Overseas pensions can pose a problem
Transferring funds accumulated while working overseas home to New Zealand is far from straightforward
My daughter worked for a short period in Britain about 20 years ago and there is a small balance in her UK pension account (about $500) which is not enough to warrant engaging professional advice.
In fact, I spoke to a firm that regularly advertises its expertise in transferring such funds to NZ and was told they charge at least $1000 so retaining them would be unwise.
Do you have any recommendation and is there a KiwiSaver provider you know will handle such a transfer of funds for little or no cost?
With New Zealanders heading to Britain in droves as part of their OE, many will return to New Zealand with some funds stashed in a UK pension fund.
Unfortunately, transferring pension funds from Britain to New Zealand isn’t a straightforward exercise.
I asked Jocelyn Weatherall, an authorised financial adviser and director at financial advisory firm Rutherford Rede, for some advice on whether you can transfer a British pension into KiwiSaver.
“The short answer is yes, there are a number of KiwiSaver providers that are also QROPS which will accept the transfer of your UK pension,” says Weatherall.
“A UK pension must be transferred to a Qualifying Recognised Overseas Pension Scheme [QROPS], a list of which can be found on Her Majesty’s Revenue & Customs [HMRC] website; search QROPS on the HMRC website and choose ‘Qualifying Recognised Overseas Pension Scheme [QROPS] List’ from the search results returned. New Zealand QROPS are on about page 55.
“Not all KiwiSaver providers are QROPS and not all QROPS are KiwiSaver.
“Each QROPS will have different policies on minimum amounts and fees so it is worth shopping around; we are aware of KiwiSaver and non-KiwiSaver providers that have no minimum and no fee to transfer.
“When transferring any pension it is highly recommended to gain advice from a suitably qualified professional as the rules, regulations and tax ramifications in both New Zealand and the overseas country make this a complex and technical area; such things as exchange rate, investment approach, fees, tax and the type of pension you hold abroad and the benefits that come with each type of pension should all be taken into account.
“With that said, as you mention, for smaller amounts it may be uneconomical to gain such advice.
“There are KiwiSaver QROPS and then there are non-KiwiSaver QROPS; these two sets have different rules after you have transferred in. If transferring in to a KiwiSaver QROPS you are bound by the rules of KiwiSaver going forward and any changes to those rules imposed by current