The on-going Brexit negotiations and subsequent demise of the UK exchange rate have left many British expatriots who have moved to New Zealand wondering what to do about their UK pensions.

Should they wait for a more favourable exchange rate, or bite the bullet and transfer their pensions now – knowing that it could get far worse before it improves?

Alison Renfrew, pension transfer specialist at Lyford Investment Management, has been advising British expatriots for 17 years on their options for transferring their pensions. She recommends that with some exceptions, transferring now is probably the better option.

Why?

“Firstly, if you’re worried about the exchange rate, you can keep your funds invested in GBP and convert them into NZD years in the future,” says Renfrew.

“More importantly though; pension transfer values seem to be really high at the moment.

“I advised a client earlier this month that her transfer value had increased by 25% in just six months. She now has another £145,168 ($281,776NZD) to transfer. This is phenomenal”.

Renfrew has not seen such a dramatic positive change in transfer values before.

On the very same day, Renfrew had a conversation with another client about her pension transfer value. She was offered a Cash Equivalent Transfer Value (CETV) of £59,731, or a pension of £900 p.a.

You would have to receive £900 p.a. for 66 years before you broke even – before you saw any investment returns from your retirement savings.

“It is 100% illogical to accept such a lousy deal,” Renfrew says.

When Renfrew compared current CETVs with promised pensions, she found little incentive to choose to have a taxable pension paid from the UK compared to receiving a far higher non-taxable income in New Zealand based on realistic investment projections.

“What Brits really don’t like is knowing that if they die prematurely their spouse will only get half of the income. In some cases, the spouse gets nothing”.

A major benefit of taking control and investing your transfer value to provide you with a retirement income is that you can access your money if you need to. Conversely, there’s no access to your retirement pot if you’ve elected to take a pension.

“Where is your financial security if you can’t access your money in an emergency?”  Renfrew asks.

There are a couple of exceptions, of course.

Renfrew cautions Brits and returning Kiwis not to transfer their pension funds if they are uncertain where they’ll live for the five years after they have transferred their pension funds to NZ, due to tax obligations.

Renfrew further cautions that before deciding to transfer you need professional advice to ensure that all your options have been considered.

“Maybe you are one of the few who have a very attractive pension, and converting to cash would be madness.

“You really need to seek independent advice from a New Zealand investment adviser specialising in pension transfers before making the decision to transfer, because individuals simply don’t have access to the same resources advisers do. It’s important to make informed choices.”

Alison and Richard Renfrew of Lyfords have been specialising in UK to New Zealand pension transfers for over 17 years. Visit their website to find out more.