UK or NZ Invesment??

kab343

Hi all,

I have a slightly tricky question. I'm originally from New Zealand but now live and work in the UK. I'm thinking about bringing over £13,000 held in a Kiwisaver fund in New Zealand.

I am being charged a 2.29% fee per annum by an actively managed fund in New Zealand.

I want to buy Vanguard Lifestrategy 80% ACC through Charles Stanley Direct ISA. I believe the total fee will be 0.48% per annum?

If I go through withdrawing my Kiwisaver I will lose approx £2,650 of Tax Credits from the NZ Government but will have access to money and lower fees plus the benefits of a UK ISA.

Can someone tell me if this is a stupid idea or any other ideas that they have? Kiwisaver funds in NZ can't be touched until you are 65, I already own a house in New Zealand so I can't withdraw for that either.

Cheers,
Karl

ermine

If I go through withdrawing my Kiwisaver I will lose approx £2,650 of Tax Credits from the NZ Government but will have access to money and lower fees plus the benefits of a UK ISA.

Depends how old you are, and if/why you need the money now - it seems to be liqudating pension savings and you are giving up the tax saved by the sounds of it.

You win about 2% p.a. moving it but you're losing 20% in one hit to shift it. I guess is you are less than 55 on a simplistic basis you break even-ish (that's assuming simple rather than compound interest where in practices you'd break even sooner)

But having the access to the cash now has some value - if you left it in NZ you would be exposed to currency variations and inflation as well as the high-ish fees.

All of these are judgement calls you need to make on how valuable it is to you to get the money now. There's no right or wrong answer. The longer the money would be tied up in NZ if you left it the better the arithmetical case is to shift it. Plus you are shifting asset classes - VGLS is a global fund with a slight UK tilt. You don't say what the asset class is of kiwisaver. and which is better only you can say, reflecting your beliefs about the world and needs - eg do you plan to go back to NZ?

If these are strategic pension savings and you will be earning/retiring in the UK why not consider a SIPP? tax benefit of 20% and access from 55 (or 57 depends on your age). The tax benefit could make up for your Kiwi loss - NZ gets its 20% tax back but the UK pays you 20% instead.

SIPP contribs are limited to the maximum of your taxable earnings/£40k p.a. Loads on pensions right here

kab343

Good point, I am 29, turn 30 in August. The only reason I am looking to move it is that it is liquid if withdrawn from NZ and I can choose to invest it in a passive low cost fund. There is one Kiwisaver passive option Smartshares but it only invests in Australian and NZ index funds and charges 0.79% per annum.

Basic Kiwisaver fund details can be seen by Googling Fisher Funds Growth Asset Mix. Site won't let me post any links sorry!

Not planning on going back to NZ anytime soon.

ermine

The liquidity would favour shifting it to me at your age, though of course you do have to think about retirement if these are retirement savings. Personally I'd toss it into an ISA for now because if you end up in a job paying 40% tax than you get a 40% boost on moving money from an ISA into a SIPP, rather than 20%.

If you wanted more AsiaPac exposure to match kiwisave I guess you could dial in some percentage Asiapac index fund instead of part of your VGLS, but if you don't plan to go back there's no obvious reason to do that.