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Our offices will be closed Monday 23rd December at 12:00 pm
and will re-open Monday 6th January 2025 at 8:30 am
Is your UK pension trapped in KiwiSaver? Here’s how to release it in 3 easy steps
November 4, 2025
Here's something you might not know: as of April 2025, you can finally release your trapped UK pension from KiwiSaver.
The age from which private pensions are accessed was increased from age 50 to 55 in 2010, and will be increased again to 57 from 6 April 2028.
Anyone born after 6 April 1973 may therefore be affected by this change, possibly delaying their ability to access their UK or ex-UK private pension funds. Advisers will need to take this into account when advising on a transfer of a UK pension to a New Zealand QROPS.
The retirement age for private pensions (the Normal Minimum Pension Age or NMPA) will be preserved for those who are in a pension scheme in February 2021 that gives them a right to take pension benefits before age 57. Whilst this may not be critical for most people, it is an additional consideration when advising on the appropriateness of a transfer.
Our view is that under the terms of the i-Select Superannuation Scheme, i-Select PIE Superannuation Scheme, and existing SMS schemes, all members as at February 2021 have a right to take pension benefits at an age below 57. As such, they will have their NMPA preserved at 55 beyond the 2028 date. Again, it is important to note that this can only affect those born on or after 6 April 1973.
We do not believe we have to change any of our existing trust deeds for this change as the actual or effective NMPA is currently:
i-Select Superannuation scheme: Legacy Members (i.e. those who joined before 01/12/16): their 55th birthday Personal Section Members (i.e. those who joined on or after 01/12/16): Linked to the ability to take benefits under the UK QROPS rules, which is currently 55.
i-Select PIE Superannuation Scheme: Linked to the ability to take benefits under the UK QROPS rules, which is currently 55.
Single Member Schemes: Schemes currently in existence show the age at which benefits can be taken as the member’s 55th birthday.
The NMPA will automatically change for those who joined the scheme after February 2021, and any new SMS schemes created from today will reflect the revised NMPA.
If you’ve transferred your UK pension to New Zealand after that point, you may still be able to take out benefits from 55 after 2028 as there are several other groups exempt from the minimum.
Members whose UK scheme had a Protected Pension Age of 55 written into the rules of the pension plan.
Those affected by ill-health who have successfully applied for an exemption
Uniformed services (police, fire service, military) whose pensions will also be exempt from the new rules in 2028.
If you wish to find out further information on how these changes might affect you, don’t hesitate to get in touch with one of our friendly team.
For nearly a decade, these funds have been completely stuck. When the UK suddenly changed their pension transfer rules in 2015, thousands of UK pensions already in KiwiSaver accounts got locked in. There was no way to move them and no early access options - just wait until 65.
But since April, there's finally a way out. You can now move these "locked-in" funds to a QROPS (Qualifying Recognised Overseas Pension Scheme), which lets you access your money from age 55.
Why does it matter?
In a nutshell, you’ll have the option to access your funds up to a decade early.
Parliament recognised that people got caught in bureaucratic crossfire through no fault of their own - the UK gave just 11 days' notice about the original rule change, and many transfers were already in progress. So in April 2025, the door was unlocked.
How do I make the change?
Step 1: Get in touch with i-Select. We’ll gather your details and issue a written confirmation that we are willing to accept your funds.
Step 2: We will help you contact your KiwiSaver provider and instruct them to move your UK pension fund to i-Select’s QROPS.
Step 3: Sit back. i-Select will work directly with your KiwiSaver provider to ensure that the money is successfully transferred.
That’s it. From that point on, we manage compliance and report back to the UK, and you’re able to access your pension from 55 rather than 65.
If you’re one of the few people with a UK pension still stuck in a KiwiSaver, contact us here.
Thousands of Kiwis return from Europe without a plan for the pension savings they’ve left abroad. According to the Ministry of Social Development, nearly 100,000 New Zealanders receiving Superannuation also draw overseas pensions from nearly 70 countries, totalling over NZ$501 million in 2022 - and those are just the ones already claimed. The UK is most common, followed by Australia and the Netherlands.
Some Kiwis presume that their old pension is untraceable and too hard to access. Larger financial services firms may not bother trying to look, not having the specialist knowledge required.
That’s where i-Select’s niche expertise comes in.
i-Select is not just for UK Pensions
Against this backdrop, i-Select has been quietly sitting in this space for years. It has tracked down and moved thousands of pension funds to New Zealand from the UK, Ireland, Belgium and other countries.
