Top 5 Benefits of Moving Your UK Pension to New Zealand
If you’ve spent time working in the UK, there’s a good chance you have a pension sitting with a UK provider. For many returning Kiwis or British expats settling permanently in New Zealand, transferring those pension funds across borders can offer significant long-term benefits - but it’s not a decision to take lightly.
Transferring your pension into a New Zealand QROPS (Qualifying Recognised Overseas Pension Scheme) can give you better control, flexibility, and peace of mind. Here are five key reasons why this option is worth considering.
1. CONSOLIDATION: KEEP YOUR RETIREMENT SAVINGS IN ONE PLACE
Over the course of your career, you may accumulate several different pension pots - especially if you’ve worked for multiple employers in the UK. Leaving these behind can make retirement planning difficult. It’s estimated there are over £30bn in lost pensions in the UK. You may struggle to keep track of balances, fees, and investment performance, especially with different providers operating under different rules.
By transferring your UK pension into a New Zealand QROPS, you bring your retirement savings under one roof. This simplifies reporting, allows for clearer investment oversight, and makes it easier to plan your future income with a single point of contact. It also makes dealing with withdrawals, tax, and estate planning more streamlined under NZ regulations.
2. GREATER INVESTMENT FLEXIBILITY AND LOCAL CONTROL
UK pension schemes often limit investments options to GBP denominated funds. While that may suit some people, others prefer more flexibility and personalisation in how their retirement savings are managed.
Most New Zealand QROPS providers offer a broad selection of investment options in different currencies. These typically include:
· Multi-sector funds with various risk profiles (e.g. conservative, balanced, growth)
· Cash and fixed interest options
· Sterling-denominated funds, for those wanting to delay currency conversion
· Socially responsible or ethical investment portfolios
The ability to work with your adviser to select or change investments gives you more control over your long-term returns and risk exposure.
3. CURRENCY CERTAINTY AND LOCAL WITHDRAWALS
If your retirement will be based in New Zealand, leaving your pension in the UK means your eventual income is subject to currency exchange movements. This can lead to volatility in your retirement income, particularly if you’re converting lump sums during periods of a weak pound.
Transferring to a NZ-based QROPS lets you convert your funds to New Zealand dollars (or invest in both GBP and NZD options if you wish), which:
· Removes ongoing FX risk if you’re living and spending in NZ
· Makes retirement income planning more predictable
· Aligns with your actual cost of living
This is especially relevant during periods of geopolitical or economic instability that can cause significant shifts in currency values.
4. POTENTIAL TAX ADVANTAGES FOR NEW ZEALAND RESIDENTS
New Zealand’s tax system is unique when it comes to foreign pension transfers. If you’ve been back in NZ for fewer than four years (as a returning resident or new migrant), you may qualify for a transitional tax exemption. During this window, transfers of overseas pensions can generally be brought in tax-free - but only if timed correctly.
After that four-year window, New Zealand begins taxing a portion of the transfer as “foreign superannuation income,” based on how long you've been resident. Planning your transfer within the exemption period can make a significant difference to your tax liability.
On the UK side, a 25% Overseas Transfer Charge (OTC) may apply if you’re no longer resident in the UK or a qualifying country. But if you’re living in New Zealand and transferring to a NZ QROPS, this charge can be avoided.
Due to the complexity of these rules, it's essential to get tax advice from a tax professional who understand both jurisdictions, but the opportunities to minimise or avoid tax are real for those who plan ahead.
5. SIMPLER ESTATE PLANNING AND INHERITANCE OPTIONS
From 2027 UK pension funds will fall into the UK inheritance tax regime (resulting in a potential 45% tax). Transferring your pension to New Zealand allows you to align your retirement savings with local estate and succession laws. That makes it easier to:
Nominate beneficiaries
Understand how your pension fits into your wider estate plan
Avoid confusion between jurisdictions
Potentially reduce or avoid foreign tax obligations on death
Your retirement savings become part of your New Zealand financial life, making things much clearer for your family or executors down the line.
SHOULD YOU TRANSFER YOUR UK PENSION TO NEW ZEALAND?
Transferring your UK pension is not a one-size-fits-all decision. It depends on:
The type and value of your UK pension (e.g. defined benefit or defined contribution)
Your residency status and timeframes
Tax implications in both countries
Your long-term retirement plans
That’s why it’s important to get personalised advice from a financial adviser who understands both UK and NZ systems. But for many, the benefits of bringing your UK pension to New Zealand - better control, flexibility, and alignment with your financial life - make it well worth exploring – contact us now for an obligation free confidential chat about your circumtances
Compound Wealth are based in Mount Maunganui, Tauranga and offer KiwiSaver, Investment & Retirement Financial Advice to clients all over New Zealand.
