UK Pension Transfer
For years Expats who were residing in Canada were allowed to transfer their UK pensions to Canada into a QROPS (Qualified Recognized Pension Scheme) within certain limits. In February of 2017, HMRC stopped allowing the transfer of pensions from the UK to Canada.
Unexpectedly on September 15 2019, HMRC started allowing the transfer of UK pensions to Canada into a QROPS. This was mainly because one investment provider (Industrial Alliance / iA Clarington) went out of their way to consult with HMRC to become qualified again.
HMRC has added an age requirement which states that you must be age 55 or older to be able to transfer a UK pension to Canada. If you are age 55 or older (or close to age 55), we highly recommend reaching out to us for a free consultation to see if you should consider moving your pension funds to Canada.
Did You Know?
Strata Wealth does not charge an out of pocket fee to transfer your pension from the UK to Canada. We are 100% compensated by the investment provider who receives your funds in Canada.
When Should You Transfer?
This is one of the most frequently asked questions that we receive from potential clients. If you are seriously considering transferring your pension from the UK to Canada, you will want to act sooner rather than later.
The reason for this is because in February of 2017, HMRC disallowed the transfers of pensions from the UK to Canada without notice. Luckily, they started allowing transfers again in 2019, but this shows us that the ability to transfer your pension to Canada can be removed at any time. We do not have the ability to predict future Government policies so we cannot provide a definite answer of what the future holds.
Status Update – February 2023
The transfer of QROPS pensions from the UK to Canada are available for those aged 55 or older.
As mentioned above, we cannot control the decisions of the UK and Canadian Government. Future policy, legislation and tax changes could easily make the ability of transferring your pension from the UK to Canada extinct. If it makes sense for you to bring your pension funds to Canada, it is highly advisable to get the process started.
Advantages of Transferring Your Pension
Upon death, your UK pension in Canada will roll over to your spouse TAX FREE. This is because your pension will be a RRSP account in Canada which the CRA allows to be transferred to a spouse tax free at death. If left in the UK, you could be subject to tax at death and/or lose a large portion of your pension.
You have full control of your retirement income options when your pension is moved to Canada. It is also held in Canadian dollars.
Choose between regular scheduled withdrawals or lump sums. You have the ability to decide how and when to take income from your retirement account. This provides the potential for a higher income in retirement.
You will not be subject to any taxation in the UK when withdrawing your pension funds in Canada. You will only be subject to tax in Canada which is dependent on your total income in the tax year that you withdraw from your pension (RRSP).
Your pension will be held in Canadian dollars if you transfer it to Canada. This eliminates the risk of currency fluctuations of the pound sterling and provides you with more control on your retirement income. Withdrawals in retirement will be in Canadian funds.
You have the ability to name a beneficiary on your pension to ensure that the balance of your pension goes to person(s) of your wish at death. Your beneficiaries will receive the full remaining amount of your investment because your investment has the ability to bypass probate and estate fees.
You have full control of your retirement income options when it is in Canada. Choose between regular scheduled withdrawals or lump sums. You have the ability to decide how and when to take income from your retirement account. This provides the potential for a higher income in retirement.
At death, your estate will be much easier to handle for your heirs if your investments are not scattered across multiple countries in different currencies and investment accounts.
Currently Industrial Alliance is an eligible investment provider accepting UK pensions in Canada. They offer a product which can guarantee up to 100% of the initial transfer value of your pension when it arrives in Canada. This adds another layer of protection on top of your hard-earned money.
Transferring your pension from the UK helps solve the tax issue on excess Lifetime Allowance LTA) Limits. Currently, the LTA Limit is at £1,073,100 and frozen until 2026 (according to 2021 UK Budget). Consult with us for more information regarding LTA Limit.
How Much Does It Cost?
We do not charge an up-front, out of pocket fee to you to transfer your pension assets from the UK to Canada. When the funds arrive in Canada, they have to be invested in either mutual funds or segregated funds. We are solely compensated by the investment provider once the funds arrive in Canada.
HMRC did introduce a new requirement in 2019 which basically states that if your pension is over £30,000 and provides for a guaranteed income in retirement, you are required to have an independent financial advisor in the UK do a full review of your pension. We can refer you to a qualified advisor who can complete this review for you, but they do charge a fee which depends on the value of your pension. You will be billed directly by their firm to complete the audit which is required before we will be able to move forward with your pension transfer.
This part of the transfer process is quite complicated so we advise you to contact us if you feel that this is applicable to your situation.
Why Choose Us?
Our clients mean everything to us and we’ve worked hard over the years to build a team focused business that is tailored to their needs.
At Strata Wealth, Simon Huften specializes in working with expats who want to transfer their pension assets from the UK to Canada. Simon brings many years of experience in the financial industry and is supported by the entire Strata Wealth team. He manages existing QROPS RRSP/RRIF accounts in Canada as well as assists new clients with transferring their pension assets to Canada.
Whether it be assisting with your UK pension transfer, financial planning, mortgage or taxes, The Strata Wealth Team has specialists in all areas in the wealth sector.
- Over 10 years experience
- $150+ million in managed assets
- Personalized service either in person or virtually
- No out of pocket fee charged by us for pension transfers
- No load options for investments to ensure no penalties or fees for withrawing money
- Variety of retirement income and saving options
- Complete transparency in all aspects
What Investment Options Are Available?
Due to the requirements set out by HMRC for QROPS, once the funds arrive in Canada you have to invest the funds with a qualified QROPS provider in Canada (updated list here). At this time, you have the option of choosing to invest in mutual funds or segregated funds with the following investment providers…
- Mutual Funds
iA Clarington
www.iaclarington.com - Segregated Funds
Industrial Alliance
www.inalco.com
We will assist with the mix of your investments whether it be stocks, bonds or cash. Usually it is a mix of all three depending on your risk tolerance.
You can view an updated list of Canadian approved investment companies by clicking here. This list is updated by HMRC on the 15th of every month.
What Are The Steps?
Step #1
Introduction & Discovery
The first step is to ensure that you have moved to Canada from the UK, are currently a Canadian resident aged 55 or older and that you have a pension in the UK that you are interested in transferring to Canada.
If so, we need to have a short discussion (either by phone or email) to understand your current financial situation in more detail and determine if it is in your best interests to transfer your pension from the UK to Canada.
Step #2
Gathering Documents
Once we have mutually agreed that it is beneficial to transfer your UK pension to a qualified retirement account in Canada, you will need to authorize us to start working for you. With your consent, we will contact your pension provider(s) to request up to date investment/transfer values, as well as any relevant documents required to start the transfer process.
Throughout this entire process there is no cost for the work we are doing as we are commissioned by the investment provider in Canada.
Step #3
Transfer of Funds
After we have received the necessary information from your pension administrator (current values, forms, etc.), we will be in touch with you to review everything and completed the required application/transfer documentation. This can all be done via phone, email or in person- whichever you prefer.
We will take care of everything including setting up your new investment account in Canada, processing transfer requests, follow-ups, etc.
Simon was great to work with. I had some initial concerns, but he walked me through everything and made me completely comfortable. He is very professional and quick to respond. I’d highly recommend.
