When it comes to pension transfers, there’s a lot of talk about timing. You’ll often hear people speak about the “four-year window”, generally considered the optimum time to complete a transfer from the UK to NZ.
(In case you were wondering, it refers to the first four years of becoming tax resident in New Zealand. Here’s GBPensions’ director Tony Chamberlain explaining more.)
But other timeframes can apply too. For example, did you know there’s no official retirement age in Aotearoa? The New Zealand Government website notes: “The common age to retire is 65, when NZ Super and some other pension payments start.”
This seemingly innocuous statement highlights an important – but sometimes unknown or overlooked – fact. UK Pension schemes have normal retirement ages – that’s the age from which the scheme provider expects the beneficiary to begin withdrawing their pension benefits. This is usually older than age 55 (the earliest age from which legislation allows benefits to be paid) and can affect both defined benefit (DB) and some older defined contribution (DC) schemes.
Why do I need to know the normal retirement age of my UK pension scheme?
In terms of overall financial planning, it makes sense to know when you can expect to receive payments from your pension scheme. However, for people for whom transferring their UK pension to New Zealand could be an option, there’s another good reason to check.
Some DB and DC pension schemes will not provide a transfer value if you are less than 12 months from their assigned normal retirement ages. In other words, if your scheme’s normal retirement age is 60 and you request a transfer value aged 59 years and one day, they will not give you one – effectively stopping any potential transfer.
Unfortunately, GBPensions has had a couple of cases recently where clients have been unable to proceed with their transfer simply because they missed this cut-off date. We can attest to the resulting frustration and disappointment they felt.
I’m not planning to transfer my UK pension. Do I still need to know its normal retirement age?
At GBPensions, we go to lengths to help our clients make sure they understand all their pension transfer options. You can choose to leave funds where they are, move to a UK SIPP (Self-Invested Personal Pension) or transfer to a New Zealand QROPS (Qualifying Recognised Overseas Pension Scheme).
To properly consider all the options, you must have all the facts. That’s why, even if you’re not thinking of a transfer today, we would encourage you to acquire a transfer value, so you can see where things stand today. (Bear in mind that financial markets fluctuate. You’ll need to obtain a revised transfer value if/when you consider a transfer further down the line.)
How do I find out my pension scheme’s normal retirement age?
If you know the details of your DB or DC pension scheme/s, you can contact their service team and ask them to provide you with this information.
Things could get complicated if you’ve worked for several companies and aren’t entirely sure where your pension funds might be.
The good news is that, with your permission, GBPensions can help with that. Before you roll your eyes and metaphorically back away, please remember that asking us to make these enquiries on your behalf puts you under no obligation whatsoever to proceed with any kind of pension transfer. Our goal remains for you to have all the details you need to make an informed decision about what to do next. And, crucially, for you not to miss out on any potential benefits purely because of poor timing.
To find out more, please drop us a line or give us a call on 0800 427 693.
