- January 2, 2023
- Posted by: Simon Huften
- Categories: Investing, QROPS, QROPS RRIF, QROPS RRSP
You must be age 55 or older to transfer a UK pension to Canada
Pension values over £30,000 must be reviewed by a UK advisor
Transfer process can be complex – use a professional
Non-state UK pensions can be transferred to Canada
Not all UK pensions can be transferred to Canada
QROPS – Eligible Transfers
QROPS stands for Qualifying Recognised Pension Scheme.
In simpler terms, it is a pension scheme in the United Kingdom that meets certain criteria that allows the pension scheme to be transferred to Canada into a QROPS RRSP or QROPS RRIF account. Transferring your pension from the UK to Canada is quite a complex process and is not intended to benefit everyone.
For your pension scheme in the UK to qualify as a QROPS, there are certain criteria that must be met.
- You must be age 55 or older to be able to qualify (this was changed by HMRC in 2019)
- Pension transfer values over £30,000 must be reviewed by UK financial advisor
- You must be a Canadian taxpaying resident.
- You must intend to live in Canada for a minimum of 5 years.
- Ideally you must not have any intentions to move back to the UK.
Please note that not all pension schemes from the UK can be transferred to Canada. Please contact us to determine if your pension scheme is eligible or not.
Pension Value Greater Than £30,000?
Defined Benefit Pension Plans (aka Final Salary Pensions) and Defined Contribution Pension Plans (aka Employer Matching Pensions) which have a market value greater than £30,000 require a qualified FCA approved UK financial adviser to review and complete an audit of your pension. This audit is to provide you with a detailed report of your current pension scheme and potential advantages/disadvantages of transferring your pension to Canada. Unfortunately, this is a new requirement by HMRC and you will incur costs for this audit.
Fortunately, we have a referral agreement with a qualified FCA approved UK financial adviser who can complete this audit for you. When we are working with a client, we will ask for a copy of any pension scheme paperwork that you have so that we can review with the UK financial adviser. This will provide you with confirmation that your pension scheme can be transferred as well as the potential costs charged by the advisor for completing the audit. You can then make an informed decision if you would like to proceed or not.
Just to clarify, we do not charge any fees for processing the transfer and bringing your funds to Canada. The only costs incurred are from the financial audit required by HMRC if your pension value is greater than £30,000.
With a Defined Contribution Pension Plan, there must be at least $1 of employer contributions for the transfer to be eligible for a 60(j) transfer. A 60(j) transfer allows you to shelter your pension transfer from tax from the UK to Canada directly into a RRSP.
Public Sector Pensions cannot be transferred from the UK to Canada. Some examples are civil service and teacher pensions.
The majority of NHS pensions cannot be transferred if a contributing member has more than two years of membership in a pension scheme with NHS.
You should contact us first to determine if your pension is eligible for a transfer. This will save you a lot of time and hassle as we will do the work for you. If your pension is eligible for a transfer, we can have a further discussion to see if it is beneficial for you to transfer your pension from the UK to Canada.
If your UK pension scheme transfer value is over £30,000, we will have to consult with a UK financial advisor to get you a cost to transfer. Once this has been completed, we will take over all of the processing of paperwork, setting up your account in Canada, follow-ups, etc.
Please contact us today for a free consultation to see if it makes sense for you to transfer your pension funds to Canada.