In a letter sent to all providers just before Christmas, the GA reaffirmed that KiwiSaver schemes certified as Qualifying Recognised Overseas Pension Schemes (QROPS) were able to accept transfers from UK superannuation funds.

Gavin Quigan, Ministry of Economic Development Insurance and Superannuation Unit manager, said a number of KiwiSaver schemes had suspended their QROPS facility following legal advice.

"The GA [David Bension] contacted the HM Revenue and Customs while he was in the UK and has received written advice that KiwiSaver schemes can accept QROPS transfers," Quigan said.

The UK tax department written advice says: "As contributions by members to New Zealand pension schemes do not attract tax relief I confirm that we do not need to add a regulation, such has been necessary in Australia, for pension schemes in New Zealand (both KiwiSaver and superannuation schemes) to meet the conditions to become QROPS."

Quigan said there was "quite a market" for UK pension transfers to New Zealand although no statistics were available for how successful KiwiSaver schemes have been in attracting such money.

He said the UK tax authorities also expressed concern that some QROPS transfers to New Zealand superannuation schemes were resulting in early withdrawals, potentially breaching UK law.

In the letter, the GA further emphasises that KiwiSaver providers must expedite transfers to other schemes within 35 days of a request being made.

Some providers have informed the GA of "significant backlogs" of transfers to process.

As well, the GA letter threatens tough legal action against schemes that endorse aggressive sales tactics.

"There has also been anecdotal comments made to me that stand-over tactics and gross misrepresentations of provider status have been employed by commission-based distributors who are trying to retain or twist business between schemes," the letter says.