More than 20 pension schemes based in New Zealand which accepted transfers of UK tax-relieved savings have dropped off the official list of registered overseas pension schemes, as concern grows over the implications of a crackdown in the wake of new retirement freedoms.
A number of KiwiSaver schemes have disappeared from the latest recognised overseas pensions list published by HM Revenue and Customs. The move means transfers to the schemes would be likely to attract unauthorised tax charges of 55 per cent, with potential for further penalty fines.
The list dated 19 May 2015 shows only 34 New Zealand schemes. A previous version of the list dated 15 April 2015 showed 57 New Zealand schemes, including the Kiwisavers.
FTAdviser understands many will have themselves asked to be delisted in light of HMRC’s enforcement of a pension age test, which requires schemes to assert savers are not able to access funds before the age of 55 in line with UK law.
Kiwisavers were set up by the New Zealand government in 2007 and allow early access for reasons of ill health, or to allow first-time buyers to finance property purchase. Concern was also raised over Australian schemes, which similarly allow early access on grounds of ill health.
Last week, FTAdviser revealed that one firm had already made moves to halt transfers to Kiwisaver schemes until clarification on their status had been provided.
In a further development, FTAdviser understands there are fresh fears the changes could impact Irish schemes, which under national law typically allow savers in some circumstances to take early retirement and access funds at age 50.
Jerry Moriarty, chief executive officer at the Irish Association of Pension Funds, said the situation was the same as for the antipodean regimes, but that discussions were only just beginning as the situation had only come to light in recent days.
Anger was expressed in relation to the issues facing New Zealand schemes that HMRC had not consulted on the changes, which were introduced by way of a statutory instrument that initially went largely unnoticed.
Mr Moriarty told FTAdviser: “The situation is pretty much the same here because most schemes would allow early retirement from the age of 50. This would rule out pretty much all Irish schemes.
“It’s only come onto our radar on the last couple of days. We need to look at it and see what can be done on it and if anything can be done on it. Schemes have the options of changing their rules or they can no longer qualify as Qrops.”
Mr Moriarty added that it would be “unlikely” for schemes to change their rules because most of them are schemes which are designed for the general Irish public, not those transferring from the UK.
On Kiwisaver schemes, James McLeod, head of pensions at AES International said: “Anyone who is currently transferring... must stop immediately as otherwise they may well face a 55 per cent tax charge from HMRC.
“The indications are that HMRC is taking this much more seriously than they have in the past and so this is not an empty threat. In fact, anyone who has transferred to a Kiwisaver since 6 April could be facing a 55 per cent tax charge.
“Although these schemes had been on the list since then, HMRC had been very clear in the run up to the 6 April that the rules were changing and so Kiwisaver schemes should have been warning people about it.
“Equally UK schemes should have been aware of this issue and questioned or refused a transfer.”
Bethell Codrington, global head for international pensions at TMF Group, said: “Kiwisaver won’t be able to amend their schemes to come within the new HMRC rules as these schemes’ rules are governed by statute and they are required to allow certain withdrawals before retirement.
“Other New Zealand schemes might be ok as long as they had an early retirement date of 55 on 5 April 2015 with access before only on death or incapacity. Changing their rules after 5 April will require delisting and reapplying.”
A spokesperson for HMRC said that it is in contact with schemes to confirm whether or not they meet the new pension age test from 6 April 2015.
The spokesperson added: “Individuals who are concerned about a transfer made from 6 April 2015 onwards should contact the scheme that received the transfer.”
ruth.gillbe@ft.com