“Pension transfers is all we do, and we’re very good at it!” says Robyn Galletly, administration manager at i-Select.
Just recently, i-Select moved some substantial funds over from Belgium and Ireland. Galletly notes that the Belgian transfer involved navigating complex legal, regulatory and administrative requirements - not to mention paperwork entirely in a foreign language. Each process took around four months.
The clients were surprised that i-Select was able to recover a pension from Belgium, and complete an Irish pension transfer.
“We’re happy to take on any pension portability challenge that comes our way”, Galletly said. “We’re flexible and adaptable with what we can do.”
Where to begin?
If you happen to remember a few years of overseas work, get in touch. With an employer name and a letter of authority, i-Select can begin the process of tracking down a lost or forgotten pension.
Every stage is handled for you, from gathering initial information through to the funds arriving in New Zealand.
Galletly says the key misconception is that only UK funds can be easily transferred to New Zealand, but this is far from the truth.
These successes show that i-Select’s reach is not limited to UK pension transfers - we’re able to handle cross-border wealth challenges in a wide range of countries.
“There is more opportunity out there,” she says. “It can start with a client saying “I worked in this country for a few years, do you think I might have a pension?”. “You may end up having some money that you didn’t know you had.”
How the process works — from start to finish
If you suspect you might have an overseas pension, here’s how i-Select can assist:
Initial client conversation & discovery You tell us where and when you worked overseas (for example: “Dublin 2008–2010,” or “Brussels 2015–2017”). Even if you don’t remember the name of your employer, any details help us begin. We then seek your formal letter of authority so we can act on your behalf.
Tracing & documentation gathering We contact pension administrators, government agencies, or former employers in the relevant countries. We gather historic records, membership numbers, scheme details, account statements, or transfer values.
Regulatory and tax compliance checks We review local pension law, cross-border tax treaties, and any restrictions on pension transfers from that country to New Zealand. (For example, from 1 April 2026, New Zealand law will allow certain overseas pension transfers to elect for the receiving scheme to pay the tax on the client’s behalf.)
Conversion, transfer, and arrival of funds We coordinate the actual transfer, ensuring all compliance, foreign exchange, timing and technical requirements are handled. We provide updates so you know when the funds land in New Zealand.
Ongoing support & advice Once funds are in New Zealand, we can assist with reinvestment, structuring, and integration with your wider retirement portfolio.
Importantly, all these steps are managed end-to-end by us — you don’t need to coordinate with foreign administrators or agencies yourself. Click on ‘Contact Us’ above to get in contact and start your process.
Why is this change happening?
The UK government previously made several pension reforms. The pension freedoms (2015) gave over-55s more flexibility around withdrawals, and abolition of the Lifetime Allowance (2023) allowed for more contributions without tax penalties.
The unintended consequence is that pensions are increasingly being used as a vehicle for tax-free wealth transfer, rather than solely for retirement savings. Rather than rolling back the original reforms, the UK government has decided to close the loophole.
What are the changes?
Previously, many UK pensions were not counted in your estate for IHT, particularly when benefits were paid at the discretion of pension trustees.
From April 2027, most unused pension funds will be included in the value of a person’s estate when calculating inheritance tax, which kicks in at 40% on estates worth more than £325,000 (around NZ$800,000 at today’s exchange rate).
The UK has also changed who gets caught by inheritance tax. Instead of being based on “domicile” (where you consider your permanent home), the rules now look at residence. If you've been a UK resident for 10 or more of the past 20 years, you're potentially liable.
One of the biggest pitfalls is also the effective double-tax. If you die aged 75 or older, your beneficiaries already pay income tax when they withdraw from your pension. Now they may also face the 40% inheritance tax first, creating an effective tax rate of up to 67%.
What do Kiwis need to do?
If you have a UK pension, it's time to assess whether these changes affect you. Consider whether transferring your pension to a New Zealand QROPS (Qualifying Recognised Overseas Pension Scheme) makes financial sense.
To understand your specific situation and whether a transfer would benefit you, seek independent advice. i-Select can introduce you to appropriate specialists and discuss whether a pension transfer may suit your situation. Please contact us for further information.
Disclaimer: This article is general information only. It is not financial, tax or legal advice, and should not be relied upon as a basis for making financial decisions. UK and NZ pension and tax rules are complex and subject to change. Whether you are affected will depend on your personal circumstances, including your UK residence history and the type of pension you hold. You should obtain professional advice from a qualified UK and/or New Zealand adviser before taking any action. I-Select Ltd is the issuer and manager of the i-Select PIE Superannuation Scheme and the i-Select Superannuation Scheme. Product Disclosure Statements for these schemes are available at i-Select.co.nz.
