Value of the pound affecting your UK pension transfer decisions?


Featured post written by Steve Baker AFA, 29 March 2019*


Uncertainty around Brexit and how this could affect the value of the British Pound is a serious consideration for those now living in New Zealand but with sterling assets remaining in the UK. This can include UK pension benefits as well as funds remaining in UK bank accounts paying minimal interest.

The UK is scheduled to leave the European Union on the 29th March 2019 but the withdrawal agreement setting out the terms of the divorce is yet to be agreed. It is possible a ‘hard Brexit’ could spark a fall in the Pound but to what extent have markets already priced in this scenario?

Following the recent vote by Parliament to throw out Theresa May’s Brexit plan, the Pound unexpectedly rose in value against many currencies, including the NZ dollar.

A hard Brexit is likely to be more negative for sterling as it was in June 2016 following the initial referendum. To offset the impact of Brexit on the British economy the Bank of England could drop interest rates making things worse for sterling deposit holders.

Given the uncertainties surrounding the Pound and interest rates;

  • How long do you wait for UK interest rates to rise so you get a little more interest? Months? Years? What about the exchange rate?
  • In the meantime, what potential investment returns are you missing?
  • If you are in your four year transition period and can transfer your UK pension free of New Zealand tax, do you wait for the Pound to rise and risk paying NZ tax on your transfer or do you proceed to start the transfer process?


The good news is you can move your UK Pension benefits and UK Cash to New Zealand now without having to take a punt on the exchange rate. We can help you establish a diversified portfolio operated from New Zealand that invests in UK domiciled assets and cash, meaning you don’t have to “lock in” the current exchange rate as a result of moving your money to New Zealand. We can then work with you to determine when it might be appropriate to sell down your UK investments and diversify elsewhere.

From the perspective of those holding UK pension benefits, currency is just one consideration. Other factors such as tax and death benefits are also relevant. In the long term these specific factors may be of greater importance to you than short term currency volatility. We are able to help you understand these factors, so you are able to make an informed choice on your pension benefits.

To learn more or to arrange a no obligation consultation, call us on 0800 757 858 or go to our contact page and send us a message.

Since this article was written the EU has agreed a Brexit extention to 31 October 2019.

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