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main | our service | the benefits | frequent questions | fee fallacy | the rules | the pitfalls |
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Transfer now to increase your If you leave your pension in the UK you will get taxed The technical bit - If you live in New Zealand and have a UK pension, any income you receive directly from that UK pension will be taxed at your highest marginal tax rate in either New Zealand or the UK (up to 40%). That is because it is subject to: UK tax on income from UK pensions (even though you aren't living there); and, New Zealand's double tax treaty rules.
Transfer your pension to New Zealand and this tax is eliminated The technical bit - By transferring your pension to New Zealand you will no longer be subject to these rules and related taxes. Why? Because your pension ceases to be a UK pension and becomes a New Zealand superannuation fund and under New Zealand tax law income received from superannuation funds (outside of Kiwisaver) is tax free.
So why does this increase my net pension by up to 66% Because if your UK pension paid you $1,000 you might pay $400 in tax, leaving you $600. Whereas, if you transferred your fund you would receive the full $1,000 which is 66% more than the $600, if you left your pension in the UK.
These benefits are only available if you transfer to a qualifying recognised overseas pension scheme (QROPS) in New Zealand We will only deal with such schemes and so should you. Failure to transfer to a QROPS will leave you with a 55% tax bill...click here for more about QROPS
Tax free access to your funds before retirement Depending on your circumstances, including how long you have been outside the UK, your age and a range of other factors, you can access your pension in part or in full tax free - and often well before the retirement age of 65.
The devilish detail of the savings As discussed above the different tax regimes and laws in New Zealand and United Kingdom affect the value of your pension fund and therefore how much it is worth. The rules and regulations are complex, and determined by lots of different factors, such as the type of pension that you have in the United Kingdom, how long you have lived overseas before coming to (back to) New Zealand, . Below we show the current value of your pension and its value at your retirement age of 65 under three different scenarios (but just remember you may not have to wait until 65 click here): 1. Leaving your fund in the UK (not caught by NZ FIF rules) Under this scenario you will receive tax free growth in the fund in the UK as it will fall outside the foreign investment fund rules. However, when the annuity is purchased and the payments made they will be subject to UK and New Zealand income taxes. 2. Leaving your fund in the UK (caught by NZ FIF rules) Under this scenario the growth in the fund will be taxed in New Zealand under the foreign investment fund rules as the value of the fund is greater than $50,000. In addition when the annuity is purchased at your retirement and the payments made they will be subject to UK and New Zealand income taxes. 3. Transferring your pension to NZ
The transferred pension would
grow in New Zealand with tax on any income in the fund such as dividends
or interest, but not capital gains. At
retirement there would be no tax to pay. There are also no taxes to pay on the transfer
as it is made into a QROPS registered fund in New Zealand. |
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The other benefits
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