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Pension Transfer

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Disclosure

Benefits


A New Zealand Superannuation Scheme provides a number of valuable benefits to those considering transferring their UK pension scheme.

A transfer is not necessarily the right course of action for everyone and it is important that you consider what is important to you before making a decision on what do I need to consider.

Potential benefits of transferring a UK pension fund to NZ

 

1. Increased flexibility and control

  • So long as you meet with UK QROPS rules and NZ Superannuation Scheme legislation you have increased flexibility in when you can access your money. This could mean that you are able to get access to some of your fund before you could from your UK scheme retirement age.
  • You have control over how you take benefits. A UK pension scheme allows you to take a small percentage (typically 25%) of benefits as a tax free lump sum, with the remainder paid as income which is taxed in NZ as part of your worldwide income. A NZ scheme is deemed to be tax paid and therefore allows you to take all benefits as tax free lump sums therefore saving you potentially large amounts of tax.
  • You can control when you want to retire. NZ pension schemes generally have a retirement age of 55. Normally up to 40% of your fund could be taken before this age, so long as you meet with UK pension rules, but this then means that the remaining 60% is available from 55.
  • There is no need for you to buy an annuity and lock in a lifelong low pension income. In the UK you must buy an income at some stage and this is usually via either an annuity or income drawdown. Both of these options limit the amount you can take as income. A NZ Superannuation Scheme allows you to control how much income you take and gives you the flexibility to be able to change this whenever you want to, all the while with your pension fund remaining invested.

 

2. Currency control

  • The NZ schemes we use allow you to keep your transferred UK pension monies in Sterling. This provides you with maximum control to time when you want to exchange, at the exchange rate that you feel comfortable with.
  • You can buy Sterling denominated assets so that all of your money does not have to sit in cash while interest rates are low and exchange rates are poor. This means that your fund can start to work for you.
  • If you take your pension income from the UK you will receive a different level of income each month and you may also have bank charges to pay each time you transfer funds. Taking your income from a NZ scheme means that you remove this exchange rate volatility and possible bank fees. Click here to find out more.

 

3. Access to information

  • It can be difficult once in NZ to obtain information on your UK scheme and to get regular updates on how UK pension legislation changes would affect your scheme benefits. This can be an issue if you have a number of UK schemes
  • Having your pension monies local to where you are now living and being able to consolidate various UK pension schemes into one scheme in NZ is one of the many reasons why Brits living in NZ transfer their funds.

 

4. Taking Tax Free Income in retirement.

  • If you take your pension benefits from your UK scheme while living in NZ, after having received your tax free lump sum (typically around 25%) the income you then take is taxed at whatever your NZ tax rate is
  • If you transfer to a NZ Superannuation Scheme and then take benefits, no tax is paid. This could increase your income in retirement by more than 30% (actual amount depends on your NZ personal tax rate)

 

5. Investment Choice

  • Many older UK pension schemes have very limited investment choice that allows you no other alternatives should performance be poor. Our preferred NZ schemes offer a very wide choice of investment therefore providing more control over investment going forward. You also have the choice of having either a customized fund or using a selection of managed portfolios designed for those with varying risk profiles.

 

6. Death Benefits

  • Upon death of the member the whole value of a NZ superannuation scheme fund is paid to beneficiaries as a tax free lump sum, both before and during retirement. For some people this may be a more attractive proposition than the spouse receiving a reduced percentage of the member’s pension, as is the case with some types of UK schemes

 

Information provided is generic only and should not be taken as advice. The decision on whether to transfer will be based on different factors for each individual and should be based on your own individual circumstances.

Our Disclosure Statements are available upon request and are free of charge.

 

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