UK Pension Transfers FAQ

• Overview
• FAQ

When can I transfer my Pension?

You can transfer your UK pension or pensions once you have permanently emigrated from the UK. You can, however, start looking into the process at any time. As long as you haven't purchased an annuity.

Should I, and why would I transfer my Pension?

Whether you should transfer your pension is a question of fact. Not all pensions are the same. When you transfer a pension you lose any guarantees of a level of income in retirement that may be built into your pension and any other ancillary benefits that may be part of you pension scheme. Your pension is a valuable asset and should not be transferred lightly.
We work with you to assess if transferring your pension is right for you. We will not recommend you transfer your pension unless we think it is in your best interests.
There are some good reasons to transfer your pension to New Zealand, including:

• You can gain more control over your pension funds even customising your own superannuation fund.
• You can protect yourself from exchange rate risk.
• You can consolidate personal and occupational schemes into one NZ superannuation scheme.
• You're not obliged to purchase an annuity once you reach a certain age meaing that remaining pension funds can be passed on to your beneficiaries when you die.

How can I? What's involved?

You can transfer your pension to a Qualifying Registered Overseas Pension Scheme (QROPS) such as Pegasus Investment Fund (which is Perpetual Trust's QROPS product) by accepting a transfer value and completing the appropriate paperwork from your UK pension provider.

The process involves gathering up your pension details so that we can make a full assessment of your UK pension funds. We request transfer values and overseas pension transfer forms. We then review your pension details and these forms and advise as to whether we think a pension transfer is right for you.

If you choose to proceed we complete the forms requesting a transfer. At this stage we also establish your account with the Pegasus Investment Fund and establish an investment policy with you. Once the transfer arrives in New Zealand we invest it in the Pegasus Investment Fund. We establish the portfolio in line with your parameters and then report to you on a six monthly basis thereafter.

What are my initial costs?

Most of our advice is free, but we will sometimes charge for a comprehensive report on your pension funds. This will usually only be necessary if your situation is complicated. If you decide to proceed with transferring your pension, we charge a tiered fee of 1% - 2% of the funds transferred, depending on the size of the pension total. This fee is deducted once the funds arrive in Pegasus.

What are my ongoing costs?

The Pegasus contract charges an annual management fee of 1.5%. This covers the charge levied by the third party WRAP platform provider, the trustee's fee and the ongoing advisory fee for monitoring the portfolio, producing half yearly (or more frequent) reports and administration costs.

The underlying investments in which your account is invested may also levy fees. This might include an annual investment fee in the case of managed funds. In the case of shares and direct fixed interest investments, these are purchased through a recognised stock exchange and therefore stockbrokers fees will be incurred. Some countries impose stamp duty tax on purchases in securities.

The ongoing fee charged under the Pegasus Contract is largely tax deductible against any assessment for tax on income (and deemed income) derived from investments.

What are the tax implications?

Pegasus is taxed as a superannuation fund. There is no tax liability on capital gains accrued. Income tax is levied on interest and New Zealand and Australian dividend receipts at a rate of 30% (The superannuation tax rate). Investments in Australian unit trusts and foreign domiciled companies (except the bulk of the top 200 companies quoted on the Australian Stock Exchange ASX200) are subject to a 'Fair Dividend Rate' (FDR) Assessment. This seeks to tax foreign investments based on a deemed dividend receipt of 5% of the opening value of the investments each year.

What are my risks? Are there any guarantees?

Your Perpetual Trust Adviser will spend some time with you in order to ascertain your appetite for investment risk and time horizon. From this the Adviser will construct an investment portfolio that may comprise some, or all, of the following: Cash, Fixed Interest, Australasian Shares, International Shares and Commercial Property Investment Funds. Some of these investments may incorporate a 'capital guarantee', backed by third party insurers and counter parties. The quality of any such 'guarantee' will be fully explained to you.

What accessibility do I have, if any?

This very much depends upon how long you have been living outside of the UK and your age at the time of the request. Under QROPs regulations, Pegasus is responsible for reporting all transactions to UK tax authorities for 5 tax years from when you left the UK. Under UK current rules, if you are 50 or over you may opt to receive a Tax Free Cash Sum payment of 25% of the transfer value received, plus an income payment based upon the permitted unsecured pension or alternatively secured pension methods provided for under UK based pension rules.

What happens if I subsequently return to the UK?

The government have introduced rules specifically aimed at making people think long and hard about their new 'domicile of choice' and whether this is likely to be a long term commitment.

What they are attempting to avoid are individuals taking up temporary residence overseas in an attempt to access their pension funds. Effectively, anyone caught doing this within the five year reporting period would suffer a tax penalty in the order of 55% of the amount received. It is imperative that, when considering transferring pension benefits, you are certain that you will not return to the UK to live.

Didn't find an answer to your question?

Please feel free to make an online enquiry and one of our advisers will get back to you. Alternatively you can call your nearest Perpetual Trust office on 0800 737 738 or e-mail us: email@perpetual.co.nz.