What you need to know

UK Advisory Firms

UK based advisory firms usually require persons enquiring about pension transfers to pay for a very expensive report on the status of their UK pension scheme before they commence the transfer process. It is also suggested that clients should transfer their existing UK scheme or schemes to another UK scheme to make the transfer easier to manage.

We advise that an expensive report is not a requirement of a pension transfer to NZ – neither is there any need to transfer to another UK scheme as part of the transfer process. If you are persuaded to transfer your pension or pensions to another UK scheme before you transfer to this country, you will be faced with numerous sets of charges. Commission will be paid to the UK advisory firm for the transfer or transfers within the UK, and a further commission will be paid when the transfer to NZ is completed. You will end up paying all of these commission charges and related expenses by way of a substantial deduction from your pension savings.

Britannia Financial Services Ltd has been involved in the pension transfer business for over 10 years. During that time we have had dealings with over 2500 UK pension providers, and we have successfully transferred over 8500 separate pension accounts. We do not insist on an expensive report which says nothing, and we only transfer once – directly from your UK pension plan or scheme to a complying scheme in NZ.

NZ Advisory Firms

Be warned that there are a number of small NZ firms who claim to be “pension transfer specialists” but who in fact are life insurance agents and/or financial planning advisers interested in promoting other aspects of their businesses.

We also advise that if your scheme is contracted out, and holds elements of GMP or Protected Rights, these smaller firms may not have the expertise or ability to complete a pension transfer. This could mean you will waste many months of your time without your transfer being completed - and possibly end up with only part of your scheme in NZ with the Protected Rights/GMP balance stuck in the UK!

We further warn that you may be told you MUST start contributions to a NZ scheme before you commence the transfer process. This is not the case if you deal with Britannia. You will only contribute to the NZ registered scheme if that is your wish. Saving towards a comfortable retirement is a worthwhile goal - but our experience in dealing with people settling in this country over many years tells us that it is not a priority when you are a new arrival interested only in setting up house in a new country of residence.

Important additional information! We advise that we've recently heard of transfer cases handled by New Zealand "pension transfer specialists" where two separate sets of fees have been charged without a client's knowledge. These local firms claim to have lower up front pension transfer fees - but do not disclose that they also charge an entry commission to the local receiving scheme of up to 5% which is paid to the adviser as a further fee. This additional charge is often hidden and written off by way of a reduced earning rate over the first three years - and so clients of these companies are not fully aware of the total charges being paid.

As an example we have evidence of a recent transfer case where a client was quoted a pension transfer fee of 3% of the transferred funds, but was not informed of a further 5% commission/entry fee to the local receiving scheme - making a total payment of 8% to the adviser involved. In another case a client was advised in writing that the transfer charge would be 2% which was increased to 7% because the additional 5% entry fee was hidden and not fully disclosed.

Britannia fully discloses its pension transfer charges - which consist of one charge only deducted at source from transfer monies received from the overseas pension provider.

We do not charge an additional hidden commission/entry fee to the local receiving scheme for the services we provide.

Pension transfers - UK tax implications

New UK regulations coming into effect from 6 April 2006 will mean a tax penalty payment of 55% deducted from your UK pension funds before transfer. This tax imposition will apply to all transfers to overseas schemes which are not "Qualifying Recognised Overseas Pension Schemes".

There are further tax implications which will apply to persons accessing funds from overseas schemes. From 6 April 2006 any lump sum withdrawal not sanctioned by UK regulations will attract a tax penalty of 55%. This penalty will be deducted at source, or left to accrue as an accumulating UK tax liability against an individual's name.

Britannia advisers are well versed in these new regulations, and can give expert advice concerning any potential tax problems. We can also advise on the flexible disposition of your transferred funds so you can use them to maximum advantage.

Britannia uses a NZ receiving scheme which is fully authorised by HM Revenue & Customs to receive transfers from UK schemes. This means that transfers through Britannia attract no penalty or exit taxes when your funds are transferred from the United Kingdom scheme.