type of UK pension you have, the benefits that it offers, what your options are with the pension, how your circumstances influence your tax, what might happen in your future and much more. This requires an in-depth look at your UK pension and your personal circumstances.
This phase is about getting all the relevant Information together about:
- You and your situation
- Your UK pension
Taking all the information and converting it into relevant information, through tax calculators, income planning tools and more…
The report covers:
- What exactly you have in your UK pensions and the protections available to it
- The tax implications of:
- Leaving the pension in the UK
- Transferring the pension to New Zealand
- What happens if you have a future change of circumstances
- The financial impact of leaving the pension in the UK and of transferring the pension to New Zealand
Make an informed decision
If it looks like moving away from your existing UK pension scheme is an option worth pursuing then you need to work out where the best place to transfer to is. There are many variables like your tax status, tax structuring, your risk profile, your age, your investment preferences (socially responsible funds for example), currency preference and more which will determine what schemes and funds are going to be relevant and right for you. We recommend you work with a qualified financial adviser through this process as all different schemes have different characteristics.
Once you have made the decision to transfer the final part is to execute on the transfer. This involves:
- Applying for membership in the new scheme you are transferring (the receiving scheme)
- Completing the transfer forms for the scheme you are transferring out of (the ceding scheme). There can often be multiple layers of forms
- Completing all the necessary HMRC forms
- Applying for enhanced lifetime allowance
- Getting UK FCA advice where you have a defined benefit scheme that is worth over £30,000
- Calculating your tax liability on the pension transfer and returning this in your New Zealand tax return
- Paying the tax on transfer
We recommend that you seek professional advice for each of these steps as failure to do so can have costly penalties from a tax perspective including lifetime allowance charges, overseas transfer charges, New Zealand taxes and penalties if they are not dealt with immediately.
After the transfer
Once you have transferred your pension the work does not stop. The QROPS have continuous reporting requirements to the HMRC for the next 10 years, and you should be continuously assessing your funds and the scheme that you are in to see if they are still right for you. Many people that have transferred into New Zealand QROPS might now find that new QROPS have:
- Better accessibility provisions
- Lower fees structures
- More investment options
- Better risk and return profiles
We recommend that everyone work with an independent financial adviser to continuously assess their QROPS schemes and investments.