Pension Transfer to NZ: Should You Move Your UK Pension to a QROPS or Leave It in Britain?

Anyone researching a pension transfer to NZ soon hits the same fork in the road. You can move a private or workplace UK pension into a New Zealand scheme that HM Revenue and Customs (HMRC) recognises as a QROPS, or you can leave the money in Britain and draw on it later. The better option comes down to how long you have lived in New Zealand, what type of UK scheme you hold, how your retirement withdrawals will be taxed, and a major UK Inheritance Tax change arriving on 6 April 2027.

Invicta Financial can advise on pension transfers, and a free 15-minute consultation is the place to start. This guide is general information to help you weigh up the rules before you make an irreversible move.

How does a pension transfer to NZ work?

To move a UK pension to New Zealand without triggering a 40% to 55% UK unauthorised payments tax charge, the receiving fund must be a Qualifying Recognised Overseas Pension Scheme (QROPS). Inland Revenue confirms that KiwiSaver schemes stopped qualifying as QROPS in 2015 because KiwiSaver allows first-home and hardship withdrawals before retirement age. New transfers must go into a dedicated New Zealand superannuation scheme that meets HMRC rules (we covered how to check a scheme is a real QROPS in an earlier post).

Not every UK pension can move. You cannot transfer the UK State Pension, and unfunded public sector schemes such as the NHS, Teachers, Civil Service, Police and Armed Forces pensions generally cannot be transferred to a QROPS either. Most defined contribution pensions (workplace pensions, personal pensions and SIPPs) and funded defined benefit schemes can be transferred, provided you have not already started drawing an annuity or scheme pension.

How is a pension transfer to NZ taxed compared with leaving it in the UK?

Many migrants assume that leaving a pension in the UK avoids New Zealand tax, or that the UK's 25% tax-free lump sum stays tax-free once they live here. Neither is true once your initial tax exemption expires.

According to Inland Revenue's foreign superannuation rules, New Zealand taxes UK pensions in three distinct ways depending on what you do:

• Within your 4-year exemption period. Most new migrants and returning Kiwis who have been non-resident for at least 10 years get a 4-year tax exemption on foreign superannuation lump sums. Your exemption starts on the earlier of the first day you were in New Zealand for more than 183 days in a 12-month period (backdated to day one) or the day you set up a permanent place of abode here. A lump-sum transfer to an NZ QROPS completed inside that 4-year window pays 0% New Zealand transfer tax.
• Transferring to an NZ QROPS after 4 years. Once your 4-year exemption ends, only a percentage of the transferred lump sum is treated as taxable income under IRD's default schedule method (or actual gains since your exemption ended under the formula method, which is available for defined contribution schemes worth at least NZ$50,000). Since 1 April 2026, you can also use the 28% "scheme pays" option so your NZ QROPS pays the tax directly out of the transferred funds. Once the money is inside an NZ QROPS, future investment returns are taxed inside the fund (often as a PIE capped at 28%), and your eventual retirement withdrawals from the QROPS are paid out tax-free in New Zealand.
• Leaving the pension in the UK and drawing it in retirement. Under the UK and New Zealand Double Tax Agreement, New Zealand has the taxing rights on pension income paid to New Zealand tax residents. If you leave your pot in the UK and draw regular pension or annuity payments, 100% of every payment is taxed at your marginal New Zealand income tax rate (up to 39%). Even if you take the UK's "25% tax-free lump sum" after your 4-year exemption has ended, IRD treats that lump sum as a foreign superannuation withdrawal and taxes it under the schedule or formula method.

How the IRD schedule method builds up over time

Here is where people get caught out. Under IRD's IR1024 schedule method table, the taxable slice of a lump-sum transfer climbs for every income year (1 April to 31 March) after your 4-year exemption ends:

• Within the 4-year exemption. 0% of the transfer is taxable in NZ.
• Schedule Year 1 (first year after exemption ends). 4.76% is taxable.
• Schedule Year 5. 23.07% is taxable.
• Schedule Year 10. 44.39% is taxable.
• Schedule Year 15. 64.08% is taxable.
• Schedule Year 20. 82.28% is taxable.
• Schedule Year 26 and beyond. 100% is taxable.

Let's put illustrative numbers on that. Suppose you have a UK defined contribution pension worth £150,000, which converts to an illustrative NZ$320,000, and you have no post-arrival contributions to deduct. These figures are illustrative only:

• Transfer inside your 4-year exemption. Assessable withdrawal amount is $0. New Zealand tax on the transfer is $0.
• Transfer in Schedule Year 6 (27.47% inclusion rate). Assessable withdrawal amount is $87,904 (27.47% of $320,000). Using the flat 28% scheme pays option within 10 working days of the transfer, the scheme deducts $24,613 in tax, leaving $295,387 invested in your NZ QROPS. If you instead paid personally at the 39% top marginal tax rate, the tax bill would be $34,283 out of your own pocket.
• Transfer in Schedule Year 15 (64.08% inclusion rate). Assessable withdrawal amount is $205,056. At the 28% scheme pays rate, the tax deducted is $57,416. At a 39% personal marginal rate, it would be $79,972.

Because your residency start date and schedule year drive the entire calculation, we always recommend confirming your exact dates with a specialist tax adviser before you sign transfer paperwork.

Want to see where your UK pension sits on the timeline and whether a move is worth exploring? Book a free 15-minute consultation with one of our advisers to talk through your options.

What changes on 6 April 2027 for UK Inheritance Tax on pensions?

One of the biggest shifts for people with UK pensions was legislated in the UK's Finance Act 2026, which received Royal Assent on 18 March 2026. Under HMRC's Technical Note on Inheritance Tax on pensions (updated 29 May 2026), from 6 April 2027 most unused pension funds and pension death benefits will be brought into a person's estate for 40% UK Inheritance Tax.

