NZ Funds’ UK Pension Transfer Tips

NZ Logo.png

NZ Funds offers a free comprehensive UK pension transfer service that helps clients every step of the way until their pension is re-located to New Zealand.

NZ Funds began offering a transfer service in 2017 when our Qualified Recognised Overseas Pension Scheme was registered with Her Majesty’s Revenue & Customs. Since then we have transferred over
$30 million of UK pensions.

Below are our top tips for those considering whether to transfer their pension from the UK to New Zealand.

Can my pension be transferred?

Generally, most pensions are transferable, irrespective of the amount. However, there are a few exceptions to this. If you do not fall into one of the following categories your pension should be transferable!

The UK State Pension, which is the equivalent of New Zealand’s NZ Super – paid for by the Governments of both countries – is not available for transfer. However, if you have relocated to New Zealand you may be eligible to receive NZ Super payments. Some rules and exceptions apply.

Public sector pensions, which are funded by the UK Government and are commonly referred to as unfunded public sector pensions, are currently not transferable. These include organisation such as NHS, Police, Firefighters, Armed Forces, Teachers and other Civil Services.

Annuities, which are currently in payment, are also not transferable. Defined Benefit schemes (explained below) have many of the same characteristics as an annuity but are transferable unless they are already in pay out, or in some cases where they are within a year of the policy’s retirement date.

What kind of pension do you have?

All pensions are not created equal. There are in fact two types of pensions: defined benefit and defined contribution. So long as you don’t fall into one of the categories above, both are transferable to New Zealand.

Defined Contribution Schemes (which are also known as Money Purchase Schemes) are similar to New Zealand’s KiwiSaver Schemes. Members, often helped by their employers, save a percentage of their income each year in preparation for retirement. How much is available to spend in retirement (or transfer) depends on how much you have saved and how well the investment portfolio has performed.

Defined Benefit Schemes (which are also known as Final Salary Schemes) are Schemes where the pension is not defined by the member’s contributions, and often there are no member contributions at all. These offer an annual pension amount from the Normal Retirement Date until death. In general, these types of schemes, which effectively offer a fixed income in retirement guaranteed by the company you worked, for are becoming rarer and rarer. The good news is they can be transferred as well, however there are two downsides to consider when transferring them.

First, most members will need to obtain financial advice in the United Kingdom before their pension provider will agree to transfer this type of pension. NZ Funds can help co-ordinate this specialist advice for you, but there is usually an additional charge by the UK-based adviser for this service and this is not covered by
NZ Funds. Second, when Defined Benefit Schemes are transferred, members lose their annual guaranteed income and instead receive a single lump sum amount, based on the value of the scheme at the time of transfer.

When is the best time to transfer?

To start with, pensions should not be transferred to New Zealand until the member has become a New Zealand tax resident and intends to remain in New Zealand permanently.  If the member is not a New Zealand tax resident or ceases to a be New Zealand tax resident within five full UK tax years of the transfer, their pension may be subject to a 25% overseas tax charge.

Once you become a New Zealand tax resident New Zealand’s Inland Revenue Department gives you a four-year window to transfer any overseas pension funds to New Zealand tax free. After that taxes usually apply.

While this sounds like a long time, you should factor in plenty of time to work with your chosen transfer organisation, and bear in mind that once the paperwork has been completed, transfers themselves can take up to six months, or in some cases even longer!

But what about the exchange rate!

Concerns around the exchange rate should not stop you considering a UK Pension transfer. Many approved Qualified Recognised Oversees Pensions Schemes (or QROPS, which are schemes approved by HMRC to accept UK Pension transfers) offer a Sterling Strategy within their schemes. This allows you to transfer your pension to New Zealand but keep it either in Sterling or exposed to Sterling until you are comfortable with the New Zealand dollar, Great British Pound exchange rate.

If you would like NZ Funds to review your situation please do not hesitate to contact Ellie Jarvis:

 T. 09 918 9784

M. 022 061 1033


Ellie’s advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. A copy of Ellie’s disclosure statement is available on request, free of charge.

Ellie - photofilter UK Pt.jpg