UK Pension Transfers to KiwiSaver

DO YOU HAVE A UK PENSION? YOU CAN TRANSFER IT TO YOUR GMK ACCOUNT?

 

Not in KiwiSaver? We also accept UK Pension transfers into the GMI Superannuation Scheme.

What are the advantage and disadvantages

Advantages:

  • A UK pension that is repatriated to NZ, will be available to you as a lump sum.
  • The administration of your funds will be in NZ as opposed to the UK. As an investor you would have greater access to information about how your money is performing and be able to contact the administrators if and when you need to without the hassle of dealing with an overseas company.
  • You can better manage your risk tolerance, including exchange rate risk. For example, if you are nearing retirement and need a more conservative approach to investing, if you have transferred your UK pension to NZ, you can stipulate that you want your funds invested in a conservative fund. This typically would have a higher NZ dollar exposure thus limiting your risk of ongoing currency fluctuations, especially against the pound.

Disadvantages:

You can only transfer your UK pension to a NZ superannuation scheme that has been certified QROPS (Qualifying Recognised Overseas Pension Scheme) compliant by HM Revenue and Customs. You will then be subject to any lock in provisions set by this scheme, even if under the UK pension rules you may have been able to access the funds earlier. The Gareth Morgan KiwiSaver Scheme has QROPS certification.

  • You risk extra taxes imposed by HM Customs and Revenue if you try to withdraw or transfer your funds to an unapproved scheme prior to the lock in date agreed with HM Customs and Revenue. These taxes could be in excess of 40% of the original transfer value of the funds.
  • The full value of the UK pension will be exchanged into NZ dollars on the day it is transferred to NZ, at that day’s rate. The funds cannot be held in pounds for a more favourable rate.

 

What is the process for transferring a UK pension?

Just follow these steps. The process generally takes around three months to complete.

  • The member must enrol in a NZ registered superannuation scheme which is registered as a QROPS, for example the Gareth Morgan KiwiSaver Scheme.
  • The member completes an authority to transfer form giving us details about the pension scheme they wish to transfer.
  • We contact the UK pension scheme and request the appropriate transfer forms and a current transfer value quote and send these to the member to complete.
  • The member may wish to seek advice regarding whether to proceed with the transfer based on the transfer quote provided.
  • GMK and the member complete the transfer forms and send these back to the UK pension provider along with proof of the QROPS registration.  
  • UK pension provider pays across transfer payment as a lump sum in GBP and this is immediately deposited to the GMK scheme bank account and  converted to NZD. (We are unable to hold transfers in GBP for a more favourable exchange rate.)
  • The whole process generally takes around three months to complete.

 

What is the cost?

GMK does not charge an administration fee for this service. There may be fees charged by your UK pension provider.
 

 

What happens to the money?

The funds will be invested in the Gareth Morgan KiwiSaver Scheme and subject to the existing rules of the scheme. With GMK you can select a Conservative, Balanced or Growth investment, or a blend of these. More information available here.

The Gareth Morgan KiwiSaver Scheme is a PIE (Portfolio Investment Entity) so your investment income is taxed at either 19.5% (for those on an income of less than $38,000) or 30% (for those on incomes higher than $38,000); this is calculated and paid on your behalf by the scheme manager.

The funds will be locked in until you are eligible to withdraw from KiwiSaver and there will be no further tax payable on withdrawal. You will be able to withdraw the money in a lump sum, or as incremental withdrawals.
 

 

Transferring to another Superannuation scheme

You can only transfer to another QROPS accredited Superannuation Sceme. Transferring to a Scheme that is not QROPS certified may result in HMRC charging an unauthorised transfer tax penalty which can be up to 40% of the transfer value. This penalty may also apply for any withdrawals before the lock in period has finished.
 


Need more information? Email us.

Download a transfer form