The Revenue said this decision is limited to schemes named on a spreadsheet provided to them during negotiations with Workplace Savings NZ, Inland Revenue’s Policy Advice Division and the Financial Markets Authority.
Although International Adviser was unable to see the list, the Revenue said its decision was reached on facts specific to the relevant KiwiSaver schemes.
HMRC were not available for comment.
Previously, all transfers made into KiwiSaver schemes after 6 April would have been liable to a penalty tax charge of up to 55% after HMRC sent a letter to all scheme operators asking them to confirm they met QROPS status on 17 April.
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KiwiSaver schemes lost QROPS status because they allow pension benefits to be paid before age 55 in cases of “serious financial hardship” as well as assisting with home purchase, which is not allowed under HMRC’s so-called “pensions age test”.
Auto-enrolment
Introduced in 2007, KiwiSavers are equivalent to UK auto enrolment and are normally part of a work-based savings scheme designed to encourage New Zealanders to save for their retirement, governed by the KiwiSaver Act 2006.
They formed part of the Government’s initiatives to increase New Zealand’s level of savings by promoting long-term retirement savings amongst its permanent residents and provide a vehicle for savings by way of direct deductions from salary or wages, or via personal savings.
UK legislation released in 2012 confirmed that KiwiSaver schemes qualify for fully-flexible “cash out” at New Zealand retirement age, and were not caught by the QROPS “70% rule” which applied to the country’s Superannuation Schemes and requires 70% of the funds transferred to provide an income for life.
Cause for concern
Mark Hattersley, business development manager at the NZ Endeavour Fund, said HMRC’s changes to the rules on overseas pensions have caused concern in New Zealand as individuals can only have one KiwiSaver and the Government is keen to retain a relatively simplified and cost effective retirement savings industry.
Expats will almost certainly have already been enrolled into a KiwiSaver for personal and employer contributions before deciding to transfer their UK pension, meaning that if not all KiwiSaver schemes had fallen off the overseas pension list, they could not have transferred to another KiwiSaver that had retained QROPS status without first transferring their existing, accumulated fund.
Hattersley said that despite HMRC’s concession there may be problems if there are tax relieved funds within the fund value when a KiwiSaver is wound up or where a member decides to transfer.
