A Qualifying Recognised Overseas Pension Scheme (QROPS), is a non-UK pension scheme or the equivalent recognised as such by Her Majesty's Revenue and Customs (UK HMRC).

For a New Zealand superannuation scheme to be recognised by HMRC, the New Zealand scheme must be  registered with the New Zealand Inland Revenue Department (IRD) as a superannuation scheme in New Zealand and also approved and registered with UK HMRC.

When UK pension's funds are transferred to a New Zealand QROPS, the QROPS trustee will generally be obliged to lock them in until the member reaches retirment age. The QROPS trustee will be obliged to report payments to the member within 5 years of the member being UK resident.

An overseas person could also benefit from the UK Relevant Migrant Member rules by becoming a member of a QOPS before moving to the UK. If for example a person was resident in Australia and intending to become resident in the UK to work, they could join an NZ super scheme registered as a QOPS in the UK and then when they became UK resident and continued making contributions to the NZ scheme from UK taxable income, their contributions into the NZ scheme would be tax efficient in the UK. The UK Pension rules relating to this are the relevant Migrant Member rules. See: HMRC Guidance

If the individual was already in the UK then although they could join a non-UK scheme their contributions to it would not be as UK tax efficient as joining a UK scheme but they could join a UK onshore pension scheme, make contributions to a UK scheme from current employment income and those contributions would be tax efficient in the UK. We would generally say that the assistance of a UK financial advisor would be required to establish a relationship with a UK pension scheme. We are not UK IFA’s but we work with firms that are.

At the end of the accumulation period, the UK pension fund could be transferred by the member to a QROPS such as Super Trustee Fund established in NZ . See: HMRC Guidance.

 When Super Trustee Fund has the transferred fund they may be subject to restrictions on making pay-outs to the member directly; due to the local rules requiring that the scheme be used for saving for retirement. They would not (under NZ law) generally be prevented from transferring the fund to an Australian compliant super scheme provided it was also a UK QROPS. The transfer to an Australian QROPS would have to be reported to HMRC and again the tax and member access rules would be those governing the local scheme.

Under UK rules within the last 5 years of the member ceasing to be UK tax resident, the NZ or Australian QROPS (which has received the members funds from a UK pension scheme) would need to report to HMRC any benefits passed to the member. Generally when the member has been outside the UK for less than 5 years but is over 55 years of age, the non-UKL QROPS may make a UK tax free 25% pension commencement lump sum which must be reported to UK HMRC.

After the end of the 5 year reporting period the scheme could distribute according to local law without being concerned with the QROPS reporting obligations.

Note: There is a bill before the NZ parliament called the Financial Markets Conduct bill which, (at s 115) proposes that non-NZ resident individuals may only join a locked-in NZ super scheme. See: MED Guidance

We along with others involved with NZ QOPS and QROPS have made representations to the NZ committee dealing with this especially.

Transferring UK pension funds to a QROPS is a specialised area. A specialist independent financial advisor authorised to advise by the UK Financial Services Authority or a Financial Advisor authorised by the Securities Commission should be consulted before transferring a UK pension fund to a QROPS.

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