We all love the Internet. It’s a great source of information, but unfortunately, it isn’t always reliable or up to date. And reliable, up-to-date advice is what you need when exploring your UK Pension Transfer options. There’s a lot to think about, key pros and cons to ponder, and rules that have a tendency to change.
That’s why talking with a UK pension transfer expert (like us) is so worth it. Before we get to talk strategy, here are some common misconceptions to be aware of.
My UK Pension transfer will be taxed in New Zealand
This is true in principle, but not if you take advantage of your four-year transfer window. This tax-free transfer period is a significant incentive: you can move your UK Pension funds to New Zealand without any NZ tax obligations within four years from the first day you are a New Zealand tax resident. Then, once your funds have been transferred, you’ll be required to pay tax on the income from your investments.
If transferring your UK Pension to New Zealand is the right move for you, it’s a good idea to get things started well before your four-year window is due to close. The transfer process can take up to six months (sometimes longer) to complete, so be sure you don’t leave your run too late.
Also, remember, UK Pension funds can only be transferred to a QROPS, otherwise you could face a UK tax liability of up to 55 per cent of the value transferred – another valid reason to seek professional tax and financial advice.
NZ QROPS offer limited investment options
On the contrary, NZ QROPS offer choice and flexibility. There is a range of NZ QROPS providers to select from, including self-administered personal pension schemes, investment platforms and generic managed funds. And each of them offer different investment options.
With this level of choice available, finding the most appropriate scheme for your goals and needs can be daunting, so make sure you talk to our experienced team at Pension Transfers®. We can help you explore your options and get clarity at each step of the process – before, during and after your transfer.
Fees are just too high
Even if you invest directly, all investments carry costs in the form of different fees, depending on the fund manager. The question is not about ‘how high’ these fees are, but how high they are in relation to returns
When it comes to NZ QROPS in particular, providers may charge transfer fees, entry fees, annual management fees, switch fees and others. This doesn’t mean that all providers will apply all of these fees, but most of them charge an annual management fee as a percentage of the value of your investments.
The bottom line is, fees matter, but they’re just one part of a much larger picture. It’s important to select a scheme that’s suited to your goals, needs and risk profile, and whose fees are reasonable in relation to performance. Please get in touch to learn more.
Current exchange rates are not favourable
Choosing whether a UK Pension transfer is for you depends on many different factors, but the good news is, current exchange rates isn’t one of them.
First of all, the transfer process can be lengthy and by the time your funds reach New Zealand, the exchange rate will likely be different anyway. Plus, you can transfer your UK Pension to New Zealand in GBP, and wait until the exchange rate is favourable to convert to NZD. Or you can also choose to transfer your funds in GBP and then convert to NZD in bundles over time, for example $10,000 a month.
Have questions? Please don’t hesitate to contact us. While we don’t offer advice on exchange rates, we partner with Global Reach who are renowned experts in the field.
We take the hassle out of UK Pension transfers
It may all seem complicated, and the reality is – it can be. But with us in your corner, you can make informed decisions and act with confidence, knowing that the information you’re receiving is current, accurate, and relevant to your needs.
Give us a call on 0800 UK 11 NZ, email askus@pensiontransfers.co.nz or get the ball rolling by requesting your free UK Pension Report.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.