The state pension in New Zealand is known as New Zealand Superannuation or more colloquially as National Super. You will be eligible if you:

• are 65 years of age or over and
• are a New Zealand citizen or permanent resident and
• have lived in New Zealand for a certain amount of time and
• normally live here when you apply

You need to have lived in New Zealand for:

• a total of 10 years since you turned 20 and
• five of those years to be since you turned 50, unless you spent some of that time overseas

 What happens to my UK State Pension?

The UK state retirement pension is normally payable in New Zealand, but you will not get annual increases in the benefit once you have ceased to be ordinarily resident in the UK. This means that your pension will stay at the same rate as when you left the UK, or when you first qualified for the pension if you were already living in New Zealand at the time.

If you are eligible for New Zealand Superannuation, your UK state pension will be paid directly to the NZ Government. If you are not eligible for New Zealand Superannuation, you will receive your UK state pension directly. You need to declare this income on your tax return in New Zealand.

You are generally not eligible for special allowances, such as the Winter Fuel Allowance, when you are living in New Zealand.

To find out how much UK state pension you are eligible for, you can apply for a State Pension Forecast from the Department for Works and pensions. This will include information on your Basic State Pension, Additional State Pension (or SERPS), and Graduated Retirement Benefit. You need to complete form BR19, which is available at the following addresses:

http://www.thepensionservice.gov.uk/resourcecenter/br19/home.asp

The DSS website for pensions is:

http://www.thepensionservice.gov.uk/home.asp

Receiving UK Pensions Payments in New Zealand

If you are receiving UK pension income in New Zealand (whether from a personal, occupational or state pension), there are a couple of points to note:

1. If you are eligible for New Zealand Superannuation, your UK state pension will be paid directly to the NZ Government
2. If you are not eligible for New Zealand Superannuation, you will receive your UK state pension directly. You need to declare this income on your tax return in New Zealand
3. You will be taxed on your income from personal and occupational pensions, unless you are a transitional resident

Currency exchange charges and exchange rate fluctuations can affect your income. Our foreign exchange partner NZ Forex has a good service for setting up regular pension payments from the UK to New Zealand. You’ll save money on the charges that a UK high street bank would make every month for setting up these payments. You’ll also get a competitive exchange rate on the funds you transfer, and you can even get an exchange rate locked in for up to two years, providing you with stability of income.

It might not be too late to transfer your personal and occupational pensions – most pensions can still be transferred once they are in draw-down, but not once an annuity has been purchased.

As well as better weather and a higher standard of living, Brits are being further tempted to move to New Zealand because of the number of jobs on offer. New Zealand is actively crying out for skilled workers and its Government currently cites a need – and vacancies – for professions as diverse as engineers and midwives to tandem skydiving instructors and jockeys.

New Zealand’s level of unemployment is currently 4.7%, compared to 6.7% in the UK. What’s more, The Land of the Long White Cloud entered into a recession earlier than the UK and is therefore expected to return to positive growth earlier than most developed countries, including the UK.

Interest rates are also higher meaning a better return on investment for New Zealanders. The Official Cash Rate is 2.5%, which is equivalent to the Bank of England’s base rate of 0.5%. The Auckland Savings Bank is currently offering 5.25% on a two-year deposit account and many other banks are offering similar deals. The New Zealand government itself has further announced a scheme whereby it guarantees existing and new deposits of up to $1million per person in approved institutions.

The number of Brits moving permanently to New Zealand has rocketed by 20% over the last year. A total of 8,300 people migrated from the UK in the last 12 months, compared to 6,900 in the previous year.

Many more Brits enter New Zealand under the country’s Working Holiday Scheme, which was recently extended to 23 months – considerably longer than Australia’s 12 month scheme.

Auckland on New Zealand’s North Island recently came fourth in the Mercer 2009 Quality of Living Survey, whilst the country’s capital Wellington came 12th. London came 38th in the survery. The research covered 215 cities and was based on criteria including political, social, economic and environmental factors.

Why form a Trust?
Whilst the use of trusts in the UK has long been regarded exclusively for the very wealthy this is not the case in New Zealand which has different social legislation than the UK. This includes Acts of Parliament that can govern such things as the way your estate is distributed if you do not have a valid Will, who can contest or challenge your Will, how your assets are dealt with if your relationship fails and how creditors can pursue your assets if business ventures fail. Perhaps the simplest way of avoiding these potential problems is to establish a New Zealand trust prior to leaving the UK.

