Transfer your UK Pension to New Zealand
If you have spent time working in the UK, you will have accrued some savings in a pension scheme through your employer. This is due to the auto-enrollment rules in the UK that make it a compulsory requirement for your employer to contribute to a pension scheme on your behalf. So whether you are Kiwi national or a UK expatriate, if you are now living or retiring in New Zealand you may be wondering how you can transfer your UK Pension to New Zealand.
In this guide, we will cover the main points you need to know and also the process when transferring your pension, with IVCM.
What You Need To Know
There are various points you should know and consider if you are transferring your UK Pension to New Zealand.
- You can only transfer your UK Pension to a scheme in New Zealand that is registered with Her Majesty’s Revenue and Customs (HMRC) as a Qualifying Recognised Overseas Pension Scheme (QROPS), like our NZ PIE Superannuation Fund.
- If you are not a resident in New Zealand, then the transfer would be subject to an Overseas Transfer Charge (OTC) of 25%.
- You cannot transfer your UK pension to a Kiwi saver scheme.
- Once your funds have been transferred to New Zealand, you must be aged 55 or over before you can begin to withdraw them.
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Types of UK Pensions That Can Be Transferred To New Zealand
You may transfer the following types of UK pension arrangements to a New Zealand QROPS:
- An Occupational Pension Scheme.
- A Defined Benefit Scheme (i.e. A Final Salary Scheme)
- A Defined Contribution Scheme (i.e. A Self Invested Personal Pension (SIPP)).
- A Small Self Administered Scheme (SSAS)
You are not permitted to transfer your UK State Pension directly to New Zealand.
Benefits of Retirement Saving In New Zealand
- TAX BENEFITS – Within your first 4 years of residency, you do not pay any tax on investment growth or income withdrawals. If you are a Non-NZ resident, income withdrawals and investment growth are also generally tax-free.
- NO INHERITANCE TAX – If you die, your funds do not form part of your estate and so your beneficiaries would not be subject to an Inheritance Tax bill.
- FLEXIBLE ACCESS TO YOUR FUNDS – From age 55 you can flexibly withdraw your funds as one lump sum, a series of lump sums or as a pension income, giving you complete control of your money.
- WELL REGULATED JURISDICTION – New Zealand hosts a very well regulated superannuation environment so you can have complete peace of mind that your retirement funds are held securely.
How Your Funds are Taxed
When transferring your UK Pension to New Zealand, you should have an understanding of how the funds are taxed on transfer and also the other tax trigger points. Tax is generally assessed when you transfer money into the scheme and also on investment growth and income withdrawals. However, this all depends on your tax residency status.
If you are a non-NZ resident then generally you do not pay any tax. If you are a resident you will be assessed for tax depending on how long you have been a resident for. The first 4 years of becoming a tax resident in New Zealand is called the transitional residency period. During this period you are not assessed for tax.
UK Pension Transfers
These are treated as ‘foreign withdrawals’ and taxed under the schedule method. This is a certain percentage based on how long you have been living in New Zealand. This percentage increases each year which means that the longer you wait to transfer your UK Pension, the higher the tax liability will be. If you transfer your UK Pension within the first 4 years of becoming a resident in New Zealand, you will not be subject to this tax charge.
Once you reach age 55 and begin taking income withdrawals from your fund, these are subject to tax at your Prescribed Investor Rate (PIR), which is your tax rate. However, during the first 4 years of residency in New Zealand, these withdrawals will not be taxed.
You will be taxed on investment growth within your fund if you are a resident in New Zealand. If you are a non-resident or within your 4 year transitional residency period, then you will be exempt from tax. Tax is charged annually, in line with your prescribed investor rate.
Tax is a complex matter and you should always seek professional tax advice from a suitable qualified adviser so that you are fully aware of any potential implications. We are not authorised to provide you with any tax advice.
the transfer of funds.
Transferring Your UK Pension To New Zealand, With IVCM
The cost of transferring your pension to New Zealand will vary depending on a number of factors. Many UK Pension providers may impose an exit charge on your pension funds and this is a point you should always check with your pension provider.
At IVCM, we pride ourselves in providing our clients with a seamless transfer process. We deal directly with your UK scheme provider and handle all of the administration involved with moving your pension funds, so you don’t have to. This comes at one-off charge of $495. The ongoing fees depend on your choice of investments but as an example, if you invested in the IVCM Vanguard LifeStrategy fund, your ongoing annual charges would be 1.22%.
As previously mentioned, you will be subject to an Overseas Transfer Charge of 25% of your pension, if you are not resident in New Zealand.
HOW IT WORKS
Simply follow these 3 steps and we will take care of the rest.
Print, complete and return our new business application forms.
Our application form also includes a letter of authority so that we can deal directly with your existing UK pension provider so you don’t have to.
- Personal ID
Provide certified copies of ID Documents
One should be a copy of your passport or driving license as photographic identity and the other a recent bank statement or utility bill, as proof of address.
Post or email your completed documents to us
Post all documents to us or scan all your documents email to us to get the process underway immediately.
Listed below are all the items we require, to handle the transfer process on your behalf:
- NZ PIE Superannuation Application Form
- Your completed and signed transfer forms from your UK Pension Scheme(s)
- Your identification documents, as noted above.
Post all of this documentation to our office in Australia :
IVCM (Aust) Pty Ltd
Lvl2, Suite 210, 25 Solent Circuit
Norwest Business Park, Baulkham Hills NSW 2153, Sydney
We can start the process with a scanned copy of this paperwork but ultimately we need the original signed paperwork to finalise the transfer of funds.
This article does not contain personal or financial advice. It is provided for general information only and does not take into account your personal objectives, financial situation or needs. IVCM is not authorized to provide you with any personal or financial advice.
If you require financial any advice then you must make sure that you obtain advice from a suitably qualified financial adviser.