UK Pension Transfers

Bring Your Pension Closer to Your New Home

Now that you’ve made the move, it makes sense in most cases, to transfer your UK pension to New Zealand  

Chances are you weren’t long off the plane when the cold calls started coming. They knew a lot about the tax situation…it seemed like an easy option, right?    

Before you hand over your hard-earned money, there is something you should know:

When it comes to UK pension transfers, tax is only one part of the picture

It’s far more important to focus on protecting your existing pension equity and making the right investments to grow your pension over the next 15 to 20 years 

We’ve met too many expats who took the cold sales call, got drawn in by the tax knowledge and figured “I don’t know anyone else to go to so I might as well find out more”   

One of our clients chose to go with a sales call four years ago, and by the time she contacted me, she’d lost ninety percent of her funds. The true cost of that cold call was $70,000 of hard-earned money, reduced to $7,000 in just four years. Ouch. 

Of course you need to consider the tax implications. But you shouldn’t get so caught up with tax, that you lose sight of the bigger goal: building a comfortable retirement. 

We want your investment to work hard for you. We want to help you make smart investment choices, based on expert advice you can understand, from an experienced adviser who cares about your long-term financial wellbeing.

When you work with Windsor Wealth, we’ll help you figure out whether transferring your pension is the best choice for you (spoiler alert: it may not be) and guide you through your options and the tax implications. 

Then we’ll create a custom investment plan, backed by evidence and designed to work hard for you. A plan that is logical and easy to understand, with all fees explicitly disclosed and no commissions.

Contact Brett on 021 222 0700 to book a complimentary consultation and get your pension transfer questions answered.

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10 money mistakes expats make in New Zealand (and how to avoid them).

UK Pension Transfer FAQs

At first glance, there are good reasons to transfer your UK pension. If your pension is in New Zealand, funds can be accessed in full from the age of 55 without any tax deductions. Plus, if you make the transfer within four years of arriving in New Zealand, your fund can be transferred tax-free. Sounds like a win-win right?

Not so fast. If you have a final salary scheme, or insurance benefits, there may be good reasons to keep your pension in the UK. 

That’s why you need an expert adviser, who can thoroughly review your pension scheme and overall financial situation, to make sure transferring really is in your best interests.

There are a lot of reasons it makes sense to have your money close at hand. It’s easier to keep track of your overall financial position when your funds are consolidated, you have a local adviser in the same time zone, and you don’t have to keep tabs on the financial stability of a UK pension fund. 

You’ll have peace of mind knowing your hard-earned pension is locally invested, and you’re financially ready for new opportunities. We’ll even take care of all the paperwork for you. 

As full-service financial advisers, we can advise you on more than just the pension transfer process. We will consider your pension as part of your complete financial picture, helping you make the overall best choices for you and your family.

Yes but you will be taxed.

If you transfer your pension to New Zealand within four years, you can not only transfer it tax-free. You can withdraw your entire lump sum at age 55 with no tax, and spend it when and how you like.

If you leave your pension in the UK, you may have built up quite a lump sum by the time you turn 55. But every time you withdraw money, you will have to pay UK income tax. 

The more you withdraw, the higher your income, and the higher your income, the higher your tax bracket goes. You end up with a good pension fund, but limited flexibility, because you can’t access your money without handing over a decent chunk of your savings to HMRC.

There are a number of factors that could affect the balance of your pension, so it’s important to get comprehensive advice from a qualified adviser who is an experienced investor – not just a salesperson.

Depending on your UK scheme, you might also lose some benefits like insurance cover. If you’re withdrawing from a defined benefit scheme, you will receive a lump sum transfer, which may or may not be enough to generate the same returns in your New Zealand scheme over time. 

The exchange rate will also impact on the total amount transferred. If the exchange rate timing is poor, we can keep your funds in GBP after transferring your UK pension.

Like any investment there are risks attached. We can’t guarantee your pension will perform better or worse than your UK fund, but we can give you comprehensive advice, backed by evidence and tailored to your unique circumstances and overall financial picture. We’ll help you work through the risks, so you can make a fully informed decision that’s right for you.

When you move to New Zealand, you have four years to transfer your pension without being liable for tax. You can still transfer your pension after the four year window has passed but the tax liability increases with each year.

When it comes to investing for retirement, there’s no one-size-fits-all approach. It will depend on your overall financial situation, your level of debt and the value of other investments, as well as your age, the size of your pension and your appetite for risk.

We will look at your overall financial picture and help you make fully informed choices that are right for you.

UK Pension Transfer funds must be deposited in a Qualifying Recognised Overseas Pension Scheme (QROPS) or else there are steep tax penalties. 

With a QROPS fund in New Zealand, you can choose to withdraw money from the age of 55, or if you become seriously ill. Withdrawals from a New Zealand QROPS are tax free. 

If you keep your pension fund in the UK, you would be taxed on income taken from it after age 55, and that makes it hard to take much income each year without a large tax bill.

The New Zealand QROPS would incur tax on dividend income received in the years before accessing it. This tax cost would all incur within the QROPS investment. The UK pension does not incur tax on dividend income during the years you are investing in it.

We can help you there. Our preferred QROPS is:

  • Well-established having handled more than 2,000 pension transfers
  • Allows for low cost transfer, and low cost ongoing investment
  • Provides flexibility to select any fund or any company listed in the developed world

You are not locked in to your choice of QROPS and can transfer your funds to a different QROPS scheme in the future if you choose. Costs may apply though, so we’d prefer to help you make the right choice, right from the start. 

If you return to the UK within ten years of your original departure from the UK, you will have to pay UK tax on any amount transferred above 25 percent. If you move to another country within five years from the date of the transfer, an Overseas Transfer Charge of 25 percent will apply.

When you die, the balance of your pension will be transferred to your estate. Unlike the UK there are no death duties on pension funds in New Zealand, so your estate will receive the full balance (less any applicable fees or charges). 

In most cases yes, however you can continue to hold funds in GBP if the exchange rate timing is particularly bad.

You can but you don’t have to. When you work with me as your investment adviser, I will look at your entire financial picture and make recommendations tailored for your situation.

There is no transaction cost and we take care of the paperwork. 

In some particular situations where you have been in New Zealand for well over 4 years we may recommend that you receive additional advice from our preferred tax specialists, but we will let you decide in advance if you want to incur this cost.

It can take up to 6 months, so it is good to engage on your UK pension transfer early, and work with us to help to get it right first time.

Contact Brett on 021 222 0700 to book a complimentary consultation and get your pension transfer questions answered.