Background
If part of a pension within a QROPS that originally derived from a UK pension is transferred to an ex-spouse as part of a separation, it will be classed as an unauthorised payment unless it is done in accordance with UK pension sharing rules. An unauthorised payment will result in a charge being levied on the Member of up to 55% of the value of the transfer to the ex-spouse. Such charges are not prevented by the UK/New Zealand Double Taxation Agreement as it is not considered to be a tax and is therefore outside the ambit of such an agreement.
UK Regulations applicable to QROPS
The pension sharing regulations in the UK were extended in 2006 to cover overseas pension schemes by The Pension Schemes (Application of UK Provisions of Relevant Non-UK Schemes) Regulations – SI 2006/07).
This regulation applies to the division of a fund within a QROPS on the dissolution of a marriage, which includes a civil partnership, but not a de-facto partnership.
The requirements for a pension split to be an authorised payment under the UK regulations are as follows:
The pension splitting scheme must be a ROPS;
It must be recognised for tax purposes in the country in which it is situated;
The relationship must be a marriage or civil partnership;
The ex-spouse receiving a share of the pension fund must have been a party to the marriage;
The pension sharing order must be in the form of an order of a court in connection with proceedings relating to the dissolution of the marriage or civil union.
The share of the pension fund passing to the ex-spouse must be to a QROPS. It does not need to be a different QROPS scheme.
Under New Zealand law, pension sharing can be achieved with just a Relationship Property Agreement validly executed under the Property (Relationships) Act 1976. This does not require the marriage to be dissolved, and it does not require the courts to be involved. However, the UK regulations require the pension sharing to have been both by order of a court and in relation to proceedings that will lead to the dissolution of the marriage or civil union.
Suggested clause
An example agreement to be put to the Courts to be used as part of the application to the Courts for ratification of a Relationship Property Agreement is attached. This needs to be considered by a lawyer.
Checklist
A checklist of the requirements is as follows:
Introduction
This report is intended to supplement the information provided directly by an individual who is intending to transfer their UK defined benefit or guaranteed annuity rate pension funds to a New Zealand QROPS.
It is divided into:
The New Zealand tax treatment of foreign pension schemes owned by New Zealand tax resident individuals;
The New Zealand tax treatment of benefits received from foreign pension schemes by New Zealand tax resident individuals;
The New Zealand tax treatment of transfers of foreign pension funds to New Zealand superannuation schemes by New Zealand tax resident individuals; and
General information about New Zealand’s tax system as it relates to New Zealand superannuation schemes for New Zealand tax resident individuals.
Pensions and pension schemes are colloquially known in New Zealand as superannuation and superannuation schemes. The two are interchangeable, and here I use both.
For New Zealand tax purposes, UK pension schemes are in the same category as all overseas pension schemes, but I use the phrase overseas pension scheme and UK pension scheme interchangeably here.
1. NZ tax treatment of foreign pension schemes
The income or gains of foreign pension schemes have ceased to be annually taxable on individuals in NZ from 1 April 2014. Before that date, subject to a number of complex exemptions, individuals were technically taxable on the growth in value of their overseas pension fund each year.
From 1 April 2014, individuals became taxable on a notional amount of income calculated when they make lump sum withdrawals. Withdrawals are defined as the transfer of an overseas pension fund to a New Zealand scheme as well as the taking of benefits directly from the overseas scheme.
Under the new rules, transfers between foreign superannuation schemes is not taxable for a New Zealand tax resident provided the transfer is not to an Australian pension scheme. Transfers to Australian schemes are outside of this rollover provision because transfers from Australian superannuation schemes to New Zealand schemes are exempt from New Zealand taxation.
When the rules were introduced in 2014, they were made retrospective, and the old rules were grandfathered. This means that any individuals that transferred their UK pensions after 31 March 2014 who had not applied the ‘old’ rules, prior to that were required to adopt the new rules as if they had applied at all times. Any individuals who had correctly and consistently applied the old rules could opt to continue using the old rules if doing so was to their advantage.
2. NZ tax treatment of benefits from foreign pension schemes
2.1 The rules if no exemptions apply
Pension income is taxable in full on a receipts-basis, which means that it is taxable in the tax year in which it is received. The word ‘pension’ is not defined in tax legislation, so it takes its ordinary meaning of being income received on a regular basis from a retirement savings scheme. Any annuity, regular drawdown, or defined benefit pension that is not a lump sum will therefore fall into this category.
