Who Regulates QROPS (2023)

Key Points

QROPS are more regulated by the UK compared to Canada

HM Revenue & Customs regulates QROPS in the UK

Each province regulates QROPS individually in Canada

You must be age 55 or older to transfer a UK pension scheme to Canada

Seek professional tax and financial advice before transferring a pension scheme

QROPS (Qualified Recognized Overseas Pension Schemes) are a type of pension scheme that enables individuals to transfer their UK pension overseas to Canada, subject to certain requirements. As such, QROPS are regulated differently in Canada and the United Kingdom.

Regulation of QROPS in Canada

In Canada, QROPS are regulated by Financial Services Commission in the province that the pension scheme is transferred to. For example, in Ontario the Financial Services Commission of Ontario (FSCO) would regulate QROPS. FSCO is responsible for regulating pension plans in the province of Ontario, and it reviews and approves QROPS applications.

To qualify as a QROPS in Canada, the scheme must meet certain criteria. The scheme must be registered as a pension plan with the Canada Revenue Agency (CRA), and the plan administrator must be licensed in the province where the plan is registered.

Additionally, the QROPS must be established and operated in a jurisdiction that has entered into a tax information exchange agreement (TIEA) with Canada. The TIEA allows for the exchange of information between the two jurisdictions regarding the taxation of pension benefits.

Once a QROPS has been approved by FSCO, the scheme is required to comply with ongoing reporting requirements. The plan administrator must file annual reports with FSCO and the CRA, and must also notify FSCO of any significant changes to the plan.

Regulation of QROPS in the United Kingdom

In the United Kingdom, QROPS are regulated by HM Revenue and Customs (HMRC). HMRC maintains a list of approved QROPS providers and a QROPS must be on this list to qualify for certain tax benefits.

To be eligible for approval by HMRC, a QROPS must meet a number of requirements. These include:

• The scheme must be established in a jurisdiction that has entered into a double taxation agreement (DTA) with the UK.

• The scheme must be open to local residents and not just to non-residents.

• The scheme must provide benefits that are broadly similar to those provided by UK pension schemes.

• The scheme must comply with certain reporting requirements, including providing annual statements to scheme members.

• The scheme must not allow members to access their benefits before the age of 55, except in certain circumstances (such as ill health).

If a QROPS meets these requirements and is approved by HMRC, then individuals who transfer their UK pension to the scheme may be able to avoid certain UK tax charges.

It’s important to note that not all QROPS providers are approved by HMRC. In some cases, schemes may be removed from the approved list if they no longer meet the requirements or if there are concerns about their operation.

Conclusion

In summary, QROPS are regulated differently in Canada and the United Kingdom. HM Revenue and Customs (HMRC) plays a much bigger role in the pension transfer process as they determine what countries and investment companies are eligible to receive pension scheme transfers from the UK to Canada.

As always, it’s important to seek professional financial advice before considering any pension transfer to ensure that you understand the potential benefits and risks involved.

If you are interested in learning more about transferring a pension scheme from the UK to Canada, please contact us today for a free, no obligation consultation.