UK expat pension members and potential UK migrants to New Zealand, look for guidance and advice regarding many aspects of New Zealand QROPS (Qualifying Recognized Overseas Pension Schemes).
As well seeking assistance regarding income levels, tax advantages and possible death benefits available from a New Zealand QROPS scheme, UK pension members – and in particular those UK pension members that have plenty of time to go before retirement – enquire as to whether they can vary their investments to greater degree than they could in a UK scheme.
Broadly speaking, New Zealand superannuation schemes (approved as QROPS) have similar investment capabilities as UK pension schemes – although growth and income within the QROPS are subject to tax – for example, unitised funds and investment managers.
Many UK expat pension members in New Zealand, however, also want to know if they can affect a pension transfer to New Zealand and use those funds to invest in more diverse investments.
Since the launch of the QROPS rules in the UK, on 6th April 2006, the question of permitted investments has come up. For example, the most common discussion point is residential property – as this is not permitted as an investment in UK Self Invested Personal Pensions (SIPPs) or UK Small Self Administered Schemes (SSASs).
Residential property, in the HMRC manuals, falls under the category of ‘Taxable Property’. In other words, a QROPS administrator would have to report an investment of a residential property to HMRC. Furthermore, unlike pension and lump sum payments to QROPS members where there is a 5 year reporting period, there is no time limit on reporting for residential property as an investment. UK pension members should not fall into the trap of thinking that transferring pensions to a New Zealand (or any other) QROPS allows you to invest in anything because there are UK tax charges if you chose to invest in something such as residential property.