A withdrawal from a foreign superannuation scheme that is not a pension (i.e. it is a lump sum) is taxed in a more complex way. The rules that apply were introduced with effect from 1 April 2014 and involve determining:
When it applies: It applies when there is a:
Lump sum withdrawal
Transfer to New Zealand
Transfer to Australia
Transfer of an interest to another person
When it does not apply: It does not apply to:
Transfers of interests under formal relationship property agreements (a formal legal process between couples that does not necessarily involve divorce)
Withdrawals within a specified period of exemption
Withdrawal amounts in excess of the amounts calculated using one of the two permitted methods
The Exemption period: This is usually the month of arrival and the following 48 months.
The Assessable Period: This is generally the period between the end of the Exemption Period and the derivation of the withdrawal.
The methods permitted to calculate the assessable amount: The two methods are:
The Schedule Method
The Formula Method
2.2 Exemption period
The exemption period starts when a person first becomes tax resident after they first join a foreign pension scheme and applies for the month of arrival and the following 48-month period. This exemption period can end before the expiry of 48 months if a person becomes non-resident. A person may only have one exemption period.
2.3 Assessable period
An assessable period follows an exemption period, and each tax year that passes tends to increase the amount of notional assessable income that a person must declare and pay tax on if they take a lump sum withdrawal.
Any period of non-residence is not part of an assessable period. For example, if a person joined a UK pension scheme, came to NZ for three years, became non-resident for another five years before returning again, they would effectively have an 8-year exempt/non-assessable period.
2.4 Schedule Method of calculating income
The Schedule Method is the default method of calculation and may be used for defined contribution schemes, but is compulsory for defined benefit schemes. In its simplest form, it requires an individual to count the number of tax years that have started between the end of an exemption period and the foreign superannuation withdrawal (with a minimum of 1). The number derived determines the percentage of the withdrawal that is taxable and is called the Schedule Year Fraction. The more years collected, the greater the percentage of the fund that is taxable.
The Schedule percentages are:
2.5 Formula Method of calculating income
The Formula Method of calculation may be used for a withdrawal from a defined contribution scheme but cannot be used for a withdrawal from a defined benefit scheme.
A brief description is therefore included here only for completeness. The method requires a calculation of the increase in value of a pension fund from the end of any exemption period to the date of withdrawal. The raw gain is then put through a formula which increases the gain by a factor dependent upon the length of time it has accrued without NZ taxation being charged. If a pension scheme has decreased in value over this period (e.g. because of exchange rate movements) the income is zero.
The logic for this method not being permitted for interests in defined benefit schemes is that the market value at the date of the commencement of the assessable period is unlikely to be readily available. In some instances, however, the market value at the relevant date has been calculated by an actuary and has been used as a basis to consider transferring a defined benefit interest to a SIPP prior to a transfer to a New Zealand scheme. This would permit the use of the Formula Method, but may be subject to Inland Revenue Department (IRD) scrutiny.
2.6 Lump sums from defined benefit schemes
The IRD’s view is that lump sums taken from defined benefit schemes that involve a commutation of an entitlement to income are fully taxable rather than taxable under the rules associated with lump sum withdrawals. The rationale for this is that the lump sum is an advance of income resulting from an option exercised by an individual, not a withdrawal of a capital amount. The form of the payment (i.e. a lump sum) does not change the nature of the payment for New Zealand tax purposes (i.e. it is, and remains, taxable income). An important requirement for this legal principle to apply is that, following the lump sum payment, a pension must commence or continue. There is New Zealand and overseas (including Australian and UK) case law to support this legal position.
Where scheme rules provide for the payment of a non-optional lump sum on the commencement of a pension, the lump sum withdrawal rules would apply to the member’s entitlement, and it would not be treated as income.
2.7 Transitional Residence
There is a separate overriding exemption from NZ tax given to new tax residents and to returning residents if they have been tax-resident outside of New Zealand for at least 10 years. This is called Transitional Residence, and it generally results in all foreign passive income being exempt from New Zealand tax for the month of arrival and the following 48 months. Passive income includes interest, dividends, pension payments or withdrawals, rents, and royalties. Any lump sum or regular income benefits from UK pension schemes received in this period are therefore exempt from tax, as are the transfer of any UK pension funds to NZ schemes.
2.8 Summary
In summary:
The receipt of a pension from a UK pension scheme is fully taxable.
Lump sums payments that derive from an option to commute part of a defined benefit pension will retain their income nature and will be fully taxable as income in New Zealand.
