The ability to access 30% of the funds at age 55 is about to be significantly reduced
Plus ca change, plus c'est la meme chose! Or the more things change the more they stay the same! Change seems to be a constant theme in the UK pension transfer space, if it's not the HMRC, it's the IRD, and if it's not the IRD it is the Financial Markets Conduct Act!
The ability to access 30% of the funds at 55 is about to be significantly reduced. Currently when someone transfers their UK pension to a New Zealand Recognised Overseas Pension Scheme (ROPS) the amount that they can withdraw is determined by Her Majestiy's Revenue and Customs (HMRC). This means that the earliest you can withdraw transferred UK pension funds is age 55 and the amount that you can withdraw is 30%.
Many clients have accessed this option to withdraw this 30% at age 55. Those withdrawn funds are unaffected by any future changes to the scheme or HMRC rules. Some have used it to pay any tax liability that has accrued when they transferred their pension from the UK to New Zealand.
However, on 1 December 2016 new legislation will come into effect that will restrict the amount of funds that can be withdrawn from a New Zealand superannuation scheme for members from age 55 to only 10% of the fund balance.
These rules are being introduced under the Financial Markets Conduct Act (FMCA) and schemes cannot opt out of the rules. After 1 December 2016 you will not be able to join a new scheme and still have the ability to withdraw 30% at age 55. My current understanding is that existing members of the scheme that we use will be unaffected by these changes. It is also my understanding that those who wish to transfer their UK pensions that have opened their scheme prior to 1st December 2016 will be able to lock-in the old rules and be able to access 30% at age 55, even if this occurs after 1st December 2016.
If you were considering (or have friends and colleagues who are considering) transferring UK pensions to NZ it may be worthwhile getting in touch with me to discuss your situation in more detail. On average it can take 3-4 months to transfer a UK pension.