 You'll notice throughout our pension transfer infomation that we mention QROPS, the HMRC and UK tax penalties several times - we thought we would take the opportunity to explain the requirements specified by the UK government for pension transfers to New Zealand.
On 6th April 2006 new rules relating to the transfer of UK pension funds to overseas schemes came into effect, resulting in New Zealand superannuation scheme providers having to get specific approval from the UK HMRC (Revenue and Customs) to be able to accept UK pension transfers. New rules were also introduced on the ways in which benefits can be taken from an overseas scheme, with tax penalties of up to 55% if these rules are broken. Additionally, for the first 5-6 years after you arrive in New Zealand, you can now only take UK pension benefits you would be eligible to if you were still in the UK. However, after this time you can take lump sum benefits with no liability to any UK tax. This could be as much as 100% as a tax free lump sum, although in practice most NZ superannuation scheme providers will have their own limits on what you can draw down (normally around 40%). UK personal pensions meet the NZ Inland Revenue Department QFPA (qualifying foreign private annuity) rules, so are not subject to FIF (foreign investment fund) tax – this means that you will be taxed in New Zealand when you take benefits from your UK pension, but as long as you cease to make contributions to your UK pension funds within four years of the start of the income year in which you become a New Zealand tax resident, you are not subject to any New Zealand tax on your pension until you take benefits from it. (If you are thinking about continuing to pay in to your UK pension fund once you are resident in New Zealand, please note that under HMRC rules you only qualify for tax relief on contributions up to the ‘basic amount’ of ₤3,600. You are only eligible for this relief for five tax years after you leave the UK.) Consequently, there is no time limit where you have to transfer your pensions to avoid paying New Zealand tax on them. The relevant legislation is available from the Inland Revenue website, http://www.ird.govt.nz. Search for IR 257: Overseas Private Pensions. Please read on for our comprehensive list of questions that we are frequently asked about pension transfers.
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Pension Transfer 
