10 reasons why a NZ Foreign Trust beats a QROPS

I have spent the last six months developing a route by which long term UK tax relieved pension funds can migrate to a New Zealand Foreign Trust (NZFT) and one of the inescapable conclusions is that this is a better, indeed much better, solution than a traditional QROPS.

This option is only available to those who have been non-UK resident for five complete UK tax years – but for those who satisfy this condition here are the ten reasons why the NZFT wins out:

1.The ability to access up to 100% of the fund at any time either through a capital distribution or via a loan which may be interest free.
2.Total investment freedom - no restrictions, none at all.
3.Complete confidentiality outside of New Zealand.
4.No issues if the member of the NZFT later returns to live in the UK. The NZFT is not however suitable for anyone who lives or intends to live in New Zealand.
5.Tax free income and capital growth within the NZFT.
6.Income or capital paid from the NZFT is without deduction of tax at source.
7.The NZFT allows the member to be a trustee of the arrangement (more on this below).
8.The NZFT member is empowered to change the New Zealand resident trustee if they wish.
9.All decisions associated with the NZFT require the unanimous agreement of the trustees - so the member, if also a trustee, has control.
10.On death, the assets of the NZFT are distributed to the classes of beneficiaries selected at outset by the member. This may result in the creation of a further NZFT on death for the beneficiaries enabling the advantages of the NZFT to continue for the benefit of the next generation.
For me the question of trusteeship is the most important.

We were in the QROPS market very early and a major disadvantage of the usual model is that the sole tustee is a corporate trustee of the QROPS provider. If you fall out with the corporate trustee your only recourse is to transfer to another QROPS.

This will involve an exit fee (typically up to 1% of the fund value), and an entry fee (typically £1,500 or more) into the new QROPS.

The NZFT enables the member also to be a trustee and in that capacity they have the power to replace the New Zealand resident trustee (corporate or otherwise) with another. There is no need to throw out the baby and the bathwater.

NZFTs form a part of the strategy of the New Zealand government to develop as a major financial centre. They are specifically for non New Zealand residents.

We have, after extensive legal advice in New Zealand, helped to deliver a facility whereby UK pension funds may (via a QROPS) migrate to an NZFT without at any stage in the process the fund leaving the protection afforded by a trust based structure.

For expert QROPS advice go to http://www.qrops-advisers.com or call 01664 444625

http://www.international-adviser.com/article/10-reasons-why-a-nz-foreign-trust-beats-a-qrops