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Can I transfer my UK pension to New Zealand?

You can transfer your pensions from the UK to New Zealand, but there’s plenty to consider beforehand.

We look at the rules and regulations and what you need to take into account. 

Transferring to other countries: India | Canada | Malta | Spain | Portugal | Australia

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What is QROPS?

Since 2017, all pensions transferred from the UK to New Zealand must be put into a Qualifying Recognised Overseas Pension Scheme (QROPS) or a Self-Invested Personal Pension (SIPP). 

There are certain tax advantages to using QROPS, which features a range of benefits, including: 

  • 25% of your pension fund as a tax-free lump sum instead of the UK’s standard 25%. You can take this once you’ve lived for five years outside the UK. 

  • You can avoid inheritance tax of up to 55%, and by nominating beneficiaries when you set up your QROPS, passing on your wealth is easier and less stressful. 

  • It’s more flexible when you want to take income from your pension. Drawdown rules are linked to the jurisdiction of the country you move to, not the UK, which can allow for up to 50% more income to be taken.  

  • QROPS offer a much broader choice of investments from across the global market, potentially boosting the growth potential of your funds. 

  • There’s no need to purchase an annuity - yields have been low in the past and the income you receive is subject to tax. You can avoid these limitations with a QROPS, and any money left that you haven’t taken as income will be available to your beneficiaries tax-free. 

  • Many countries impose lower income tax than the UK — including on pensions. By paying tax in the country where your QROPS is based, you could save money.  

  • Combining several pensions into one scheme. Many of us have accumulated contributions in more than one pension. Keeping track of where everything is and how it’s performing can be challenging. With a QROPS, you can merge all UK funds into one plan and enjoy diverse investment opportunities. 

What are the rules for transferring my pension to New Zealand?

To open a QROPS and move your UK pension to New Zealand, there are certain regulations that must be met. Here are six key rules: 

  • Your scheme must conform to the definition in the HMRC’s Pension Tax Manual 

  • Your scheme must be an overseas pension created outside the UK, and meet the regulations test by being taxed as an occupational scheme in another country 

  • Your scheme must be a Recognised Overseas Pension Scheme (ROPS] 

  • It must pass a benefits tax relief test 

  • Benefits are payable from the age of 55, except in the case of illness 

What are the benefits of transferring your UK pension to New Zealand?

There are many advantages to transferring your UK pension to New Zealand.   

Similar to other big decisions, it's a good idea to seek professional advice beforehand. 

Here are some of the pros when you transfer: 

  • Benefits paid and received in New Zealand from a QROPS are tax-free. 

  • If you become seriously ill, you may be able to access your pension early. 

  • After your death, your pension fund will be paid to your estate. 

  • Unlike in the UK, there is no inheritance tax. 

What are the disadvantages of transferring your UK pension to New Zealand?

There are some disadvantages to be aware of when transferring your UK pension to New Zealand, but they may be avoided with some research and even professional advice. 

It’s vital that you avoid making the wrong transfer to a scheme that is not qualified by HMRC as this could land you with a tax bill of up to 55% of the value transferred. 

Also, if you leave New Zealand to live in another country within five consecutive tax years from your date of transfer, you would be liable for a 25% charge of the original transfer value.  

Once you’re 55, you can withdraw 25% of your funds tax-free. It’s best to avoid withdrawing over 25% - if you return to live in the UK within 10 years of leaving, anything over this would be subject to UK tax.  

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How do I transfer my UK pension to New Zealand?

If you’ve decided to transfer your UK pension to New Zealand, you can start the process by sending your current pension provider a letter of authority, which will tell them who is acting on your behalf. 

You’ll also need to request various vital forms concerning the transfer of your pension and the transfer value, which you can do over the phone. 

Once you have the paperwork, you’ll have a lot to sort, but a financial adviser may be able to offer guidance so you can get your pension transferred without any issues. 

Can I access my state pension?

If you retire to New Zealand, you'll still receive your UK state pension if you have sufficient National Insurance contributions and are of retirement age. 

But you won’t benefit from the annual UK increases in the state pension.  

What else to consider before moving to New Zealand

You’ll want to plan carefully before moving to New Zealand. 

Here are some key financial considerations: 

  • Your new home: How will you fund your New Zealand home – with a mortgage, savings or the sale of your current property? If you’re taking out a mortgage, a broker can help you determine how much you can borrow. 

  • Sort your tax affairs: HMRC must know about your move and updated circumstances. A financial adviser can help you decide how to tell HMRC, clarify your tax affairs and advise you on making the most of your pension. 

  • Inheritance: When you own a property in New Zealand, draw up a will to ensure the interests of your loved ones are thoroughly protected should something happen to you.    

  • Get insurance: You’ll need to insure your life in New Zealand. It's worth finding the best policy for your home and car, and potentially private medical insurance. 

  • Open a New Zealand bank account. It’s a good strategy to open a New Zealand bank account before you arrive. It means you’ll be able to transfer funds in advance of your move. Make sure you have several forms of ID before contacting your chosen bank.  

Before you start looking for your new property in New Zealand, a decent savings fund is vital if you want to visit the country to find your new home. It’s also wise to have money set aside for transporting your belongings.  

If you want to retire to New Zealand, ensuring you transfer your UK pension properly is an essential first step. It's worth doing your research and talking to a financial adviser via Unbiased if you need guidance.  

Most types of pension schemes are transferrable to New Zealand, including occupational, final salary, defined benefit, defined contribution, self-invested and small self-administered schemes.

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About the author
Our team of writers, who have decades of experience writing about personal finance, including investing, retirement and pensions, are here to help you find out what you must know about life’s biggest financial decisions.