The news comes after HMRC last month issued a “pension age test” letter to the managers of all overseas pension schemes following the reforms to UK pensions on 6 April, which saw full flexibility introduced to many of the schemes.
In the letter, HMRC asked scheme managers to confirm that from 6 April 2015, their QROPS was recognised under the UK tax law by prohibiting the payment of benefits before age 55 unless the member is retiring due to ill-health.
Alongside many Australian overseas pension schemes, KiwiSaver schemes, which were introduced by the New Zealand government largely to encourage pension saving among local residents but which also qualified as an overseas pension, allow the payment of benefits before the age of 55 in cases of “serious financial hardship”, now making them ineligible for QROPS status.
While this will affect those who transferred into an ineligible QROPS before 6 April, those who have transferred since could be subject to an unauthorised payment charge of 55%.
According to Mark Hattersley, business development manager at the NZ Endeavour Fund, the KiwiSaver schemes are likely to have dropped off the list simply because their managers have recognised that they no longer meet the requirements to be a QROPS.
“Those in charge of these schemes have realised that to qualify as a QROPS they will need to change their rules to continue accepting transfers,” he said. “KiwiSaver was a domestic product anyway so many will not feel a need to change their rules to cater to the small expat minority. If they do, then they will need to spend a bit of time changing the policy rules.”