Outside of any period of exemption related solely to foreign pension schemes, the receipt of a lump sum withdrawal from a UK pension scheme may be partly or fully taxable, dependent upon the length of New Zealand tax residence, with the amount determined by one of two methods.
Any pension payments or lump sum withdrawals from a foreign pension scheme during a period of Transitional Residence is exempt from NZ tax.
3. Taxation of lump sum transfers to New Zealand Superannuation schemes
Transfers are treated in the same way as lump sum withdrawals. Accordingly, exemptions, exemption periods, assessable periods and the Schedule and Formula methods apply in the same way.
The transfer of a defined benefit pension fund in payment would be treated as a capital lump sum to which the Schedule Method of income calculation would apply. This is on the basis (as outlined in 2.6) that there would be no ongoing pension payments following the pension transfer.
4. General information about New Zealand’s tax system
Tax Year
The New Zealand tax year runs from 1 April to 31 March each year.
Personal allowances
There are no personal allowances in New Zealand
Personal tax rates
Personal tax rates are progressive, and the tax bands are:
$0 to $14,000 - 10.5%
$14,001 to $48,000 - 17.5%
$48,001 to $70,000 - 30%
$70,000 + - 33%
Capital taxes
There are no capital taxes in New Zealand. This includes:
Capital gains taxes;
Gift taxes;
Inheritance taxes
However, where capital gains are considered to have the nature of income in specified ways, the income tax legislation provides for gains to be taxed as income.
Tax reliefs
Expenditure incurred in order to generate assessable income is generally deductible for tax purposes, but there are few tax incentives that relate to investments or savings. In particular, there are no tax reliefs for personal pension contributions, but the antithesis of this is that benefit payments from New Zealand superannuation schemes are not taxed on individuals.
Superannuation Schemes in New Zealand
In broad terms, for tax purposes, superannuation schemes in New Zealand can be categorised as:
Portfolio Investment Entities (commonly abbreviated to PIEs); or
Non-PIE but widely held; or
Non-PIE and not widely held.
A PIE is a unitised investment vehicle that attributes income and gains to individual investors for the purpose of applying tax rates nominated by individuals that must reflect their personal marginal rates of tax. This is designed to remove the tax disadvantage that low earning taxpayers otherwise face when investing in investment vehicles with higher tax rates. The tax rates that investors can nominate (the Prescribed Investor Rate, or PIR) are:
Tax Year
The New Zealand tax year runs from 1 April to 31 March each year.
Personal allowances
There are no personal allowances in New Zealand
Personal tax rates
Personal tax rates are progressive, and the tax bands are:
Tax reliefs
Expenditure incurred in order to generate assessable income is generally deductible for tax purposes, but there are few tax incentives that relate to investments or savings. In particular, there are no tax reliefs for personal pension contributions, but the antithesis of this is that benefit payments from New Zealand superannuation schemes are not taxed on individuals.
Superannuation Schemes in New Zealand
In broad terms, for tax purposes, superannuation schemes in New Zealand can be categorised as:
Portfolio Investment Entities (commonly abbreviated to PIEs); or
Non-PIE but widely held; or
Non-PIE and not widely held.
A PIE is a unitised investment vehicle that attributes income and gains to individual investors for the purpose of applying tax rates nominated by individuals that must reflect their personal marginal rates of tax. This is designed to remove the tax disadvantage that low earning taxpayers otherwise face when investing in investment vehicles with higher tax rates. The tax rates that investors can nominate (the Prescribed Investor Rate, or PIR) are:
Resident investors:
10.5% for those with taxable income up to $14,000 provided their non-PIE and PIE income combined is less than $48,000.
17.5% for those with taxable income between $14,000 and $48,000 provided their non-PIE and PIE income combined is less than $70,000.
28% where an investor does not qualify for rates of 10.5% or 17.5%.
Non-resident investors
0% where the PIE scheme invests mainly in foreign investments and has formally elected to be a Foreign Investment PIE, and the investor qualifies as being a Notified Foreign Investor.
28% where the investor does not qualify for the 0% PIR
Widely held superannuation schemes that are not PIEs are taxed at a flat rate of 28%. To be a widely held superannuation scheme, it must have, or must anticipate having, over 20 investors.
A non-widely held, non-PIE superannuation scheme is taxed at a flat rate of 33%.
