Battle Over New Zealand QROPS Rules

A QROPS provider in New Zealand is urging the government to halt proposals that they may end the countries viability as a QROPS jurisdiction

London, UK (Pryce Warner International) September 20th, 2011 – In the past month the New Zealand ministry for economic development issued a draft financial markets bill, within which are several new regulations that would restrict the availability of QROPS in New Zealand to residents and those that work for the state.

Over the past few years New Zealand have experienced some problems with their QROPS schemes as some providers were offering them as a means for individuals to cash out their pensions in one go, something that the HMRC expressly forbids.

However, critics of the new proposals are stating that stopping all non-residents from being able to take out a QROPS is too extreme a step, and could endanger the countries overseas pension market.

The new measures are understood as being a way of enabling the country to remain a QROPS jurisdiction and stay on the good side of the UK’s HMRC, however the limitation could mean the end of QROPS as they now exist in New Zealand.

Some have suggested that the residency clause be replaced with one that forces members to adhere to the existing principle that the scheme is a savings mechanism for retirement or that individuals can only take 40% of their fund before retirement. As New Zealand already has a similar rules for residents, applying them to overseas pension holders has been suggested as a means of effectively stopping the cashing out problem.

Other critics have suggested that the problem regarding cashing out has been overblown, and that the cumulative good that the overseas pension market does has not been sufficiently considered when drawing up the new regulations.

David Harra, a Senior Market & Investment Analyst with Pryce Warner International, a Financial Services Provider for Expats, commented: “New Zealand QROPS have by and large been highly successful, and these new measures though well intentioned, seem to go too far. They potentially mean that the overseas pension market in New Zealand will take a big hit, which would be highly unfair on those people that have only ever sought to use such schemes genuinely. The regulations should seek ways to increase scrutiny and bring individuals who break the rules to account, rather than punishing the market as a whole.”

Pryce Warner International Group provide International Asset & Investment Management, Independent Financial Advice & QROPS Overseas Pensions.

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By: Aneil Fatania
Financial Editor
Pryce Warner International Group
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