The almost $400 million UK pension transfer scheme, i-Select, has expanded its distribution potential after joining the NZX Wealth Technologies, Forsyth Barr and Adminis platforms.
Hugh Stevens, i-Select managing director, said the multi-choice investment UK pension provider had adopted an “open architecture” approach to platform partnerships.
“We’re seeing increasing demand from a wide range of advisory groups for a flexible UK pension transfer service,” Stevens said. “And we don’t want platform availability to be a barrier to growth.”
Previously, the i-Select scheme, which allows a wide choice of underlying investments, was available on the FNZ, Apex (formerly MMC) and Hobson Wealth (now part of Forsyth Barr) platforms.
Founded in 2006, i-Select offers three options of UK pension transfers including a traditional super fund, a portfolio investment entity version and bespoke ‘single-member’ schemes typically targeting wealthy individuals.
According to the UK tax department list of qualifying registered overseas pension schemes (QROPS), i-Select hosts about 20 single-member funds.
Stevens, ex Smartshares chief, bought i-Select from founder, Chris Heffernan, last December for an undisclosed sum.
Overall, NZ has 10 or so QROPS providers including AMP, Booster, Britannia, Craigs, IVCM, Garrison Bridge (owned by the Lifetime Income group), MAS, NZ Funds and the NZX-owned SuperLife.
Total UK pension fund assets under management in NZ likely add up to well over $1 billion with Britannia, for example, reporting about $450 million in assets as at the end of March last year.
While the UK pension transfer market to NZ has been a steady, and lucrative, business, the sector is hostage to tax rulings in either country with a current hiccup in the system, according to the International Adviser publication.
In an article last week, International Adviser notes changes to UK pension regulations introduced in April have caused issues for QROPS transfers.
“HMRC [the UK tax department] issued a last-minute newsletter on 5 April 2024 advising that members considering a transfer to a QROPS might wish to postpone it until the rules have been corrected,”
International Adviser says. “All well and good, but here we are in mid-June now, with no indication when HMRC will carry out the correction, which is really not helpful to ex-pats to want to move their pensions out to a QROPS and in some cases have time sensitive deadlines, due to the way in which benefits can be taxed in their new host country.”
Any fix is unlikely to arrive before the UK election slated for July 4.
The Financial Markets Authority (FMA) also recently closed a brief consultation on granting an exemption to UK advisers helping NZ clients with QROPS transfers.
Theoretically, UK advisers giving advice to NZ-based retail clients would be subject to FMA regulations.
“Additional New Zealand regulation of these UK firms is unlikely to provide a commensurate benefit for users of the advice. We understand that UK firms would face significant compliance costs if they had to comply with the New Zealand financial advice regime,” the FMA consultation says. “Those costs may discourage UK firms from providing the necessary advice, and limit opportunities for those in New Zealand as they would not be able to transfer funds from a DB pension unless they travelled to the UK to get the required financial advice from a UK firm.”
In practice, however, the FMA has little scope to enforce NZ regulatory compliance from UK-based advisers .