Until now, unused defined contribution pension pots in the UK usually sat outside your estate for UK Inheritance Tax. From 6 April 2027, that changes, and HMRC's technical note sets out a critical distinction for people living overseas:

• Leaving your pension in a UK-established scheme. Section 3.5.1 of HMRC's technical note confirms that even for "non-long-term UK residents" (such as migrants and returning Kiwis who have lived outside the UK for more than 10 of the last 20 tax years), UK Inheritance Tax arises on unused pension property held in a registered pension scheme established in the UK, subject to standard thresholds and spouse exemptions.
• Holding your pension in an NZ-established QROPS. HMRC's technical note states that non-long-term UK residents will not be charged UK Inheritance Tax on pension schemes that are established outside the UK. (If you are still classed as a long-term UK resident because you left the UK more recently, overseas pension schemes remain in scope while you hold that status.)

New Zealand itself does not currently levy an inheritance tax or estate duty. For long-term New Zealand residents with sizeable defined contribution pots, the April 2027 rule is another reason to review whether keeping funds in a UK-established scheme still suits your family's estate plan, alongside specialist cross-border tax advice.

When can you access money in an NZ QROPS vs KiwiSaver?

While KiwiSaver locks retirement savings until age 65, an NZ QROPS follows the UK's Normal Minimum Pension Age. GOV.UK confirms that the minimum pension age is currently 55, and rises to 57 on 6 April 2028.

There is an age-55 detail worth checking before you move. Some UK pension schemes give members who were in the scheme before 4 November 2021 an unqualified right to take benefits at age 55 even after April 2028. Transferring that pension individually into a QROPS usually forfeits that protected pension age, meaning you would have to wait until 57 if you turn 55 on or after 6 April 2028. If retiring between 55 and 57 is part of your plan, check whether your UK scheme holds a protected pension age before you transfer.

When does a pension transfer to NZ not make sense?

Moving your pension to New Zealand is not a one-way ticket to better returns. In practice, leaving the pension in the UK is often the stronger choice in three situations:

1. You hold a defined benefit (final salary) pension or guaranteed annuity rate. Defined benefit schemes promise a guaranteed, inflation-linked income for life, often with a 50% to 66% surviving spouse pension built in. Giving that up converts a guaranteed income into an investment pot where you carry the market risk and the risk of outliving your capital. If your UK scheme has safeguarded benefits worth more than £30,000, UK law requires you to get regulated advice from a UK Financial Conduct Authority (FCA) authorised adviser before any transfer can proceed.

2. You might move to Australia or another country within five full UK tax years. Under HMRC's Overseas Transfer Charge rules, a transfer to an NZ QROPS is free of the 25% UK Overseas Transfer Charge as long as you are resident in New Zealand and your transfer is within your £1,073,100 Overseas Transfer Allowance. However, if you stop being a New Zealand tax resident within five full UK tax years after the tax year of the transfer (a window that can stretch close to six calendar years), the 25% UK tax charge can be clawed back.

3. Your UK scheme has very low fees and you have already been in NZ for many years. UK workplace pensions often have low annual management charges and tax-free investment growth inside the wrapper. If you have been in New Zealand for 15 or 20 years, paying transfer tax on a large portion of your pot plus ongoing NZ scheme management fees and annual PIE tax needs to be weighed carefully against the tax you would pay on UK drawdowns.

Exchange rates also play a huge part. A £150,000 pension converts to NZ$300,000 at an exchange rate of 0.50, or NZ$333,333 at 0.45. Some New Zealand QROPS let you receive and hold funds in British pounds so you are not forced to convert your entire retirement balance into New Zealand dollars on a single day.

How we can help

Invicta Financial's advisers can advise on pension transfers, alongside wealth planning, KiwiSaver, mortgage advice and personal insurance. We can review what you hold in the UK, help you weigh up whether a transfer suits your situation and timeline, and compare recognised New Zealand QROPS options, including currency flexibility and how the scheme handles the 1 April 2026 scheme pays rules. Every situation is different and a transfer will not suit everyone. Tax and UK pension regulations can be complex, so we will also tell you when you need specialist tax or UK FCA-regulated advice.

Make the call with the full picture

Once a UK pension is transferred to New Zealand, you cannot move it back to the same UK scheme. Taking the time to check your residency dates, your UK scheme guarantees and the 2026 and 2027 tax rules puts you in control of the decision.

Want to find out how a pension transfer to NZ would work for your UK pension?

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Sources

• Inland Revenue, Foreign superannuation (periodic payments, 4-year exemption, schedule and formula methods)
• Inland Revenue, Calculate my foreign super with the schedule method and IR1024 Tax rules for foreign superannuation lump sums (April 2026)
• Inland Revenue, Foreign super and the formula method
• Inland Revenue, Foreign superannuation transfers and the scheme pays option (updated 16 March 2026)
• GOV.UK / HMRC, Technical note: Inheritance Tax on pensions (Finance Act 2026, updated 29 May 2026)
• HMRC Pensions Tax Manual, PTM102200: Overseas transfer charge and overseas transfer allowance
• GOV.UK, Increasing normal minimum pension age to 57 from 6 April 2028
• GOV.UK, Pension benefits with a guarantee and the £30,000 FCA advice requirement

General Information Disclaimer

The information in this article is general in nature and is not intended to be personalised financial advice. It does not take into account your individual goals, financial situation, needs, or circumstances.

Any examples, figures, rates, or scenarios are for illustrative purposes only and may change over time.

Before making any financial decision, you should consider whether the information is appropriate for your circumstances and, where appropriate, seek personalised advice from a licensed financial adviser.

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