If you’ve been thinking about moving a pension to New Zealand, you might have come across references to ROPS.

But what is a ROPS, why does it matter, and how can you find the right one for you? 

What is a ROPS?

ROPS stands for recognised overseas pension scheme.

Funds that have ROPS status have been determined by HMRC to have similar rules to UK pension schemes – such as limits on when investments can be accessed.

British pension-holders are allowed to shift their funds from the UK into these, without the penalties and tax charges that could come with an “unauthorised” payment to a non-ROPS scheme. 

The UK Government administers a list of ROPS, which is updated regularly. British pension providers will usually also check that the receiving fund meets the criteria before a transfer is completed.

If your pension is transferred into a New Zealand ROPS within the first four years of you becoming a tax resident in this country, you won’t usually have any tax to pay on the transfer.

Once the money has been transferred, withdrawals are generally tax-free but part of the growth of the investments is taxed. Investors are then usually no longer subject to UK tax obligations, including inheritance tax.  We can refer you to tax experts for advice on the full tax implications, which are important to understand.

When you reach what is referred to as “normal minimum pension age” you can request money from your ROPS account as a one-off payment, a regular drawdown or a combination.  

Are all ROPS the same?

There can be significant differences between ROPS.

Most ROPS in New Zealand are portfolio entity schemes (PIEs), offering managed funds that fit a range of investor risk profiles.

If you have a while until you want your money, you might opt for a growth focused PIE fund, but if you are nearer withdrawing your investments, you might be more conservative. Some funds have specific options to tailor your investments, such as a geographical or sector focuses.  

There are also investment platforms that give a wider selection of investment options and can be a good fit for people who want more flexibility in their investment choices.

Some ROPS are even self-administered schemes, which can allow a really hands-on approach to your investment management.

Fees vary between providers, too, but you can generally expect to pay at least an annual management fee to your provider.

There are a number of factors to consider when it comes to a pension transfer, so it is important to get advice on the process, including the selection of an appropriate ROPS.

What works for one person may not be the right fit for another, so we can help you to take the time to consider your specific needs and circumstances. At Pension Transfers, we have a good overview of the ROPS available and can help you assess your options. 

ROPS funds are regulated by the Financial Markets Authority.

We’re here to help

As well as helping you to understand the wider implications of a potential pension transfer, and how it might fit in with your financial plans and goals, we can help you to determine which ROPs might be a fit for you. Whatever your pension transfer questions, get in touch with us – we’re here to offer expert advice on every stage of the process.

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.