Concerns over New Zealand QROPS quelled 16-10-2010
Fears New Zealand may follow Singapore in having its QROPS status removed have been quashed after an agreement was reached between HM Revenue & Customs and the country’s government actuary, according to an industry source.
International Adviser reported last month there were growing fears New Zealand could be stripped of its QROPS status because of concerns over some of its registered schemes.
According to Stephen Ward, managing director of pension transfer experts, Premier Pension Solutions SL, the concerns related to a tax break applicable to employer contributions into a scheme known as Kiwisavers.
Ward says he and a number of other advisers flagged the issue to New Zealand’s Government Actuary and, after discussions with HMRC, the problem has been resolved and members of the scheme informed.
While HMRC would not confirm details on the case in its most recent list of QROPS, published on 8 February this year, the New Zealand Kiwisavers scheme continues to appear.
However, it should be noted HMRC states on the list that ‘publication should not be seen as confirmation by HMRC it has verified all the information supplied by the scheme in its application’.
Ward said: “There has been a lot of misinformed speculation about New Zealand as a QROPS jurisdiction.
“We were involved in alerting the New Zealand authorities of this minor Kiwisavers tax issue and are delighted with the outcome and that any possible uncertainty surrounding using New Zealand schemes has now been clarified once and for all.”
WHY HMRC will not be happy bunnies this year!
QROPS are very much in the news at the moment. Recent newspaper articles have screamed at readers “Take your money and run” (The Telegraph) and “Get your money out of Britain” (Sunday Times). Much to the annoyance of HMRC, it seems people are doing just that. Recently released figures showed there was a 154% increase in transfers to QROPS in the 2007/08 tax year compared to the year before, while
uptake of new QROPS was said to have doubled in the last three months of 2009.
HMRC, which has already penalised pension rules abusers and closed down Singapore as a QROPS jurisdiction for misrepresentation, will not be amused by the headlines or pleased by the growth of a market that diverts revenue from government coffers.
Regardless, for the right person in the right place QROPS are highly attractive.
Since April 2006 it has been possible, providing you have been non-resident for five years, to:
■ receive your pension free of tax (dependent on where you transfer it to);
■ avoid purchasing annuities;
■ avoid an Alternatively Secured Pension at 75, resulting in losing 82% of fund in taxes on death;
■ unlimited fund size;
■ pass on to your beneficiaries the balance tax-free.
But to continue to enjoy such benefits, more respect needs to be given to HMRC
– quite simply, do not abuse the rules and do not delay making a transfer. Pension legislation changes like the breeze, and all the current inflammatory press attention
could bring an ill wind sooner than you think.