An example of this is the following situation, where a widow died leaving her sizeable estate to her only child, being a daughter in her late 30s. Not long after receiving the distribution her relationship of six years ended. As the inherited funds had been treated as joint property her partner was able to receive half of the inheritance on separation. This is clearly not what the widow wanted on her death and could have been avoided by placing her assets into trust.

Tell me about Domicile
Domicile is a legal concept. It is not possible to list all the factors that affect your domicile, but here we explain some of the main points.

You are domiciled in the country where you have your permanent home. Domicile is different from nationality or residence. You can only have one domicile at any given time.

Your ‘domicile of origin’ is normally acquired from your father when you are born. It may not be the country in which you are born. For example, if you are born in France while your father is working there, but his permanent home is the UK, your domicile of origin is the UK.

You can legally acquire a new domicile, known as a domicile of choice, from the age of 16. To do so, you must:

· leave the country in which you are now domiciled and settle in another country, and
· provide strong evidence that you intend to live there permanently or indefinitely.

Living in another country for a long time, although an important factor, does not prove you have acquired a new domicile.

For inheritance tax purposes, there is a concept of ‘deemed domicile’. This means even if you are not domiciled in the UK under general law you will be treated as being domiciled in the UK at the time of a transfer if:

· you were domiciled in the UK within the three years immediately before the transfer, or
· you were resident n the UK in at least 17 of the 20 income tax years of assessment ending with the year in which you make a transfer.

What are my Inheritance Tax obligations?
From 1 April 2009 Inheritance Tax exemptions increased to GBP325,000 per person, or GBP650,000 per couple. It is possible for a spouse to inherit their deceased spouse’s entitlement to this exemption.

If we sell our home to a Trust prior to leaving the UK will we pay Stamp Duty?
If you transfer your house in the UK directly to a trust yes there will be a stamp duty obligation on the trust as the purchaser of the property. However if you transfer the sale proceeds of your UK house to a trust there is no stamp duty liability.

Tell me about Gift Duty in New Zealand
A gift is “any disposition of property, wherever and howsoever made, otherwise than by Will, without fully adequate consideration n money or money’s worth passing to the person making the disposition. Provided that where the consideration in money or money’s worth is inadequate, the disposition shall be deemed to be a gift to the extent of that inadequacy only”.

What is a dutiable gift?
Under the terms of section 63 of the Act they are gifts of property situated in New Zealand together with gifts of property situated outside New Zealand, where the donor is domiciled in New Zealand or is a body corporate incorporated in New Zealand. For the purpose of the Act domicile is the country where the person’s permanent home is located. Intention to reside indefinitely in a country will also be considered in determining domicile. Under this legislation a person cannot have more than one domicile at a time.

Rates of Gift Duty

 
Example
On arrival in NZ, a couple establish a trust and gift assets to the value of GBP500,000 (about NZD1,250,000). Gift duty could be payable of up to NZD286,850. A well-structured plan could avoid gift duty, perhaps through a long term gifting programme or by establishing a migrant trust before leaving the UK.

Do we need an independent Trustee?
We recommend that you always have an independent trustee. This will mean that the trust is more likely to stand up to scrutiny from outside parties such as the Court or New Zealand Inland Revenue Department.

Do we need to make new Wills in New Zealand?
If you intend to remain in New Zealand and to move your assets here then yes you will need to prepare a will in New Zealand.

Some useful definitions

Settlor 
The person who establishes a trust and transfers assets to the trust. There can be more than one settlor.

Trustee
The person or organisation who manages the trust. There can be more than one trustee. Each trustee has an equal say in the running of the trust.

Beneficiary
The people or organisations who benefit from the trust. They may have an entitlement to income or capital or both. This entitlement can e fixed or left to the trustee’s discretion.

Trust Funds
All the assets owned by the trust. All the trust funds must be registered in the name of the trustee, who becomes the legal owner of the property.

Distribution Date
The date when all funds remaining in the trust must be distributed to the final beneficiaries. This must not exceed 80 years from the date the trust is established except where the trust is set up for charitable purposes.

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.