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Changes re New Zealand QROPS - Things are becoming clearer

By Stephen Ward BA (Econ), ACII, APMI, APFS, AIFP - Fri 23rd Sep 2011

In last week’s article we revealed that the New Zealand Financial Markets Authority (FMA), which has taken over the authorisation and supervision of New Zealand pension schemes, has just published a draft bill for consultation. The bill is called The Financial Markets Conduct Bill and it runs to a brain-numbing 400 pages.

The draft Bill includes proposed changes in New Zealand pensions’ legislation which could have far reaching effects on New Zealand QROPS. It proposes that in the future New Zealand pension schemes may only be open to New Zealand residents.

THE GOOD NEWS

Fortunately such a change is unlikely to pass into law for at least 12 months, possibly longer than that, so the door to a New Zealand QROPS is still open.

For non UK residents, who left the UK prior to 5thApril 2006, and in due course 5thApril 2007, it is still possible to transfer your private pension funds to a New Zealand QROPS and immediately access the full fund in cash, with no New Zealand tax liability.

The wording of the draft Bill is, to say the least, confusing and some observers, myself included, initially thought that the relevant

paragraph could even have been a drafting error.

However, we have been in correspondence with the Ministry of Economic Development who, whilst confirming that there is no drafting error, did reveal that the requirement, (to be a New Zealand resident), “would only apply as entry criteria and not to existing members.”

In other words any non UK resident who has transferred their fund to an NZ QROPS would not be forced out of the fund when the new legislation takes effect.

CLARIFICATION STILL NEEDED

As there are no ‘transitional arrangements’ outlined in the bill it is unclear if the existing availability of 100% withdrawal of capital will apply to these individuals, or the proposed new rules which may be less generous.

However, there will be strong lobbying for a common sense treatment of transferees to enable them to take benefits under the basis that applied when they transferred in, rather than subject to any revised basis which was introduced subsequently.

DEVELOPING ALTERNATIVES FOR THE FUTURE

We are, as you would expect, in the process of working on suitable alternative arrangements for our clients, this includes schemes in new QROPS jurisdictions where we are negotiating exclusive marketing rights. Once these are available we will set out how they will operate – but in the meantime the message coming out of New Zealand is loud and clear, if you have a UK fund you wish to transfer to New Zealand in order to access your capital, then the only way to ensure you can do it is not to delay.

For further information about QROPS and Pension Planning opportunities please contact us today via clicking the link Here and leaving a few basic details on the form at the foot of the page.

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