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Expat financial advice from the experts

UK pension transfer to New Zealand – What to think about

uk pension transfer to New Zealand

Are you one of the many expats that have found their ideal destination in New-Zealand?  That mix between country and city life? If you are one of the lucky expats living there, have you thought about a UK Pension transfer to New Zealand?

Your unique position as an expat

New Zealand is the ideal destination for those who enjoy nature and the great outdoors.  Expats typically move there to find that perfect balance between personal and work life. Another perk of moving to New Zealand is that you can escape from your day-to-day routine back home, and begin a whole new life in a place where they speak the same language as you.  Making it much easier to settle down in comparison to a foreign destination. Nevertheless, no matter what country you move to, re-evaluating your financial position is essential.

Transferring a pension

When re-assessing your finances, by ensuring your plans are in order and within the legal boundaries of your new home, one must not forget about your current investments and pensions in other countries.  As it is often found that expats overlook their current schemes when setting up new ones.

If you have worked in the United Kingdom for several years, you most likely have various different retirement  UK schemes set up.  When you move overseas, you have the possibility of transferring these pensions to your new home. However, you have to assess whether this is the most beneficial option for you.  Your current schemes might have the option of receiving a guaranteed annual income upon retirement. The plan might have 100% access to your pension at the age of 55. As a result, you might not know which type of pension suits you best and in the long term will achieve all of your retirement objectives.

Why should you transfer your UK pension to New Zealand?

There are various reasons why one could transfer their UK pensions once they live overseas.  Below are only a few of many benefits of transferring a pension:

  • Enjoy tax advantages
  • Better control over your investments
  • Wide-range of investment options
  • Ability to access 100% of your pension (at the age of 55)
  • Better control over succession organisation
  • Ability to combine multiple pensions into one plan

What should you consider when transferring your UK pension to New Zealand?

Presently, there are two other factors many expats are considering vital for potential pension growth in a long-term point of view.  Firstly, transfer values are significantly higher at the moment due to the stock market volatility and low-interest rates. Secondly, as the value of sterling is dropping against other major currencies, scheme members are finding it essential to have the ability to manage currency risk within their pensions.  Consequently, many are seeing a pension transfer as an opportunity. Furthermore, New Zealand offer expats the unique possibility of transferring to a New Zealand QROPS (Qualifying Recognised Overseas Pension Scheme), also known as NZ QROPS.

New Zealand QROPS and 100% Tax-Free Withdrawal

New Zealand has some special rules regarding its own QROPS. One of which is, that as long as you maintain tax residency in New Zealand for five years AFTER you have transferred your pension, the total withdrawal will be free of tax in both the UK and New Zealand. You must be aware that the five years is a minimum for residence. If you leave New Zealand within five years of taking your whole pension pot you could be liable to a retrospective 25% tax charge (payable to HMRC). In 2017/18 the maximum amount that you could transfer in to a New Zealand QROPS tax free was £1,000,000.

What is the next step?

Harrison Brook is specialised in advising expats regarding their finances.  They believe that before making a decision, you should acquire all the available knowledge regarding your options.  Once you have an educated point of view of the pros and cons of each option, you can then make an informed decision.  

Nevertheless, Harrison Brook can assist you if you find it difficult to acquire this information or you rather someone explain the various options to you.  The firm’s fully qualified advisers provide honest and impartial advice. Once they have the details of your current financial position, they will recommend the best option for you.

Speak to an authorised financial adviser and find out what is your best solution.

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