In this guide, we’ll walk you through some key advantages and potential pitfalls. And if you have any further questions, keep us in mind. Our team have 20-plus years of experience in helping returning Kiwis and UK ex-pats transfer their UK pension to New Zealand.

It all starts with you

Have you moved or returned to New Zealand on a permanent basis? If so, a UK pension transfer is worth considering. But before moving forward with it, there are a lot of implications to take into account.

On the surface, the transfer process is straightforward. Once you’ve chosen a ROPS fund (here’s our guide on this), you can send a written notice to your UK pension scheme administrator, and within 30 days they will send back relevant information and paperwork to proceed.

However, it doesn’t end here. The process can take between two to six months on average to complete, and there are important decisions to make throughout.

Working with a UK pension transfer expert can help you better understand what’s involved, and take out the stress that comes with financial decision-making. Starting with the overarching question: is a UK pension transfer appropriate for you?

As you can see from this step-by-step overview of our transfer services and advice, before implementing your chosen ROPS, we take the time to understand your personal circumstances. Then, we present our detailed report outlining your transfer options, including benefits, risks, and ROPS fund recommendations.

So, let’s take a closer look at some key benefits and potential drawbacks of transferring your UK pension to New Zealand.

Key benefits

• The four-year tax-free window is one of the crucial advantages. In short, if you complete your transfer within four years of becoming a NZ tax resident, you can transfer your UK pension without any NZ tax obligations on the lump sum. Once the four-year tax-free window ends, you’ll likely need to pay tax on lump-sum withdrawals and transfers.
  
  What about returning Kiwis? If you’ve been out of New Zealand for at least 10 years, you may be able to transfer your UK pension tax-free within the first four years of becoming a NZ tax resident again.
  
  
• Reduced exposure to fluctuations in exchange rates: Managing the transfer and currency exchange in two or more steps gives you control over when your funds convert from GBP to NZD.
  
  
• Control of your retirement planning: It may sound like an obvious one, but one of the key benefits of a UK Pension transfer is that you can more easily manage your funds, either through your chosen ROPS or in combination with KiwiSaver.
  
  
• Lastly, transferring your UK pension to New Zealand can simplify your Estate Planning. If you were to pass away, your family wouldn’t have to pay the UK inheritance tax and the balance of your pension would be transferred tax-free to your Estate.

Potential drawbacks (without advice)

• Overlooking tax implications: If you don’t want to miss out on the four-year tax-free window, getting the timing right is essential. The transfer process can take several months, and if you let the four-year term expire, you can end up paying between 4.76 per cent and 100 per cent of your pension value on the transfer. The good news is that we work with tax professionals to ensure that our clients make timely and strategic decisions.
  
  
• Getting currency exchange timing wrong: As we said, managing the transfer and currency exchange in separate steps allows you to wait for a more favourable GBP-to-NZD exchange rate. That’s where working with foreign exchange experts - like the ones we partner with - can make a significant difference.
  
  
• Losing the benefits you currently have: Depending on your UK pension scheme, you might have insurance coverage or pensions for your spouse and dependants. So, it’s crucial that you’re aware of any benefits you might give up by transferring, which is something that we can help you with.

Like to discuss this further?

In this guide, we’ve seen some common benefits and drawbacks. But a lot more can go into this decision, based on your unique needs and goals.

Ready to explore your options? Get in touch: our team at Pension Transfers are here to help you make sense of it all. Click here to contact us or give us a call on 0800 UK 11 NZ to book a review.

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 developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance. Past fund performance is no guarantee of future returns.