The Internet is a wonderful source of information but it also allows for a lot of misinformation and half truths to flourish! This includes what is said about transferring UK pensions to New Zealand. So I thought it time to try and dispel some of the more common myths about UK pension Transfers.
Myth 1: Since Kiwi Saver Schemes have lost their QROPS status I can't transfer my UK Pensions to New Zealand?
Wrong, there are a number of schemes in New Zealand that have the ROPS (Recognised Overseas Pension Scheme) status from the HMRC that you can transfer to, click here to see the HMRC List
Myth 2: There's no point in transferring my UK pension to New Zealand when the exchange rate is so poor?
Wrong, when you transfer a UK pension the funds will usually be GBPs, and some schemes will change the funds in NZ$ on arrival but the scheme that HHG works with allows you to keep your funds in GBPs as long as you wish and can even invest in GBP denominated investments. All investment advice is provided by stockbrokers and investment advisers Hamilton Hindin Greene
Myth 3: I have lost touch with my pension providers in the UK and it all seems too hard
This is my area of expertise, I can help take the hassle away for you. I will explain the process and what needs to be done step by step. I will sort out all the necessary paperwork so that nothing is missed. I will introduce you to David Hayes at Hamilton Hindin Greene to provide the personalised investment advice. It is vital that you are happy and comfortable with each step of the process.
Myth 4: The investments options are limited
Wrong, the scheme that we use enables David Hayes at Hamilton Hindin Greene to put an investment portfolio based upon your requirements and goals. The choice of investments includes stock markets in NZ, Australia, UK and US as well as a huge range of Unit Trusts, Funds and Exchange Traded Funds. This is quite similar to the Self Invested Personal Pensions that are available in the UK, but with the added benefit of expert investment advice.
Myth 5: What about the fees and costs, I hear that they are expensive
My fee for transferring UK pensions range from 0.75% to 2.5% depending upon the amount transferred. This a one off fee and is deducted from the UK pension once it arrives in the your QROPS scheme. The ongoing cost of the QROPS scheme is competitive and include the ongoing advice from HHG. Brokerage would be incurred on buying and selling stocks and shares.
Myth 6:I thought that my government pension scheme could no longer be transferred
Yes and No - UK State pensions can't be transferred, neither can unfunded government schemes such as the Teachers Pension scheme and the NHS. However, if the scheme is funded such as the University Superannuation Scheme and some Local Authority schemes then it is possible to transfer their pensions.
Myth 7: I will get taxed on my transfer
Yes and no, you will only be taxed if you transfer after 4 years of becoming a NZ tax resident, click here for the link to the IRD tax booklet on overseas superannuation which has more information. If you transfer to a QROPS there are usually no UK tax implications. I work with experts in UK and NZ tax who can provide detailed personal assesments if required.
Myth 8: It is all too hard and complicated, I will wait till later to consider transferring my UK pensions
It can seem that way, but it is better to assess your options with the rules as they are now. The rules are constantly changing. For example the amount you will be able to withdraw from a NZ Superannuation scheme will be restricted come 1st December 2016 to a sliding scale starting at 9% at age 55, this is a reduction in the 30% lump sum withdrawal and 10%p.a.at age 55 currently. There is no harm is seeing what the options are and even if you decide not to transfer your UK pensions you will have done so from a position of knowledge not ignorance.
This is a complicated subject so feel free to contact me if you want to discuss your UK pension transfer options in more detail and help bust those myths!