Moving to New Zealand

rpenrose

This is my first post, I have had a look for anything on this, so I hope I haven't missed what I need to know.

I have a SIPP, which started in May 2000.

We moved from the UK to NZ in August of this year and, so far, intend to stay.

For the first 3 - 4 years of being here (nearly) all income on UK investments is free of tax - this includes the SIPP income.

My current provider offers interest of 15/16th less than base rate at the moment, which is around 4.06%. Not much good! But may not be worth moving to a better rate such as Hargreaves Lansdown offering 4.75%

Interest rates here are 7.35% (Raboplus online) and an 8+% return is not uncommon for Superannuation Funds (at the moment). But this IS taxable.

The NZ Dollar, according to all the financial experts is overvalued at the moment and should tumble next year. But they did say the same about this year!

As soon as I move the pension over here, I will be taxed on the income.

I was born in April 1959, which means I could, if required, start to draw income at age 50 in April 2010.

To move a pension here, the HMRC rules say it has to be transferred to a "Qualifying Fund". It would seem that all qualifying funds can only be accessed by a Financial Advisor who would want to charge me between 0.25 - 2% of my fund value.

Based on all the above info, is there anyone out there who has had any experience of this and any advice to offer as the most cost efficient course to take. Especially the Financial Advisor charge.

The difference in rates of interest / income and the exchange rate would seem to play the most important role.

EdInvestor

Are you investing your SIPP in cash?If so why? This is not the way to build up a retirement income- you will barely match inflation if you are in cash only.

You will be taxed on the income (when you take it) whether or not you move the pension to NZ. However it may be beneficial if you leave it in the UK, as the first 5k or so of income would come within your UK personal allowance and would thus be tax free.On top of that there is a further 2k in the 10% band.

rpenrose

Hi
No its currently in commercial property being sold to a residential developer and will need somewhere with agood rate of return to sit until I decide what to do with it! So it's not a long term solution, but just trying to find the best return in the short term, and then deciding what to do medium and long term!

Thanks for reply

Any other suggestions would be really appreciated

rpenrose

Sorry

Also should have said that once moved to NZ would come under NZ tax rules which, so far as I am aware do not have any tax free allowances on pensions/

EdInvestor

BTW you may not be able to draw income from it (or get the 25% tax free cash out) until you're 55, as the rules have changed.

What date in April is your birthday?

rpenrose

Sorry for delay in replying, have been away on hols. I am 50 on 25th April 2010, so far as I am aware I do qualify to draw down at 50. My SIPP co have also confirmed this.

Unless anyone else has anything they know to add?

Any ideas about instant access saving accounts for non UK residents which dont penalise when you draw out during any month.

rpenrose

Re Savings accounts:

Found Bradford and Bingley International on the IOM best instant access at 5.6% (5.2% after march 2007) as most UK based accounts do not accpet non-residents.

Re SIPP:

PLEASE does anyone know of how I can get pretty safe higher returns for my SIPP, other than in the SIPP providers savings account (see above). We did have some shares three or four years ago when RBS bought Nat West that paid three very large guaranteed dividends and then at the end of term, were worth nothing. The dividends added up to the value of the shares + something like 30%.

As one of those who was caught up in the ZERO scandal, I am somewhat cautious.

I do need to have reasonably instant access to the money as we may want to move it to the UK when the exchange rate has improved. This could have a huge impact on the value of our pension pot!

EdInvestor

Since you already are familiar with commercial property, why not put the money (at least partially) in commercial property funds?

These pay a dividend income based on the rental returns, plus capital growth.Some invest in property shares, which are higher risk.

You can either choose investment trusts (cheaper, more choice ) or unit trusts/OEICs.In January, REITs will be launched as well (many big UK property companies will convert.)

More info here

To further increase returns after your existing property is sold, you may like to consider moving Sipp provider, as no doubt you are paying high charges for a bespoke service at present.

There are a number of new cheap (no annual fee) online ones you could consider which will also make it easy to operate your account from abroad.

https://www.sippdeal.co.uk
https://www.h-l.co.uk
https://www.alliancetrust.co.uk

All worth a look and all happy to correspond by email.You may like to further confirm the age 50 drawdown idea, let's hope you won't be caught by the new rules.

rpenrose

Many thanks for this, all really helpful.

I was born on 25th April 1959, which means I am 50 on 25th April 2009 (not 25th April 2010!!), so, I don't think I will be caught out by the new rules.

I do know a bit about commercial property, but it was limited to workshop units which were rented from the fund by my company. I was told about REITs by a friend who is a partner in one of the large stockbroking firms, before I left the UK, didn't really understand a great deal about them, so info here as to their attraction would be useful. I seem to remember something about the REIT itself having some tax advantages?

As I no longer have UK income, the only advantage in making contributions is that it would be in a "tax free wrapper", but as I have the 4 year tax exemption on overseas income which expires in August 2010, would it be worth it anyway? If I am going to transfer the fund to NZ, there is also the issue of exchange rate timing to take into account - rather a lot of balls to juggle to get it right!

Just to complicate matters, I had heard that if I do move the fund to NZ, then decide to return to the UK, I cannot move the fund back - advice here from anyone who has experience of this would be helpful.

rpenrose

Just looking a bit further and found this link

Am yet to read, but the introduction page looks interesting

http://www.londonstockexchange.com/en-gb/products/companyservices/ourmarkets/mainmarket/REITs/expcoment.htm

EdInvestor

rpenrose wrote:

If I am going to transfer the fund to NZ, there is also the issue of exchange rate timing to take into account - rather a lot of balls to juggle to get it right!

Just to complicate matters, I had heard that if I do move the fund to NZ, then decide to return to the UK, I cannot move the fund back - advice here from anyone who has experience of this would be helpful.

What is the point of moving the fund to NZ?

You can take 25% of it in tax free cash on vesting anyway in 2010 - so that can be moved.Then you would be able to get an income of 120% of the annuity rate for your age out every year, and that would be tax free in the UK up to the level of the personal allowance (currently about 5k) if you have no other UK income.

You can access your Sipp online and pay very low charges here and there are no taxes within the Sipp.

Unless the NZ laws enable you to extract a much higher income or capital sum from the pension, there doesn't seem to be much advantage, possible exception of exchange rate risk: but then you appear to have some residual doubt about remaining in NZ long term.

A bit of bet hedging sounds appropriate at present.

On another issue: it's well worth keeping up your state pension entitlements through voluntary NICs, especially with class 11 conts costing just over 8 pounds a month for working expats. A real bargain, given the horrendous proce of guaranteed annuity income these days, even if the pension isn't uprated for inflation in NZ.