NZ QROPS. 100% Lump Sum Cash in Pension at an End?
Important Update for NZ QROPS: Click here for the lastest info on pension transfers to NZ.
It is now the end for QROPS 100% lump sum cash-ins. You can no longer cash-in your pension at 50. The earliest you can access a QROPS is 55 for a UK pension scheme which is transferred and you can only get a 30% lump sum at that time. NZ QROPS are still very much alive, but no longer for cash-in of your pension lump sum.
Those looking to cash in their pension to pay off debts and receive a tax free lump sum will be severely disappointed. Anyone who is looking to cash in their pension at 50 is at the end of the road as far as a QROPS tax free lump sum is concerned. However, there are other options to pay off debts such as remortgaging your house.
The following article will be kept for historical records.
Draft legislation published earlier this week by the NZ government could potentially put an end to the country’s overweight NZ QROPS market. Many saw this as an inevitable conclusion stemming
from what happened already in Singapore and Hong Kong.
The Financial Markets Conduct Bill is the piece of legislation which clearly states that anyone joining a NZ-based pension scheme must be either a resident of the country or employed by the NZ government.
The draft is open to changes until September 6th, but many are already sounding the death knell to the NZ QROPS market for non-residents.
NZ QROPS. Is this the end for non-residents
In an article in the International Adviser, Stephen Ward, managing director of financial advisory firm and QROPS specialist, Premier Pension Solutions, said he was concerned about this development.
“If this is passed it would effectively end the QROPS market in New Zealand. However, there is a possibility that this is simply a mistake and that the FMA did not intend to include this provision in the legislation,” said
“I say this because it seems to fly in the face of upcoming legislation to introduce tax free treatment of New Zealand superannuation funds for non-New Zealand residents, which is in the final stages of parliamentary
scrutiny and due to be passed into law in the coming weeks.”
However, Ward said that his sources in New Zealand said the Bill is unlikely to be passed into law for at least 12 months and possibly longer, he added before this happened there would be a number of opportunities to have
the legislation changed.
NZ QROPS. Mis-selling
However, many advisers saw this coming. Many advisers have been mis-selling the NZ QROPS policy as an easy way to cash in 100% of their pension, which is clearly against the ‘spirit’ of QROPS. We have seen the Inland Revenue take retrospective action in light of tax avoidance which has not been within ‘the spirit’ of the law before during the Gaines-Cooper case, where he faces a possible £30m clawback retrospectively. The case is set to conclude before the end of 2012.
Any mis-sold QROPS can lead to a 55% clawback if HMRC decide that a QROPS has not followed its rules. NZ QROPS were designed to help UK expats living abroad access their pension outside the UK under tax provisions of the new country they are living in free from UK taxes. It wasn’t designed for people to try to flout the rules and cash in their pensions. Click here for more information on NZ QROPS.
NZ QROPS article written by QROPS Specialists.The End of NZ QROPS to Cash In Pension? by Richard Malpass