For New Zealand residents who hold pension savings in the UK, transferring those funds to a New Zealand-based superannuation scheme is often considered as part of broader retirement planning. Recent changes to UK pension rules mean it is important to understand how UK overseas transfer limits operate and how they may interact with New Zealand tax rules.
Although the UK abolished the Lifetime Allowance in April 2024, it introduced replacement measures that remain relevant for overseas transfers. Two concepts are particularly important: the Overseas Transfer Allowance (OTA) and the Overseas Transfer Charge (OTC).
The OTA sets a lifetime cap on the value of UK pension benefits that can generally be transferred to a recognised overseas pension scheme without an additional UK tax charge. The allowance is broadly aligned with the former Lifetime Allowance level. Transfers are tested against the OTA at the time they are made, and the allowance applies across all overseas transfers during an individual’s lifetime, not on a per-scheme or per-transfer basis.
Where the value transferred exceeds the available OTA, the excess may be subject to the OTC. The OTC is a flat-rate 25% UK tax charge applied to the portion of the transfer above the allowance, or in some cases where the conditions for an exemption are not met. The charge is assessed and reported under UK pension rules and can materially reduce the amount ultimately transferred.
Importantly, the OTA and OTC do not prohibit overseas pension transfers. Instead, they operate as cost-control mechanisms within the UK tax system. For individuals with larger UK pension balances, understanding how much of the OTA remains available — and whether transfers might exceed it — can be an important consideration when assessing transfer timing, sequencing, or whether to transfer all or part of a pension.
For New Zealand residents, UK tax rules are only one part of the overall picture. New Zealand’s foreign superannuation tax regime may also apply, depending on an individual’s tax residency status and the timing of the transfer. In some cases, different tax outcomes can arise depending on whether a transfer occurs within certain residency periods or after a longer period of residence.
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This information is general in nature and is not intended to be financial or tax advice. Individual circumstances differ, and overseas pension transfers involve both UK and New Zealand regulatory and tax considerations. There are risks involved in making changes to your pension and retirement savings and we recommend obtaining independent advice on any area of uncertainty.Â
Next steps
If you’re exploring a potential transfer of a UK or overseas pension to New Zealand, call or email us for a free, no-commitment assessment.  i-Select will provide you with information about how transfers are typically structured and administered within our schemes.
We can outline the process, timing considerations, and the information usually required, and help you understand what your options are and to introduce you to an independent financial or tax adviser if you wish to engage one.
You can get in touch via our contact page, email or phone.
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