RIG to launch into pension transfers

Changes in the New Zealand pension transfer market have created an opportunity for the Retirement Income Group, its chief executive says.

Thursday, September 8th 2016, 6:00AM

by Susan Edmunds

RIG, which offers the country’s first variable annuity product, is to launch a pension transfer scheme within the next couple of months. Chief executive Ralph Stewart said he hoped it would be live by mid-October.

It will be a multi-rate PIE registered as a New Zealand superannuation scheme and with the British Government as a ROPS scheme.

That means British migrants can transfer their pension savings to the scheme without incurring a tax burden.

The pension transfer market has been through a period of transition after Britain changed its pension rules and New Zealand’s Financial Markets Conduct Act brought in new requirements.

Stewart said there was consolidation happening as the level of regulation increased, and providers had to be licensed. “As a consequence smaller players are considering different options. We’ve been approached by quite a few and we have decided to launch one of our own as well.”

The scheme’s underlying fund manager is Vanguard.

Stewart said it was in the process of getting the regulatory sign-off required from the FMA.

New Zealand’s rules also must be changed to amend the ability to claim money in cases of hardship, so they are in line with Britain’s withdrawal rules.

Stewart said the pension transfer market was a natural place for a variable annuity provider such as RIG to be because British pension-holders would receive a tax benefit from investing in an annuity.

He said his firm had been working on the product for five months but saw a significant opportunity. “The total funds under management is about $680 million and the number of UK immigrants alone is about 12,000 per year. It’s a quite substantial, growing market.”

Tags: annuities QROPS Retirement Income Group