Hattersley said savers in the process of transferring their tax relieved fund to KiwiSaver where the transfer value had not been received by 6th April have so far been left with the “dilemma” of either trying to stop the transfer payment and possibly paying tax on their UK pension lump sum upon retirement or changing to a Superannuation Scheme.
He added that the complexity and last minute amendment to their plans risked harming the KiwiSaver industry by undermining the Government’s strategy around a “simple savings culture and solution”.
“New Zealand’s consumer protection regulations are second to none on the international stage,” he said. “Individuals sign up under a prospectus and investment statement. Investor protection does not allow retrospective and detrimental terms to be imposed on members of retirement savings schemes without member approval in writing.
“Individuals have signed up to KiwiSaver and so these terms from 6 April could cause issues with the country’s own legislation.”
He added that the Workplace Savings NZ, FMA and NZ IRD have a longstanding record of working closely with HMRC to resolve issues as they arise, which has previously led to concessions over KiwiSaver funding and elements of government assistance on contributions.
Remaining issues
International law firm MinterEllisonRuddWatts, said HMRC’s latest decision leaves outstanding issues for:
- those who have transferred their UK pension funds to a KiwiSaver scheme but will face a potential UK tax liability if they take their money out of their current scheme prior to the UK retirement date to change KiwiSaver provider; and
- those who have not yet transferred their UK pension funds but want to do so but are now left with a limited number of options of New Zealand superannuation schemes which are still QROPS.
