The company said it expects the product, the Brooklands (NZ) Superannuation Scheme No. 1, to become one of the first superannuation schemes to be registered as a foreign investment zero-rate portfolio investment entity (PIE) – a new form of PIE introduced in this year’s Budget. It means that non-New Zealand resident investors will not pay PIE tax on the foreign sourced income from the scheme – tax had previously been payable at 28%.
Despite the introduction of a more favourable tax environment for foreign investors, the New Zealand government also recently published draft legislation which threatens the very existence of QROPS in the country. In August, it published the Financial Markets Conduct Bill, in which it states that anyone joining a New Zealand-based pension scheme must be either a resident of the country or employed by its government – thus excluding UK expats who wish to use New Zealand solely as the domicile of their pension.
While it will be a long time before the Bill passes into law, giving plenty of opportunity for amendments to be made, there is real concern that the negative attention some QROPS schemes have received in the country may ultimately be enough for the government to decide to keep the Bill as it is and expel the QROPS industry.
However, in a statement accompanying the launch of the product, Brooklands said New Zealand is a “legal and desirable QROPS jurisdiction”. The company also said that, due to its Double Taxation Agreement with the UK, it is not limited by restrictions requiring a percentage of the initial transfer to be held to provide an income for life.
Brooklands added: “This means that New Zealand has the ability for much more flexible provision of retirement benefits in comparison with the likes of Isle of Man and Guernsey which both have this restriction.
“New Zealand is a very well regulated jurisdiction with disclosure and investor equity as key attributes. Given our credentials in the UK, where these are also key values, this additional jurisdiction fits perfectly into our range of products.”
