Should you transfer your UK pension to New Zealand?
For many expatriates, including New Zealanders who lived in the UK and built up a pension there, deciding whether to transfer their UK pension to New Zealand is a significant financial decision. At NZBritannia, we are dedicated to providing guidance that aligns with your best interests. Here’s a look at some important considerations when thinking about transferring your UK pension to New Zealand.
Benefits of moving your UK pension to NZ
Transferring your pension can bring several advantages. If you transfer your pension within four years of becoming a New Zealand tax resident, you generally won’t have to pay New Zealand tax on your lump sum. Once transferred, the benefits you receive are tax-free in New Zealand. This can be a significant financial advantage.
Having your pension in New Zealand can also simplify managing your finances. By consolidating your assets in one country, it becomes easier to keep track of your funds. You won't need to worry about the stability of an overseas pension provider. Instead, you’ll be dealing with a local provider, which is usually more straightforward.
With NZBritannia, you’ll be in experienced hands. As pioneers of pension transfers in New Zealand, we have completed well over 20,000 transfers. Our expertise means we can manage your savings with specialist professional investment managers, tailoring investments to match your personal circumstances and risk preferences.
Starting at age 55, you can access your funds flexibly based on your needs.* If you become seriously ill, you may be able to access your savings sooner. And in the unfortunate event of your death, your pension balance will go to your estate, with no death duties applied in New Zealand.
Potential drawbacks of moving your UK pension to NZ
However, there are also some challenges and risks to consider. Transferring your pension can involve costs, and the exchange rate at the time of transfer might not be favourable, which could reduce the amount you receive.
If you’re transferring from a Defined Benefit Scheme, the lump sum you receive may not provide equivalent returns over your lifetime compared to what you would have received if you left your pension in the UK. You could also lose some insurance cover associated with your UK pension.
Additionally, we cannot guarantee the future performance of the Britannia Retirement Scheme. Investments could perform better or worse than if your pension remained in the UK. Once transferred, you may not be able to move your pension back to the same UK scheme. If you leave New Zealand within five years of the transfer, there could be tax disadvantages. Earnings in a New Zealand QROPS** are taxed, with rates varying from 0% to 28%.
Get expert advice for your pension transfer
These are just some of the things you will need to consider. At NZBritannia, our top priority is providing advice that aligns with your best interests. Our advisers will thoroughly assess your individual circumstances, considering all the pros and cons, and guide you through every step of the decision-making process. We are committed to transparency and your financial well-being, recommending a transfer only when it aligns with your long-term financial goals.
If you’re considering a pension transfer, start with a conversation with NZBritannia to explore your options and make an informed choice. Call us today on 0800 500 811 or download our free eBook: The Simple Guide to Successful UK Pension Transfers.
*From 6 April 2028, the minimum age at which benefits can be taken will change from 55 to 57 for all individuals who are not aged at least 55 on that date.
**Qualifying Recognised Overseas Pension Scheme (QROPS), a scheme that has been approved by His Majesty's Revenue & Customs to receive transfers of UK Pension Benefits without incurring charges.