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A guide to transferring your UK Pension


Private Wealth offices Affiliated advisers


kerikeri whangarei warkworth auckland pukekohe hamilton cambridge tauranga whakatane rotorua otorohanga waitara new plymouth whanganui hastings havelock north

Advisers throughout New Zealand palmerston north levin lower hutt wellington motueka nelson blenheim christchurch timaru greymouth oamaru wanaka queenstown dunedin invercargill

nz funds : : a guide to transferring your uk pension

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Pension scheme structure matters Most UK pensions are either defined benefit

Employer contributes to plan

Benefit defined by a set formula

Payout guaranteed based on pre-defined payment formula

If you or your spouse expect to live a long time past the agreed retirement age then these can be great for you. However, the main risk in such plans is the provider getting into financial difficulties and being unable to honour their promises. Which is why the UK government set up the Pension Protection Fund in 2008 as a backstop albeit not a full one. Since 2015 government funded defined benefit pensions (NHS, teachers police etc) are no longer allowed to be transferred to a QROPS.

... or defined contribution.

Employee and employer contributes to plan

Benefit defined by gains and losses

Payout based on how well investment performs

The value of your pension is based on a mix of contributions and investment returns over time. The details provided by your pension provider on their regular statements will tell you which type of pension scheme you have.

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nz funds : : a guide to transferring your uk pension


Different structure = different advice When transferring your pension to a New Zealand QROPS, the advice process you must undergo is dependent on your pension type. If the capital value of your defined benefit pension is above £30,000 then you must get UK financial advice from a licensed UK financial adviser to check that the lump sum your pension provider is offering you, when you leave the plan, is both sufficient and in your interest. We are able to arrange this advice for you. Irrespective of your UK pension scheme type – more often than not you will require personalised financial advice to address the New Zealand aspects involved in a pension transfer process to a QROPS.

Defined benefit Pensions with a capitalised value above £30,000

Pensions with a capitalised value below £30,000

UK Transfer Value Analysis*

NZ Transfer plan

Defined contribution All pensions

* Attracts UK financial advice costs.

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There are risks if you don’t transfer After you have been a New Zealand tax resident for four years the New Zealand tax cost of transferring your UK pension will increase. There is also the risk that your UK pension may be caught by UK inheritance taxes should you pass away in the interim. You may also get caught by new restrictive changes on your ability to transfer your UK pension interests to your new country of residence. The Brexit process also raises concerns as to the short-term stability of the UK economy and currency value but also potentially the freedom of movement of capital for UK pension holders to other countries.

Rising New Zealand tax costs for New Zealand tax residents.

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Potential exposure to United Kingdom inheritance taxes.

nz funds : : a guide to transferring your uk pension

Higher exposure to changes in UK pension rules which may negatively impact you.


Option to transfer now, do exchange rate later The change in the currency of your pension assets through a pension transfer process to a QROPS is an important issue to understand. The effective currency of your UK pension is unlikely to be 100% British Pound. Likewise, the currency of your NZ QROPS is unlikely to be 100% New Zealand Dollar. Why? Both will normally have exposures to other currencies via their international diversification. We manage the currency transition by first calculating the main currency differences between your current UK pension and your prospective NZ QROPS, and then recommending that some or all of the transferred funds be allocated to a British Pound account ahead of a gradual transition to New Zealand Dollar strategies over time.

New Zealand Dollar vs British Pound PPP* Analysis

30%

20%

10%

Fair value range

0%

-10%

-20%

-30% 1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

* Source: NZ Funds. Purchasing Power Parity (PPP) is an economic theory that compares different countries currencies through a 'basket of goods' approach. i.e. they are in equilibrium when this basket costs the same in each country.

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NZ QROPS – Key feature comparisons1

issuer, manager

scheme

New Zealand Funds Management Limited

NZ Funds Managed Superannuation Service

AMP Wealth Management New Zealand Limited

New Zealand Retirement Trust – Personal Superannuation Section

Booster Investment Management Limited

Fidelity Super – Super Plan, Number 3

Britannia Financial Services Limited

Britannia Retirement Scheme

Craigs Investment Partners Superannuation Management Limited

Craigs Superannuation Scheme

i-Select Limited

i-Select Superannuation Scheme

Lifetime Asset Management Limited

Garrison Bridge Superannuation Scheme

Saturn Invest New Zealand Limited

Portfolio Superannuation Scheme

Scheme Trustees

Medical Assurance Society Retirement Savings Plan

Smartshares Limited

SuperLife UK Pension Transfer Scheme

1. The features noted are those offered under the NZ Funds Managed Superannuation Service. The table provides a comparison of these features against the other schemes. The comparison is based on information in the PDS and Other Material Information document on the Disclose Register as at 31 March 2018, as interpreted by NZ Funds..

