UK pensions in NZ: transfers, the schedule method and scheme pays

Most UK pensions are foreign superannuation schemes, and IR1024 names "United Kingdom pension schemes" as its example. Since 1 April 2014, lump sums from a scheme you joined as a non-resident are taxed when you withdraw or transfer, using the schedule method by default (IR1024; IR461 p22 note 9). From 1 April 2026 a NZ scheme receiving the transfer can pay a flat 28% for you. Here is how the pieces fit, with official sources and a worked example.

FIF or foreign super?

A FIF includes a foreign superannuation scheme (IR461 p4), but the FIF rules apply only to a "FIF superannuation interest". IR461 p5 defines that as rights acquired while you were NZ resident, or rights held before 1 April 2014 that you treated as a FIF in a return filed before 20 May 2013 and in every later return. Everything else is taxed under the foreign superannuation scheme rules: "tax is generally payable when a lump sum is received or when the interest is transferred to a New Zealand or Australian superannuation scheme" (IR461 p5).

IR1024 puts the split in one line: the schedule and formula methods are only available "if you were a non-resident when you first acquired interest in your scheme"; "If the investment was acquired while you were a New Zealand tax resident, it is taxed under the FIF rules."

The 4-year exemption

"A four-year lump sum exemption period generally applies, if you have not previously had an exemption period" (IR1024). It starts on the date you become NZ resident and "runs until the end of 48 months from the beginning of the month after the one in which you become a New Zealand resident". Lump sums received in that window are not taxed.

The window lines up with the transitional resident exemption for other foreign income, and our new migrants tool gives the end date. Confirm your residence start date first; IRD's foreign super page says the exemption starts on the earlier of the 183-day test and the day you have a permanent place of abode here.

Other transfers with their own rules (IR1024):

• UK to another foreign scheme (not in Australia): not taxable income from 1 April 2014.
• Foreign scheme to an Australian scheme: taxable.
• Australian scheme into New Zealand: not taxable, since 1 April 2010.

The schedule method, step by step

The schedule method is the default. You pay tax on a percentage of the lump sum, and the percentage depends on how long you have been resident since the exemption ended (IR1024):

1. Find the last day of your 4-year exemption period (or, with no exemption period, the last day you were non-resident while holding the scheme).
2. Note the income year that date falls in: year A. (The "2024 income year" runs 1 April 2023 to 31 March 2024.)
3. Note the income year of the withdrawal or transfer: year B.
4. Year B less year A gives the schedule year. A result of zero uses year 1.
5. Multiply the lump sum by that year's percentage, and include it in your IR3.

Where you made contributions while resident, IRD's schedule method page takes them off first, and the percentage applies to the withdrawal less those contribution amounts.

Source: IR1024 (April 2026). IRD's own example: Steve's exemption ended on 28 February 2010 (2010 income year); he withdrew $25,000 in August 2018 (2019 income year). 2019 less 2010 is 9, so 40.26% of $25,000: $10,065.

Worked example: a transfer in 2026

Sam became NZ resident on 10 June 2019. Our engine puts the end of the 4-year window at 30 June 2023, which is in the 2024 income year (year A). On 15 September 2026 Sam transfers a UK workplace pension worth NZ$200,000 to a New Zealand scheme. That is in the 2027 income year (year B). 2027 less 2024 is 3, so the percentage is 14.06%. Sam made no contributions after arriving.

Converting the pension's sterling value to NZ dollars is a separate step; IR1024 does not say which exchange rate to use, so ask your adviser. Our IRD exchange rates page lists IRD's published rates.

The 28% scheme pays option

From 1 April 2026, some NZ retirement schemes "can access your transferred funds to pay the New Zealand tax to us on your behalf without breaking the superannuation scheme rules" (IR1024). IRD's transfers page names Qualifying Recognised Overseas Pension Schemes (QROPS) as an example. The key points:

• The tax is a flat, final 28% on the amount worked out under the schedule or formula method, for funds transferred on or after 1 April 2026.
• You must work out the taxable amount and give it to the scheme within 10 working days of the transfer (IRD transfers page).
• If the scheme pays and there are no errors, you do not include the income in your return, and Working for Families, student loan, child support and provisional tax are not affected (IR1024).
• Without scheme pays, the income goes in your IR3 at your marginal rates. Our provisional tax guide explains why a large one-off amount can matter next year.

For transfers into KiwiSaver, IR1024 says you may owe income tax and student loan repayments, and you can withdraw from KiwiSaver to pay IRD; ask your provider.

The formula method, briefly

The formula method taxes "the actual gains of your foreign superannuation scheme interest between the date your four-year exemption expires and the date you receive the lump sum" (IR1024). It is only for defined contribution schemes, not final salary (defined benefit) schemes, and needs values such as the scheme's value when your assessable period started. IRD calls it "complex" and recommends a tax professional (IRD foreign superannuation page).

SIPPs and ISAs

IRD has not published guidance naming SIPPs or ISAs, so this is our reading, for discussion with your adviser.

• SIPP. A self-invested personal pension is a UK pension scheme set up for retirement, so it looks like a foreign superannuation scheme under the IR461 p24 definition. Joined before you arrived, the lump sum rules above would apply.
• Stocks and shares ISA. An ISA is a UK tax wrapper, not a retirement scheme. What NZ looks at is what is inside it: UK shares and funds are foreign companies or unit trusts, so on our reading they are ordinary FIF interests that count towards your $50,000 cost threshold. Use our is it a FIF? checker for the holdings.
• UK dividends. Tax paid on UK dividends is not eligible for a NZ foreign tax credit (IR461 p20).

A double tax agreement can change how much NZ taxes a lump sum and whether a credit is available (IR1024). IRD's foreign super page notes that most agreements give New Zealand the right to tax pensions. This is general information, not tax advice; check with your accountant, and get UK advice on UK charges before any transfer. Rules checked 12 November 2026.

Questions

Is my UK pension taxed in NZ every year?

Usually not, if you joined it before becoming NZ resident: tax arises on a lump sum or transfer. A pension acquired while resident is in the FIF rules (IR1024).

Is a transfer in my first 4 years taxed?

Lump sums received within the 4-year exemption period are generally not taxed, if you have not had an exemption period before (IR1024).

What does scheme pays cost?

A flat 28% of the taxable amount from the schedule or formula method, final, for transfers from 1 April 2026 to a NZ scheme that offers it (IR1024; IRD transfers page).

Is my UK State Pension covered here?

No. Social security schemes are excluded from the foreign super definition. IRD guide IR258 covers overseas social security pensions.