There are clear advantages, for someone migrating to New Zealand, in completing a UK pension transfer to a New Zealand QROPS (Qualifying Recognised Overseas Pension Scheme). The obvious advantage is that the benefits from a New Zealand scheme, registered as a QROPS, can be taken tax free by New Zealand residents. There are, however, other considerations.
The first question is the timing of the transfer. Is there a rush to move the UK pension funds to a New Zealand QROPS? The answer to this question lies, not just in the costs of the New Zealand QROPS (compared to a UK pension), but also with the tax and exchange rate considerations of the two countries.
As previously mentioned, the major appeal with New Zealand QROPS is the access to tax free benefits, however, the funds building up within a New Zealand scheme – prior to drawing benefits – would build up subject to New Zealand tax.
With regards to the question of the exchange rate, is there an urgency to transfer straight away. Is there some flexibility in your retirement planning that lets you wait for a favourable exchange rate? Ideally, you should look at ways of locking in at a decent exchange rate before you transfer.
Global QROPS Ltd can advise you before your migration to clarify what you should do with your UK pension benefits and whether a QROPS is the right option.
