Many people who migrate to New Zealand decide to bring their pension, too. But a pension transfer is something that should be done carefully.

Here are some things to think about.

Pros and cons

There can be benefits and drawbacks to transferring your money.

You might like the idea of having it all in one place, to make it easier to manage. But the exchange rate might not be on your side at the moment.

You might want to be able to avoid inheritance tax. But you might wonder about the tax implications here, too.

How do UK and NZ pensions compare?

One of the biggest differences between the UK and the New Zealand pension systems is the tax treatment.

If you’re moving to New Zealand, you’ll have a four-year transition window before New Zealand tax applies to your investments. If you have overseas investments after that point, they may be captured by the foreign investment fund (FIF) regime. You may need to seek advice on this.

In general, New Zealand managed funds and KiwiSaver funds are PIE investments, which caps the top rate of tax that can apply. Your income, including your NZ Super and other regular income you might get from pension schemes, will be taxed at the applicable marginal tax rate.

But when you withdraw money from a New Zealand superannuation savings account, you are not taxed on that withdrawal. There is also no inheritance tax.

Another difference is that many British pensions are set up to provide you a certain amount of income for life. New Zealand doesn’t have a comparable annuity market to provide this option. Here, it’s up to you to set up your investments to deliver income.

The superannuation schemes themselves are often similar – you can choose to be in a managed fund that matches your risk profile, if that’s the right option or you, or to invest through an investment platform. Investment platforms allow you - or an adviser on your behalf - to manage a range of direct investments.

Currency risk

If you don’t move your pension to New Zealand, another aspect to manage will be the currency risk.

With your money still invested in the UK, it won’t just be the investment returns that affect how much your pension is worth to you here. When the New Zealand dollar is stronger, you’ll have comparatively less, and when it’s weak you’ll have a higher balance.

Some pension transfer providers allow you to transfer your money in sterling, and exchange it at a time that’s appropriate for you.

Who should consider a transfer?

Anyone who has moved to New Zealand could consider transferring their pensions. We can help you to determine whether it’s suitable for you.

Having the money transferred means you aren’t subject to any changes that could apply to the British pension scheme, and it may be easier to manage alongside the rest of your financial life here.

The transfer process

In the first four years of being a tax resident in New Zealand, you can transfer your pension without attracting a New Zealand tax bill.

You’ll need to transfer your pension into a ROPS, a registered overseas pension scheme. If you don’t, you can be hit with a substantial tax bill from the UK Government, for an unauthorised withdrawal.

When you decide you do want to make the transfer, you’ll have paperwork to fill out for your account here, and forms from your existing pension scheme. We can help you do this, and get the sign-offs required.

Your pension scheme in the UK then cashes up your investments and sends the money to your New Zealand provider to invest.

There are a number of aspects of the transfer process that need to fall into line to have it happen smoothly. We can help guide you through this.

Expert advice is vital

Moving a pension won’t be the right choice for everyone, and even those for whom it is appropriate need to take advice on the decision and the process.

At Pension Transfers, we’re experts at navigating the system and can help you to determine what might be suitable for you, and what steps you need to take to make it happen.

If you have any questions, get in touch with our team. We’re here to help.

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.