UK migrants to New Zealand need to consider their UK pension options before they leave the UK. Many migrants, who have researched the subject, would know that if they wanted a pension transfer to New Zealand to happen, then the receiving scheme would have to be registered as a Qualifying Recognised Overseas Pensions Scheme (QROPS).

Throughout New Zealand, there are many superannuation schemes that have been registered and approved by the UK’s Her Majesty’s Revenue and Customs (HMRC) as QROPS.

Each New Zealand QROPS would fall under the same tax legislation in New Zealand and also the same UK QROPS rules within the 5 year reporting period. However, each scheme would have their own sets of charges and costs.

Therefore, when you transfer a UK pension to New Zealand, how do you decide what to do and which QROPS to use?

The key strategy would be to get suitable advice for your UK pension before you leave the UK – preferably from a specialist in UK pension transfers to New Zealand. Once you have spoken to a specialist adviser, regarding your retirement plans and goals, it would become clearer as to which is the most suitable QROPS.

Although you are migrating to New Zealand, you may wish to look at QROPS in other jurisdictions as well. Remember, HMRC allows UK pension transfers to QROPS in countries other than the one you are migrating too. Should you settle for a QROPS in New Zealand, however, then the entry charges, annual management costs and exit penalties of each scheme should all be considered.

For people considering a move Down Under advice son their UK pension funds is not always high on their list of things to do. Even those people who may have contemplated receiving advice on a UK pension transfer to Australia or New Zealand may have dismissed it as unnecessary or an unwanted expense – particularly when you consider the cost of migrating as a whole.

In the long term the cost of not considering your options with your UK pension could be higher than taking the advice. Many people know someone who has already migrated and their advice from them may be ‘wait until you get there’ or  ‘I didn’t need advice, I just got my employer to transfer my UK pension to Australia (or New Zealand)’. However, this in itself is advice and not necessarily well conceived advice. You would have to ask yourself, did your friend do the right thing in the first place? Did they migrate on the same visa as you (as this affects your tax status)? Are the pension fund sizes identical – as yours could be affected by the Australian cap whereas your friend’s fund was not affected? What exchange rate did the funds transfer over on? Does your Australian employer have a scheme capable of taking UK pension transfers in? ie is it a QROPS?

Sweeping aside the issue of UK pension advice before you migrate to Australia or New Zealand could prove expensive if you are not fully aware of the tax or exchange rate issues.