If you are a member of a UK contracted out final salary scheme, since before April 1997, there is every likelihood that you have an element of GMP (guaranteed minimum pension) in your scheme. Migrating pension members, looking to transfer to a New Zealand QROPS (Qualifying Recognized Overseas Pension scheme), would have to consider the benefits of their GMP.
GMP is the bare minimum an employer’s final salary scheme has to provide for its members contracted out of the state earnings related pension (SERPS) between 6th April 1978 to 5th April 1997. GMP is an undertaking to pay a certain final salary benefit at retirement age 65 for men and age 60 for women.
When someone is looking at UK pension transfer to New Zealand QROPS, the transferring final salary scheme will offer the pension benefits (including the GMP) in the form of a transfer value. This value would be the amount of money that the New Zealand QROPS receives.
At retirement, the New Zealand QROPS would have a duty to pay the member either cash or income from the scheme but would NOT be required to match the GMP benefits the original final salary scheme provided.
Although the benefits from a New Zealand QROPS are paid tax free, there is no guarantee that the income would last you for ever. This may not be a problem if you are looking at the more flexible income from a QROPS, however, final salary scheme should take specialist QROPS advice from, Global QROPS Ltd, before transferring.