Payments out of superannuation schemes
Payments of benefits made by New Zealand superannuation schemes are not liable to New Zealand tax in the hands of residents and non-residents alike. This is on the basis that individuals have not had New Zealand tax relief on the contributions to the schemes, and the New Zealand superannuation fund has been taxed on its income in the growth phase.
Introduction
The purpose of this brief article is to explain how taxation works within the i-Select Superannuation Scheme (Scheme).
Trust tax
The Scheme is set up as a trust and pays tax in the same way as a trust. Every trust has a trustee, who looks after the assets, collects the income, and pays the bills. They are also the trust’s single taxpayer and it is their responsibility to work out the taxable income, complete a tax return, and pay any tax liability arising.
A beneficiary is a person who will ultimately benefit from the trust’s assets and income, but before they do, they must rely on the trustee to deal with all of the trust’s affairs on their behalf. They therefore have no responsibility to collect income, work out the trust’s tax liabilities, report them, or pay them.
In the i-Select Superannuation Scheme, Public Trust is the Trustee, and i-Select Ltd (i-Select) is the Manager. It is the responsibility of i-Select, on behalf of Public Trust, to do all of the income tax calculations, complete the tax return, and organize the payment of any necessary tax.
How Trust tax affects Members
This is why members of the scheme do not have to put any of the income arising from their portfolio within the Scheme onto their tax return. Essentially it is not their taxable income, it is the trustee’s, and if they put any scheme income on their tax return it will result in a double charge to tax.
Scheme tax
We calculate the tax position of the Scheme for a year by collating all of the tax reports for each of the members’ portfolios within the scheme at the end of the tax year. The taxable income of the scheme is generally made up of income that is fully taxed, income that is not fully taxed and the Scheme’s expenses.
Income that is fully taxed includes things like New Zealand interest and dividends and Portfolio Investment Entity (PIE) income. Income that is not fully taxed is mainly foreign interest, foreign investment fund (FIF) income, and currency gains and losses. The expenses of the Scheme include the fees of i-Select (which pays many of the scheme’s expenses) and advisers.
Most of the Scheme’s tax liabilities are therefore paid at source, leaving only the untaxed income and the expenses. In any given year, this will either produce a net amount of taxable income, or a net loss. Where it produces a loss, the Scheme receives tax refunds and may have losses to carry forward. Where it produces income, it will either consume losses or will result in an overall tax liability that must be paid directly.
On the one hand, the vast majority of FIF income can be reasonably estimated at the start of the year as it depends upon the value of FIFs held on the first day of the year. On the other hand, currency gains or losses in many cases will not be capable of calculation until the end of the tax year, as it depends upon the exchange rate on the last day of the year, 31 March.
The Scheme’s tax rate is 28% (as opposed to a family trust’s rate of 33%) as it qualifies as a widely held superannuation scheme.
How Scheme tax affects Members
On an individual basis, every member’s portfolio has a share of the Scheme’s income and deductions each year, which may produce taxable income, or a tax loss, and will contribute proportionately to the Scheme’s overall tax position. Regardless of whether the Scheme has an overall tax liability or is due a refund, within the membership at any one time there will be members with liabilities and members with losses. Here’s a simple illustration of this:
1,000 members with total tax liabilities of - $1,000,000
400 members with losses reducing the tax liability by - $250,000
The Scheme’s overall tax liability would be: - $750,000
Each member will also have tax credits of some sort (e.g. Resident Withholding Tax, Imputation Credits, or foreign tax) which may mean that direct tax payments are not required. Using the above example:
The Scheme’s overall tax liability would be: - $750,000
Total tax credits on income - $800,000
Net refund to the Scheme - $50,000
In this way, a person with a tax liability may not be called on to settle their share of the liability immediately because other member’s losses and tax credits have deferred the need to make direct tax payments. At some future date when the Scheme’s tax position makes it necessary to make a direct tax payment to the IRD, then we may require a full or partial payment of a member’s share of the Scheme’s taxes. In the interim, they enjoy a tax deferral.
On the other hand, if a member takes full benefits, or if they transfer out of the Scheme, then full payment of tax liabilities is required, and this can cover a number of years of tax liabilities and can be large or small.
In order that members know their tax position each year, we prepare an annual report in which we set out their accrued tax position. This will make clear what tax liabilities have been deferred in the manner described above.
Take the next step...
Let us help you decide the best way to transfer and manage your superannuation, or help you navigate the tax issues involved in bringing your pension into New Zealand.
All writers' opinions are their own and do not constitute financial advice in any way whatsoever. i-Select strongly recommends that you perform your own independent research and/or speak with a qualified financial adviser before making any financial or tax decision.
