Transfer UK Pension To NZ
When you have worked hard and paid into a pension plan for most of your adult life, you deserve to reap the rewards of your decades of hard-earned retirement funds. When those funds are half a world away though, having ready access to them can be a major headache. Thankfully, you can transfer your UK pension to New Zealand without having to jump through hoops or pay an arm and a leg.
Whether you’re a Brit who has settled in New Zealand or a Kiwi who has returned after working in the UK, many find that the advantages of transferring their UK pensions over to New Zealand outweigh the disadvantages. We’ll be sure you understand the process and options so you can make a fully informed decision and avoid any unexpected hiccups.
Five things to know before you transfer
Before you move your money from the UK to New Zealand, make sure you know the answer to these questions to get a better understanding of where you stand:
- What benefits will you lose when you transfer?
- Will you be charged any other fees by the pension or superannuation providers?
- Are there any tax implications you need to consider?
- Will the age at which you can access your pension change?
- Are you considering hiring a financial adviser to help with the transfer and will they act in your best interests?
What is QROPS?
The Qualifying Recognised Overseas Pension Schemes (QROPS) are annuity-based funds in offshore financial centres. They can offer investment opportunities and tax advantages that are often unavailable in UK-based pension schemes. QROPS can help to ensure that retirement funds accumulated in the UK can be transferred abroad in a tax-effective and seamless manner.
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Benefits of transferring your UK pension to New Zealand
The best part about transferring your UK pension to New Zealand is the ability to exercise more control over your funds, and in turn, over your life.
Take control of your pension
- Some New Zealand pension schemes offer more investment options than UK private pensions.
- Your former employer or pension scheme administrator no longer controls your funds so they cannot reduce your benefits if they face deficits.
- There’s no cap to the level of income you can take. But be aware that for any transfers you make, you may be taxed at 25%-55% for the amount withdrawn over your Lifetime Allowance, though this can get complicated and it’s best to seek professional assistance.
- There is no reduction in your pension fund should you choose to retire early. Many UK schemes reduce the value by 4% for every year you retire early.
- You can eliminate exchange rate fluctuations and bank transfer charges between the UK and NZ.
- You can consolidate both personal and occupational pensions into one NZ scheme.
Drawbacks of transferring your UK pension to New Zealand
While the benefits of improved control over your pension are an important factor, it’s important to consider both sides of the coin. Keep in mind the built-in benefits of your existing UK pension when weighing your options.
Losing your UK pension scheme and its benefits
- Losing any income guarantees that may be built into your pension.
- Losing any associated spouse or dependant pensions.
- Losing any annual increases and inflation-linked increases that may be built into your UK pension scheme.*
- It can be complicated to transfer your NZ QROPS back to your UK scheme, so be sure to consider the tax implications before deciding to transfer your UK pension.
*If you transfer your UK pension to NZ QROPS, the transferred fund forms part of your estate and can continue to generate an income without any reduction to your beneficiaries after your death.
Transferring UK pensions to NZ with MyFuture
With over 30 years of experience in financial advising, MyFuture has the experience and expertise to assist with the transfer of your UK pension to NZ. MyFuture financial advisers are passionate about helping you accomplish your financial goals because we believe helping you also helps your community and future generations.
Beyond transferring your pension, we can introduce you to a full range of financial services with knowledgeable experts specialising in helping UK settlers and returning Kiwis.
We’ll provide regular updates on the performance of your fund and offer actionable advice on how to adjust your investments to best suit your retirement goals. You’ll have the opportunity to be as active or passive as you like in making the right financial decisions.
Trust the team at MyFuture to fully disclose any fees from the start of our partnership; we want our services to be accessible, affordable, and transparent for everyone. Reach out today for your no obligation, FREE Discovery Session with our experts.
Is UK pension taxed in NZ?
Your pension can be taken as a tax-paid lump sum or tax paid income. If you leave your pension in the UK, you will be liable to pay NZ taxes on any income you take from it. If you bring your pension to NZ, there will be no NZ taxes to pay if transferred as a lump sum provided this is done within the first 4 years of living in NZ (provided you are registered as a tax resident).
After the 4 year tax exemption period has expired, pension transfers and lump sum withdrawals from UK pensions will be taxable in NZ. This is where it can get complicated as your tax liability will be based on either the ‘schedule method’ or the ‘formula method,’ different methods to assess your tax liability based on your residency and financial position. But fear not as MyFuture can provide independent tax advice based on your personal situation and goals.
As they grow over time, the earnings of New Zealand pension schemes are generally liable for higher taxes in contrast to UK personal pensions which can grow almost tax free, though this is limited by the Lifetime Allowance. These earnings are considered investment income which is taxed at a special rate of between 10.5%-39% in NZ depending on your total income. Pension schemes and investment outside New Zealand and Australia may also be liable for NZ’s Fair Dividend Rate tax.
The opportunities afforded to you by having access to a more extensive range of high quality investments may outweigh having to pay higher taxes on the growth of your NZ pension, but the only way to know for sure is to get in touch with us at MyFuture for your FREE Discovery Session today and find the right pension scheme possibilities for your needs.