Maybe I am just missing something, but I can still see offshore advice firms suggesting New Zealand QROPS are really suitable for those not retiring in New Zealand and I am not sure why.
The HMRC dropped a large number of New Zealand QROPS from its bimonthly list in May, Kiwisaver schemes disappeared. The primary reason appears to relate to the ability to access income under the age of 55. However , the New Zealand Superannuation Funds remained on the list as they are open to non- New Zealand residents and these are still being promoted to non-New Zealand residents.
Why?
Why would someone with a UK pension, not resident in New Zealand, want to transfer their pension to the other side of the world?
Let’s look at some of the reasons people consider when moving a pension from April this year.
Pension Flexibility
People may like the idea of total flexibility to take as much capital and income from their fund as they want after the age of 55- Is that a reason to move to New Zealand?
No- As at June 2015, the only schemes that offer this are UK pensions ( not all ) and EU QROPS that have changed their rules.
Currency Risk
It is possible to select different currencies, when investing in UK pensions and QROPS, to protect the investor from currency risk – Is that a reason to move to New Zealand?
No- All the funds that I have seen are denominated in New Zealand Dollars or UK Sterling. By definition someone that does not live in the UK is not going to be using pounds to live on or, if not in New Zealand, New Zealand Dollars.
Greater Investment Options
An oft cited reason for transfer, rarely used, is the ability to select a very wide range of investment options- UK SIPPs and QROPS offer this- Is that a reason to move to New Zealand?
No, the schemes on offer normally offer a limited choice of investment manager- certainly self investment is not on offer. The offer is one or two fund managers who then offer a specific strategy which is restricted.
Tax Free Income
Avoid tax by transferring to a QROPS. Really? Unless someone lives in a no tax jurisdiction, then a New Zealand QROPS, that is not taxed at source, will invariably need to be declared in most jurisdictions.
And, in these cases, won’t the restricted investments and non-aligned currencies wipe out any perceived tax advantage and potentially prove to be the more costly option?
Don’t let the perceived tax dog wag the tail of the pension!