KiwiSaver providers could get some clarity on UK pension fund transfer relief early this month, according to Bruce Kerr, Workplace Savings NZ chief.
Kerr said the industry body is “working very hard” to negotiate some relief measures from the UK tax office, which recently removed all KiwiSaver providers from its list of Qualifying Recognised Overseas Pension Schemes (QROPS).
The global crackdown, which also hit Australian superannuation schemes, by Her Majesty’s Revenue and Customs (HMRC) effectively ended any future QROPS transfers to KiwiSaver schemes barring a legislative change to the NZ regime.
However, Kerr said KiwiSaver providers were seeking clarification from HMRC on the status of any QROPS transfers already received and those in transit now.
“We’re making progress,” he said. “But HMRC has to run through its processes… we should be in a better position to know by early June.”
Workplace Savings did not have data on the amount of QROPS KiwiSaver transfers in limbo, nor the funds received already, Kerr said.
While KiwiSaver providers are not required to publically report QROPS transfers, data from one of the largest schemes, AMP, indicates the UK funds import business was hitting a reasonable level.
According to the latest AMP KiwiSaver report, in the 12 months to March 31, 2014, QROPS transfers from 144 members amounted to about $10.8 million.
Over 20 KiwiSaver schemes were listed as QROPS by HMRC prior to the changes first announced in April. However, all KiwiSaver providers have vanished from the most-recent QROPS list, published by HMRC on May 19. However, the HMRC list still records 34 NZ-based QROPS (of which 16 are “SSAS” funds), including Brittannia, Craigs, Medical Assurance super scheme, the Kiwibank-owned GMI super scheme and the Portobello Motels fund.
Last week FTAdviser reported many Irish pension schemes would probably suffer the same de-QROPSisation as KiwiSaver providers.
Jerry Moriarty, chief executive officer at the Irish Association of Pension Funds, told FTAdviser: “The situation is pretty much the same here [as NZ] because most schemes would allow early retirement from the age of 50. This would rule out pretty much all Irish schemes.”
UK pension transfers to non-QROPS attract a hefty 55 per cent tax.
The UK government adopted the QROPS regime in 2006 to enable emigrating citizens to transfer their tax-advantaged pension savings to funds that followed strict withdrawal rules.
UK pension transfers via QROPS – and those made prior to the introduction of the regime – have been a lucrative business globally.
While hard QROPS data is difficult to come by, an earlier estimate put the amount transferred to NZ between 2006-2012 at about $1billion.