QROPs rules snag NZ advisers

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New British rules are stopping New Zealand QROPS pension transfers in their tracks.

Thursday, August 20th 2015, 6:00AM 1 Comment

by Susan Edmunds

The UK’s “pension freedom” reforms came into effect on April 6 this year, removing the need for British retirees to purchase an annuity product.

But the move has caused serious problems for New Zealand residents who are members of the British pension schemes and want to transfer their money here.

All of the country’s KiwiSaver schemes were immediately disqualified as Qualifying Recognised Overseas Pension Scheme (QROPS) providers because they allow members to access their funds before 65 in some circumstances.

The new rules also mean that before they are allowed to transfer to an international QROPS, members in defined benefit pension schemes worth more than £30,000 must obtain advice from an adviser who is authorised by the UK to provide advice to non-resident investors and who has the appropriate qualifications.

Tony Chamberlain, of GB Pensions,  said very few British financial advisers were permitted to give such advice under the industry regulation, even if they were qualified and willing.

“The outcome is that many of those affected will not be able to transfer their pension schemes into potentially more tax efficient savings vehicles in NZ because they will not be able to receive the appropriate UK advice and therefore obtain the required, signed certification.”

He said his own firm had encountered this problem: “We have really struggled to find a suitably qualified UK adviser, spending many hours searching for, talking to and meeting with potential candidates.  A number of advisers were willing to help, but in several cases their compliance managers and/or PI insurers would not allow them to, and others wanted to charge clients $10,000 for the advice, therefore negating any potential tax saving in many cases.”

He said the rules had been introduced with little thought for what they would mean for pension-holders outside the UK.

Since Tuesday this week he had had three inquiries from other advisers who were struggling to find someone to provide the British advice on QROPS transfers.  “They have all these clients and can’t deal with them.”

He said the New Zealand PIE regime meant there was potential for NZ QROPS schemes to boom as a vehicle for British pension-holders in Australia, where all but one QROPS scheme has been disqualified by the April rule changes.

Tags: QROPS

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