The UK Tax Authority Waives Penalty Charges on Transfers to NZ KiwiSaver Pension Plans

HMRC will renounce penalty charges on pension fund transfers from the UK to Kiwisaver pension schemes that have now lost status as long as the transfers were made between 6 April and 17 June. HMRC has stated this decision is restricted to schemes named on the spreadsheet presented to them throughout discussions between the Place of Work Savings NZ, the FMA and the Inland Revenue’s Policy Advice Division. Although, we aren't privy to the list, HMRC have stated its decision was arrived at on details specific towards the relevant KiwiSaver schemes. HMRC haven't made a comment, but the QROPS list will be up and running again by July the 8th. Find out more about the qrops rules at qrops specialists Formerly, all transfers converted to KiwiSaver schemes after 6 April could have been prone to a problem tax charge as high as 55% following the Inland Revenues sending instructions to major NZ plan operators asking to verify whether they met the QROPS status still on 17th of April. Kiwisaver schemes allow access before age 55 in the event of “serious financial hardship” in addition to aiding with home purchases, which isn't permitted underneath the Inland Revenue’s “pensions age test”, which is certainly not permitted under HMRC rules. New Zealand Consumer Protection Still Admired Introduced in 2007, KiwiSavers are equal to United kingdom auto enrolment pensions and therefore are normally a part of a piece-based savings plan made to encourage New Zealanders to save for their retirement. This is controlled by the KiwiSaver Act 2006. The Kiwisaver schemes like UK final salary schemes of the past were the envy of the world as secure pensions are built up. Full Cash Out of Pension Allowed in New Zealand UK legislations from theree years ago have allowed for NZ schemes not only to fully cash out their pensions after retirement age, but also avoid the 70/30 rule where 70% of a pension has to provide an income for life. Unfortunately, the Kiwisaver schemes have come unstuck for allowing age-related benefits early. Now it is up to the Kiwisaver schemes to either rewrite themselves or disappear from the list. Reason to be concerned Mark Hattersley, business development manager of the NZ Endeavour Fund QROPS, stated The Inland Revenue’s changes towards the rules on overseas pensions have triggered concern in New Zealand as people are only able to get one KiwiSaver and also the Government is keen to retain a comparatively simplified and price effective retirement funds industry. This means Kiwisaver schemes in NZ may be locked in and pension members may face the 55% unauthorised tax charge. If a KiwiSaver schemes has fallen from the overseas pension list, they couldn't have moved it to a different KiwiSaver which had maintained QROPS status without first moving their existing, gathered funds. Expats will likely happen to have been enrolled into a KiwiSaver for private and employer contributions before determining to transfer their United kingdom pension overseas. So, some expats may be trapped. Regardless of the Inland Revenue’s concessions, there might be problems if you have tax relieved funds inside a Kiwi pension plan and want to transfer out. Whether a KiwiSaver is closed down or if a member decides to transfer, there may still be a tax penalty. If you find tax relieved funds inside an NZ Kiwisaver pension plan, whenever a KiwiSaver is finalized or a member decides to transfer out, regardless of the Inland Revenue’s tax concession there still might be problems. Click here http://qrops.tv/hmrc-may-close-many-nz-and-australian-qrops-schemes/ to see a video and read more concerning NZ kiwisaver schemes.