- Frequently asked questions about the Fund and transferring UK pensions
These questions and answers cover the most common queries you as an investor may have. Please read the Investment Statement (available here) for more information. The prospectus and Trust Deed are also available on request (click here to make a request).
If you have further queries, please ask your adviser. Disclosure documents for Perpetual advisers are available on request and free of charge, or by clicking ¬ here.
- Why would I transfer my pension?
There are many factors to consider when deciding whether or not to transfer your pension.
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 your pension scheme. Your pension is a valuable asset and should not be transferred without full consideration of the implications.
Some of the reasons for transferring your pension to New Zealand that may be relevant for you include:
- The ability to tailor your superannuation plan
- Consolidation of personal and occupational schemes into one NZ superannuation scheme
- No obligation to purchase an annuity once you reach a certain age meaning that, when you pass away, any remaining pension funds can be passed onto beneficiaries
- When can I transfer my pension?
You can transfer your UK pension or pensions once you have permanently emigrated from the UK, as long as you haven’t already purchased an annuity.
You can of course start looking at the transfer process at any time, including prior to leaving the UK.
- What's involved in transferring my pension?
You can transfer your pension to a Qualifying Registered Overseas Pension Scheme (QROPS) such as the Perpetual Portfolio Superannuation Fund by accepting a transfer value and completing the appropriate paperwork available from your UK pension provider.
The process involves gathering up your pension details so that we can assist you with requesting the appropriate transfer values and the correct overseas pension transfer forms. Should you choose to proceed with the Perpetual Portfolio Superannuation Fund (PPSF), we then complete the forms requesting the transfer(s) and establish your PPSF account.
The time it takes to complete the transfer depends on the time the UK pension provider takes to undertake their transfer processes. We aim to have this process completed within six to eight weeks once the forms have been received from you.
Once the funds arrive in New Zealand, we implement the portfolio in line with the agreed portfolio and, thereafter, provide regular reports to you.
- What happens if I subsequently return to the UK to live?
The UK government has 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.
Anyone who has transferred funds to a QROPS outside of the UK and subsequently returns to the UK to live should seek specialist tax advice before transferring their funds back. The penalties for making unauthorised withdrawals, or unauthorised pension transfers, as defined by UK tax legislation include forfeiture of up to 55% of the transferred amount.
- What assets can I hold in my account?
Your funds can be invested into a Personal Plan.
There is a large universe of assets available for members investing into a Personal Portfolio (note: assets must be available on the platform we use in order to hold it in your Personal Portfolio). This includes a large number of NZ and Australian Unit Trusts, any share listed on the NZX, ASX, UK or US share markets, and a range of NZ and Australian direct fixed interest securities.
At Perpetual, we whittle this universe down to a select group of assets on which we have performed due diligence and which we continue to monitor. This sub-set of assets is known as our Approved Investments List. Your Perpetual Authorised Financial Adviser will work with you based on your risk tolerance, time frame and personal preferences to create a recommended investment portfolio of approved investments.
If you work with a non Perpetual financial adviser, you should ensure that they are able to explain the process they undertake in order to make recommendations to you.
- What are my risks?
The Perpetual Portfolio Superannuation Fund Investment Statement covers this question in detail. Click here to see the Investment Statement.
- What access do I have to the funds in my portfolio?
The Perpetual Portfolio Superannuation Fund is a superannuation scheme and, as such, is principally for retirement savings. Thus, there are restrictions on access.
Members who join the scheme with funds that are not sourced from a UK Pension Scheme transfer are subject to a “lock-in” to age 55 (or any later date agreed with the trustee). Prior to age 50, you may generally access up to 20% of the value of your portfolio and between the ages of 50 & 55, you may generally access up to 40% of the value of your portfolio. After that, the scheme Fund allows access to 100% of your funds.
There are access exceptions for significant financial hardship (note: significant financial hardship is not recognised by the HMRC, the governing tax body in the UK. Accordingly any hardship withdrawal from QROPS funds may generate a tax liability). Such exceptions include serious illness and withdrawals for settlements under the Property (Relationships) Act 1976. If you are looking to make a withdrawal, your Authorised Financial Adviser will discuss with you the implications for your retirement goals.
Different rules apply to members who joined, or applied to join, prior to 15 October 2010. Such members are generally able to elect to opt in to the lock-in arrangements described in the previous paragraph. Your Authorised Financial Adviser can provide details of the specific limits that apply to your account.
If you intend to transfer funds from a UK pension from 06 April 2012 onwards, the transfer amount is subject to additional rules under Qualifying Registered Overseas Pension Scheme (QROPS) regulations. As well as the “lock-in” age (55), the Trustee will designate from the total benefit potentially available, an amount equal to 70% of the amount transferred solely for the purpose of providing the member with an “income for life”. An “income for life” is an annual (or more frequent) benefit payable from the amount set aside for this purpose.
Under QROPS regulations, the Perpetual Portfolio Superannuation Scheme Fund is responsible for reporting all transactions to the UK tax authorities for a period of ten years commencing from the date when the original transfer took place. This reporting obligation exists for all QROPS transfers.
