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New Zealand QROPS - good news for all concerned

By Stephen Ward BA (Econ), ACII, APMI, APFS, AIFP - Fri 11th Nov 2011

The power of the internet means that articles about QROPS posted here on Tumbit are picked up all over the world. So this article is not just aimed at those in Spain, but at all (including other practitioners) with an interest in the subject.

We have previously mentioned a proposed change in New Zealand law which, if enacted as first drafted, would have led (with the exception of New Zealand residents) to New Zealand closing as a jurisdiction for receiving transfers of UK pension rights.

It gives us great pleasure to say that lobbying by ourselves and others has led to this position changing. The Financial Markets Conduct Bill was introduced to the New Zealand Parliament on 12th October 2011 to allow for a ‘first reading’ before next month’s Spanish General Election.

The Bill as introduced has, in the part that refers to pensions, been revised from the earlier draft.

The Bill now contemplates two types of New Zealand superannuation scheme:

1.) ‘Regular’ superannuation schemes - which can only admit individuals who are NZ residents / citizens.

2.) ‘Locked-in’ superannuation schemes - which can accept non-residents of New Zealand as members. These schemes will be subject to additional requirements that will be prescribed by regulations. We expect these requirements to include minimum periods of investment and restrictions on withdrawals.

Therefore, this will achieve two things for the New Zealand QROPS market as it relates to non-residents of New Zealand.

Firstly, from the eventual implementation date of the Bill (which will be a long way into 2012), it will end the ability of non NZ residents who left the UK more than five tax years ago to transfer their UK pension fund to a New Zealand QROPS so as to receive an immediate lump sum of up to 100% of the fund.

If this is something you are thinking of doing then it makes sense to proceed quickly bearing in mind the time it takes to process a transfer from a UK pension fund to a New Zealand QROPS. Even if you have already transferred to a QROPS in another jurisdiction but find the cash option attractive remember that it is generally possible to transfer from one QROPS to another.

Secondly, New Zealand becomes an incredibly attractive jurisdiction for holding pension fund money over the longer term. This arises because over the next few weeks we will see the first New Zealand pension schemes constituted in such a way that income and growth within the fund will be free from New Zealand tax. Add to that the ability at a later date to take withdrawals as income. This means New Zealand will be much more flexible in terms of timing and amount than other jurisdictions. Taken together we have a powerful and robust combination.

The QROPS market is one which is constantly changing and we are uniquely placed in being able to offer advice based upon a complete package of up to date market information.

For further information about QROPS, Pension Planning and long term investment opportunities please feel free to contact us by clicking the link (below) and submitting a few basic details.

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