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The advantages of having your money in a
NZ scheme versus a UK pension

Outside of the obvious tax benefits of transferring your pension.  There are a significant number of other advantages that in aggregate are quite attractive these are:

You keep all your pension - as NZ allows it to be passed to your estate

In the UK once an annuity has been purchased you are effectively buying your income flow for life. There are options with annuities to provide for your spouse however upon both your deaths there is no possibility of leaving monies to your estate.

In New Zealand, upon your death your estate will receive the balance of your pension funds. This can be quite an advantage for people with larger lump sums who are unlikely to use up all their funds in retirement and wish to leave an inheritance.

No difficult annuity purchase decision in NZ

For many UK pension holders there is always the issue of when to purchase an annuity (an annual income for life). Interest rates have a huge bearing on the amount received from an annuity (the higher the rate the higher the annuity, and vice versa) and once the annuity has been purchased you are locked in for life.

While in recent years drawdown options and deferred pensions have been brought in, which give people a little more flexibility you are still forced to purchase an annuity at some stage.

You always have the option of purchasing an annuity in New Zealand however most people organise their investments to provide an income flow. In many cases a combination of drawing down capital and interest-bearing investments provide the retirement income.

You save a small fortune in unnecessary bank fees and currency charges

If you don't transfer your pension your UK provider will give you an annuity.  We conservatively calculate that simple bank transfer charges associated with sending you your money each month will cost you nearly $15,000 over your life time.  Add to this currency charges and exchange rate volatility and the decision to leave your pension could be very costly.

You gain greater control of investment

There are three critical points that you need to consider regarding control of your investments:

• Is the pension fund provider secure?

• Which of the offered funds should I invest in?

• Do I have easy access to the funds if they need to be moved?

Having your pension transferred to New Zealand allows you greater control in all three.  It is a lot more difficult to stay abreast with investments and pension fund providers in the UK when you live in NZ. Furthermore, in many cases tracking down your funds and getting correspondence from the UK can be time-consuming and frustrating.

You get access to your funds

For people close to retirement, having access to part or all of the fund can be an advantage.  Some New Zealand super schemes will offer access to the funds if you are over 50, and/or meet certain requirements.  This can allow you to invest those liberated funds in any investment, pay off the mortgage or buy a boat, the decision is yours.

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