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nz funds : : a guide to transferring your uk pension


active investment management

lifecycle option

gbp investment option

pie tax structure

downside mitigation

globally diversified

P

P

P

P

P

P

P

P

O

P

O

P

P

O

P

P

O

P

P

O

O

P

O

P

O

O

P

O

O

P

O

O

P

O

O

P

P

O

P

P

P

P

O

O

P

O

O

P

P

O

O

P

O

P

O

P

P

O

O

P

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Minimise your costs Many QROPS advisers charge high fees for UK pension transfer advice. High initial fees and charges can add up to over £15,0001 or $29,0002 for a £200,000 pension transfer. Unlike other advisers and QROPS providers, NZ Funds does not do this. Transferring your pension can also raise tax questions. We can assist you in minimising the New Zealand tax cost associated with the transfer of your pension.

Advice Fees

QROPS fees

Avoid % based fees up to 5% – we charge a flat fee.

Avoid paying entry or exit fees – NZ Funds does not charge entry or exit fees.

Exchange rates

New Zealand tax on transfer

Avoid paying bank exchange margins of up to 2% – we do it at wholesale. 1. Based on entry fee 5% and currency fee 2.5%. 2. Based on exchange rate as at 10 April 2018.

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nz funds : : a guide to transferring your uk pension

No New Zealand tax on transfer by transferring within four years.


Optimise your investment It is important that any material change to your pension strategy is done in an informed manner. Our process constructs what we believe is the right portfolio for you based on your age, risk profile and projected spending in retirement. We compare that portfolio with your present UK pension strategy so you can see whether you are changing your level of investment risk.

Risk profile

Age profile

Projected spending profile

Sample optimised portfolio profile

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NZ Funds value proposition

Personalised advice from an Authorised Financial Adviser.

No entry or exit fees – you only pay a fixed fee for advice, not a percentage of assets.

The potential to better manage currency risks by matching your retirement spending with your investment selection.

Access your UK transferred sum from 55 onwards.

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nz funds : : a guide to transferring your uk pension


My UK pension checklist My UK pension provider has my New Zealand contact details. I am online with my UK pension provider. I have NZ Funds’ contact details. I have my UK pension transfer diarised. I have joining KiwiSaver diarised once I obtain New Zealand residency.

I would like a free consultation Name

Email

New Zealand employer (if applicable)

Please scan or photograph this page and email to ukpension@nzfunds.co.nz

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Further information about transferring your UK pension to New Zealand is available from New Zealand Funds Management Limited. This document has been provided for information purposes only. The content of this document is not intended as a substitute for specific professional advice. While the information provided in this document is, to the best of our knowledge and belief, stated accurately, New Zealand Funds Management Limited, its directors, employees and related parties accept no liability or responsibility for any loss, damage, claim or expense suffered or incurred by any party as a result of reliance on the information provided and opinions expressed in this document except as required by law. New Zealand Funds Management Limited is the issuer of the NZ Funds Managed Superannuation Service. For further information or to request a copy of the NZ Funds Managed Superannuation Service Product Disclosure Statement, please contact New Zealand Funds Management Limited or visit our website at www.nzfunds.co.nz.

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nz funds : : a guide to transferring your uk pension


New Zealand Funds Management Limited Auckland Level 16, Zurich House 21 Queen Street Private Bag 92163, Auckland 1142 New Zealand T. 09 377 2277 E. info@nzfunds.co.nz www.nzfunds.co.nz

Wellington

Christchurch

Timaru

Level 3 Central on Midland Park 40 Johnston Street Wellington 6011

Level 1 203 Papanui Road Merivale Christchurch 8014

Level 1 2 Sefton Street East Timaru 7940

T. 04 473 7701 E. jude.laurenson@nzfunds.co.nz

T. 03 366 9088 E. chris.wasley@nzfunds.co.nz

T. 03 683 1989 E. stephen.mcfarlane@nzfunds.co.nz

Wanaka

Dunedin

Invercargill

Level 2 Brownston House 21 Brownston Street Wanaka 9305

Level 2 Bracken Court 480 Moray Place Dunedin 9016

98c Yarrow Street Invercargill 9810

T. 03 443 2300 E. amanda.cleaver@nzfunds.co.nz

T. 03 477 4647 E. peter.ashworth@nzfunds.co.nz

T. 03 218 2895 E. nicki.morsink@nzfunds.co.nz

A guide to transferring your UK Pension  
A guide to transferring your UK Pension