Moving to New Zealand

Cook_County

I am afraid that Edinvestor - who is usually wise - is leading you up the proverbial garden path...

You have to transfer the fund to NZ to avoid the FIF tax regime which charges tax on foreign super once your 4 year year honeymoon is over.

You can - of course - only transfer to a NZ plan that has been accepted by the UK's HMRC as a Qualifying Recognised Overseas Pension Scheme (QROP). Equally transfers to UK plans can - I believe - only come from QROPs. However you'll probably need to speak with an IFA familiar with both the UK & NZ.

You will want to compare the tax costs in NZ of failing to transfer versus the opportunity of hving all of the money invested in NZ where you can spend the lot or pass it to your heirs; which most folks think is a better choice than the UKs compulsory annuity purchase requirement.

Ed is also recommending you keep paying UK NI. I agree that this was the advice in the past but do bear in mind that the number of qualifying years is now slated to come own to 30, so you will have far fewer to pay; and may already have got there.

EdInvestor

I'm certaintly not familiar with NZ's tax laws, but I did say

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...

CC said

You will want to compare the tax costs in NZ of failing to transfer versus the opportunity of hving all of the money invested in NZ where you can spend the lot or pass it to your heirs;

But I wonder whether such a scheme/arrangement would qualify under QROPS? It seems likely to me that if people can transfer their pensions to NZ and then extract the lot in cash, we would have heard a bit more about this apparently very attractive 'exit strategy'.

...which most folks think is a better choice than the UKs compulsory annuity purchase requirement

Annuities are no longer compulsory in the UK.

Re the tax on pension income in NZ, is there no double tax treaty covering the two countries?

Cook_County

There are many countries - eg Slovakia - which let you take money tax-free. Others give no tax relief on the way into the fund but also charge no tax on the way out.

There are already many QROPs in NZ, http://www.hmrc.gov.uk/PENSIONSCHEMES/qrops-list.htm
The OP should seek local advice on the tax position in NZ as this will be the primary driver.

UK IHT must also be considered.

EdInvestor

What's a QROPS?

From HMRC


Recognised overseas pension scheme

Under section 150(8) a recognised overseas pension scheme is an overseas pension scheme that meets the following requirements prescribed under The Pension Schemes (Categories of Country and Requirements for Overseas Pension Schemes and Recognised Overseas Pension Schemes) Regulations 2006 (SI 2006/206). It must:

* be established in a Member State of the European Union, Norway, Liechtenstein or Iceland, or
* be established in a country or territory with which the UK has a Double Taxation Agreement that contains exchange of information and non-discrimination provisions - see the list in RPSM14101045 (there is more information on the provisions of particular Double Taxation Agreements in the Double Taxation Relief Manual), or
* satisfy the requirement that, at the time of the recognised transfer, the rules of the scheme provide that:

* at least 70% of the funds transferred will be designated by the r scheme manager for the purpose of providing the member with an income for life,
* the pension benefits (and any associated lump sum) payable to the member under the scheme, to the extent that they relate to the transfer, are payable no earlier than they would be if pension rule 1 in section 165 applied, and
* membership of the scheme is open to persons resident in the country or territory in which it is established.

Pension rule 1 in section 165 provides that no payment of pension may be made before the day on which the member reaches normal minimum pension age, unless the ill-health condition was met immediately before the member became entitled to a pension under the scheme.

Nothing very advantageous there then.