- February 10, 2023
- Posted by: Simon Huften
- Categories: Investing, QROPS, QROPS RRIF, QROPS RRSP
UK QROPS transfers to Canada are currently permitted (as of 2023)
You must be age 55 or older to qualify to transfer a pension scheme
Certain pension schemes are not eligible for a transfer
Transfer process can be complicated and timely – work with a professional
Pension funds are converted to Canadian Dollars when received in Canada
A Qualifying Recognised Overseas Pension Scheme (QROPS) transfer to Canada is the process of transferring a qualified UK pension to an overseas pension scheme that is recognized by Her Majesty’s Revenue and Customs (HMRC). In this case, we are discussing the transfer of a QROPS transfer to Canada.
The purpose of the transfer depends on the transferee because there are many different reasons why an ex-Pat would be interested in bringing their pension scheme from the UK to Canada. Some of these reasons include more favorable tax treatment, tax-free spousal rollover, control of your investments, consolidation of investments at retirement, naming a beneficiary, currency protection and more.
The transfer process begins with the assessment of the individuals’ current UK pension scheme and the determination of their eligibility for a QROPS transfer. See below for additional information on how to be eligible for a QROPS transfer.
- You must be age 55 or older to open a QROPS RRSP account in Canada.
- You must hold a non-state pension scheme in the UK and be a Canadian taxpaying resident with an intention to live in Canada for at least 5 years.
- Ideally do not have any intentions to move back to the UK.
- Not all pensions from the UK can be transferred to Canada (contact us for more details).
- Certain pensions which have a guarantee of what you will be paid in retirement and 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. These pensions include Defined Benefit Pension Plans (aka Final Salary Pensions) and Defined Contribution Pension Plans (aka Employer Matching Pensions). We have relationships with UK advisers for this purpose.
- Public Sector Pensions cannot be transferred from the UK to Canada. Examples are civil service and teacher pensions. The majority of NHS pensions cannot be transferred.
Once it has been determined that you want to move your qualified pension scheme from the UK to Canada, we will work with you to request up to date pension documents from your pension administrator to start the process. Typically, pension documents are only valid for 90 days, so it is important that we act fast once they are received.
Essentially we would be taking care of everything from this point on and contacting you as necessary. There would be a number of documents that are required to be completed which include pension transfer forms, application forms from the receiving investment institution in Canada, deciding how you want your pension scheme invested in Canada, etc.
The funds are typically received by the Canadian investment institution via wire and converted to Canadian Dollars on the date that they are received.
Once the transfer has been completed, the individual will be able to access the benefits of the QROPS scheme in Canada, including the more favorable tax treatment, the ability to make flexible pension withdrawals and more. It is important to note that the rules and regulations governing QROPS schemes in Canada may differ from those in the UK, so it is important to understand these differences and the potential implications for the individual’s pension benefits.
In conclusion, a QROPS transfer to Canada can offer individuals the opportunity to take advantage of a number of different benefits including more favorable tax treatment, currency risk, estate costs and other benefits compared to their current UK pension scheme. However, it is important to carefully consider the eligibility criteria, the available options, and the potential implications of the transfer before proceeding.
Seeking professional advice from a financial advisor and/or a pensions specialist is advisable to ensure that the transfer is carried out in the most appropriate and beneficial manner for the individual’s circumstances.
Please contact us today for a free consultation to see if it makes sense for you to transfer your pension funds to Canada.