QROPS came as a result of pension simplification in the UK, which came in 2006. New Zealand QROPS are approved by the UK’s HMRC and regulated by the New Zealand Securities Commision.

The rules are designed to ensure that ex UK Residents can only transfer to overseas pension funds that have similar rules to the UK.

Our experienced, UK qualified team will liaise directly with your UK pension provider to facilitate the transfer on your behalf. Being completely impartial we have access to all the leading QROPS providers in New Zealand and will recommend the most appropriate scheme to suit your needs.

Benefits of transferring to a QROPS

Consolidate your UK Schemes into one fund.

If you have left behind a number of schemes from various employers you can consolidate occupational and personal pensions into one NZ superannuation scheme.

Where you are a member of a final salary i.e. a defined benefit scheme, your UK pension entitlement is converted into a capital sum or Cash Equivalent Transfer Value (CETV) for transfer to New Zealand to a QROPS.

Free up some cash now before retirement!

You can free up some cash from your UK pension to help with the costs of moving to New Zealand, buying a home, setting up a business or paying back some of your mortgage. Or, you may want to release funds to invest the money independently to maximise your returns.

If you transfer your UK pension to an approved scheme in New Zealand you may be able to access up to 40% of the amount transferred immediately if you are over 50 or if you have been a non – UK tax resident for a full five years (note1).

The remaining 60% of the balance transferred can be accessed either five years after being transferred or when you reach 55, whichever occurs last. If you are over 50, 25% of your funds may be released to you, tax free, prior to transferring into a QROPS (note1).

Have full access to your funds in retirement.

Typically when retiring in the UK, 75% of your funds must be used to purchase an annuity which provides you with a guaranteed but taxable income for the remainder of your life. Unfortunately under this scenario you can no longer access funds as a lump sum.

If you transfer your pension to a QROPS in New Zealand, all funds transferred can be paid to you personally (note 2).  In retirement you can then have control of your funds and the flexibility to choose how your funds are spent and invested.

Create your own fund.

Our UK qualified and New Zealand experienced investment team can help you gain more control over your funds.   If you are familiar with Self Invested Pension Plans in the UK (SIPPS) we can utilise a similar scheme that allows you to self select your investment components should you wish. The Pegasus Investment Fund allows access to thousands of investment products from NZ, Australia, US and UK.  We will work with you to choose and maintain your investments, and you can be as active or hands off as you like.

If you choose you can even transfer your scheme and keep it in pounds sterling until the exchange rate moves in your favour.

Notes -1. From April 6th 2010 the minumum age will increase to 55 - 2. Timing can be dependant on QROPS legislation and specific policy criteria.

Generally there is no tax payable when a UK pension fund is transferred into a New Zealand (NZ) HRMC, QROPS approved superannuation fund – refer to Foreign Investment Fund (FIF) exemptions below.

If your UK pension fund is employment or self employment related and you only made contributions to it before you became a resident of New Zealand, then you will be exempt from Foreign Investment Fund (FIF) Regulations.

If you acquired an interest in a UK pension fund which was NOT employment or self employment related before you became a resident in New Zealand you will be exempt from the FIF regime for the rest of the income year in which you first become resident, and for the next three income years.
After this exemption period has expired, you are then required to declare your interest in your UK pension fund to the New Zealand Inland Revenue. Income tax will then be levied on any gains the fund makes each year.

There is a possibility that should you leave your pension fund in the UK and at retirement take the Tax Free Cash sum, this may be subject to tax in NZ, even though you have left your funds in the UK. New Zealanders are taxed on their worldwide income.

So the tax advantages to transfer are:

• you simplify your tax calculations
• you remove the tax and exchange rate uncertainties
• you pay no tax on the proceeds (withdrawals) from the New Zealand superannuation plan

UK Pension Simplification Rules 2006 – How they affect your Pension transfer?
On 6 April 2006 the “pension simplification” regulations came into effect in the UK.

Under these rules ever overseas pension fund that wants to accept transfers from the UK must be approved as a “Qualifying Recognised Overseas Pension Scheme” (or QROPS). All QROPS will have to report back to HMRC any payment made to a member in respect of the amount that was transferred from the UK. This will include the date, amount and “nature of the benefit” and the current address of the member.

Note: The HMRC will apply up to 55% tax on the transfer value if the UK pension is transferred to a non QROPS approved fund.

The new regulations state that the earliest retirement age (the earliest age at which funds can be withdrawn) is 55 years. In addition the maximum withdrawal in the first year is limited to 25% of the pension without incurring any tax liability. Anything above this will incur a tax liability of 55%. To be a QROPS reporting of all withdrawals is required to be provided to the UK authorities. Additional contributions and/or investment growth are not subject to the UK tax penalties.

NZ Taxation Rules – Foreign Investment Fund rules exemptions
After 1 April 2006 new migrants and returning New Zealanders who have not been tax-resident for at least ten years, are exempted from tax for four years on foreign income such as dividends, interest, royalties and rental income.

The ten year requirement is designed to ensure that New Zealand residents do not leave the country just to become eligible for the exemption.

The changes are part of the Taxation (Depreciation, Payment Dates Alignment, FBT and Miscellaneous Provisions) Bill.