A withdrawal fee of 2% of the amount withdrawn applies if you make a withdrawal within the first year of investment, and a withdrawal fee of 1% of the amount withdrawn applies if you make a withdrawal within the second year of investment.
If you became a member of the Perpetual Portfolio Superannuation Scheme, prior to 6 April, and have any questions, please contact your Authorised Financial Adviser or provider. If you don’t have a Financial Adviser, you can find one here.
- What are the tax implications?
Under New Zealand taxation legislation, the Perpetual Portfolio Superannuation Fund is taxed as a widely-held trust. This means that income of the fund is subject to tax at the rate of 28%. Any income tax is levied against the Perpetual Portfolio Superannuation Fund, not you personally, so the tax rules relate to trusts, not to individuals. Of course, the tax charged or rebated to your account is based on the assets held and transactions undertaken within your account.
The Fund does not allow trading of investments held within any member’s account as this has adverse tax implications under NZ tax rules.
The specific tax treatment applied depends on the relevant investment of the Fund. The following outlines the general tax treatment applying to the Fund in respect of the more common assets:
- Portfolio Investment Entity (PIE) funds. The Fund will normally elect to be a zero-rated investor, with income and expenses of the PIE then flowing through to be taxed at the Fund’s tax rate. The Investment Statement for the PIE fund will provide more information on the tax treatment for the specific PIE fund. A different treatment may apply where the asset is a listed PIE.
- Direct NZ and selected ASX200 shares. Capital gains are generally tax-free, with dividends taxed at the Fund’s tax rate and credits generally available for any Australian withholding tax deducted and NZ imputation credits attached.
- Direct NZ bonds. Interest and capital gains (both realised and unrealised) are taxed at the Fund’s tax rate, any capital losses are generally tax deductible. The tax treatment of bonds will normally match the treatment in the financial statements as the Fund accounts for its financial instruments under International Financial Reporting Standards (IFRS).
- Australian unit trusts and overseas shares (excluding the selected ASX200 shares). Taxed on a ‘Fair Dividend Rate’ at the Fund’s tax rate. This means that tax is applied to 5% of the starting value of the asset, with adjustments made to ensure tax is paid on assets purchased and sold within the period. Some exceptions apply to this standard treatment for certain assets.
- Foreign currency gains and losses. The tax treatment depends on which type of asset the gains and losses relate. Gains on debt-type assets (such as bonds or foreign currency deposits) are taxed at the Fund’s tax rate, with losses being tax deductible. However, foreign currency gains/(losses) on equity assets, including foreign shares, will generally not be taxable/(deductible).
- Interest earned. Taxed at the Fund’s tax rate.
For information on the treatment of other assets, please contact your adviser.
The information provided on tax outlines the general tax treatment for the Fund, and is accurate based on our understanding of current NZ tax laws (as at December 2010).
We recommend that investors wanting to confirm the current situation or to confirm their personal situation seek specialist tax advice.
- When are tax payments made?
The Perpetual Portfolio Superannuation Scheme Fund has a balance date of 30 April.
Tax is paid via three provisional tax payments and one final tax payment each year, which are due on or around:
- 28 September - (first provisional tax payment)
- 28 January - (second provisional tax payment)
- 28 May - (third provisional tax payment)
- 7 April - (final tax payment, if applicable)
The provisional tax payments are estimates. With the final tax payment (or refund) is based on the result of the Fund’s income tax return for the year filed.
If there are sufficient tax losses, provisional tax is generally not paid. Should there be a tax loss for the full year, then the Fund’s income tax return may result in a refund if provisional tax has been paid throughout the year.
- What are my initial costs?
- If financial advice is provided regarding the transfer of a UK pension, then a fee for this may be negotiated between the Authorised Financial Adviser and client. This fee can be deducted from your Perpetual Portfolio Superannuation Fund account.
- What are my on-going costs?
The Perpetual Portfolio Superannuation Fund has an annual fee of 1.65% plus applicable GST. This covers the
- charges for the platform provider we use
- the trustee fee
- the advisory fee for monitoring the portfolio
- production of half-yearly reports, financial statements, annual reports
- administration costs
The Investment Statement for PPSF has more information on the charges.
Your adviser may also charge an on-going fee.
The investments held in your account generally have fees associated with them. Most managed funds have annual management fees (which will be detailed in the Investment Statement relating to the fund), direct shares and bonds have brokerage costs, and some overseas assets have charges such as stamp duty. Your Authorised Financial Adviser will be able to outline the specific costs for your account based on the actual assets involved.
- Are there withdrawal fees?
Withdrawal fees will be charged if you withdraw amounts within the first two years of investment (see ‘What accessibility do I have?’ below).
Expenses incurred by the Fund (e.g. legal, audit, and accounting fees) will also be charged to the Fund.
- Do you have another question?
- Please feel free to make an online enquiry and one of our Authorised Financial Advisers will get back to you here. Alternatively you can call your nearest Perpetual office on 0800 737 738 or email us: firstname.lastname@example.org.