UK Pension Transfers to Canada
Transferring your UK pension as a Canadian expat
As of April 6, 2006, new pension regulations in the UK have allowed expats to transfer their UK pension rights to Canada and other overseas countries. This has created attractive options for transferring UK pensions into overseas pension plans.
Recognized schemes, known as QROPS* (Qualifying Recognized Overseas Pension Scheme), are now available in Canada allowing those who are or will be non UK-residents to transfer UK pensions without tax deduction, ultimately drawing them without UK tax liability. Sterling Advisory has access to the majority of QROPS providers within Canada.
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It's safer to act as soon as possible, than wait too long!
The opportunity for you to take control and bring your pension money to Canada, tax effectively, may not last forever. Pension and tax legislation is changing all the time. There is currently a window of opportunity – don’t miss it. Don’t be at the mercy of tax changes and alterations to UK pension legislation. Act today to take advantage of the benefits.
What are the advantages to transferring my UK Pension to Canada?
The major incentives for transferring your UK pension to a Canadian RRSP are the benefits available on death. If your pension money is in an RRSP, on death, the full value of the pension fund is transferred, tax free, to the surviving spouse. Tax will eventually be paid from the estate when the spouse passes on, but the remainder will be available for any beneficiaries.
In the UK, there may be a survivor’s pension in retirement, however most company pension schemes will pay only half of the original pension income on death, therefore your beneficiaries could lose up to 50% of the pension overnight. Once the spouse passes on, payments usually stop and there is nothing to leave to beneficiaries.
Transfer to a QROPS ensures that, if tax is due on pension income, it will only be taxable in the country of residence. UK pension rights that are transferred to a QROPS are also taken outside of any UK tax charge levied on death for pension lump sums in drawdown.
With most pension plans, you must start to draw the pension on a fixed date, aged 55 onward. By transferring your UK pension to Canada, you will have various options that will provide full flexibility on the amount of income you will receive at retirement.
Most pension funds give you little or no choice regarding how your funds are invested. Working with myself, you can create a portfolio that suits your needs perfectly. You can invest in just about any investment fund that suits your appetite for risk.
Take control of your pension funds and gain increased flexibility.
Your UK pension money can be transferred to a QROPS Canadian Registered Retirement Savings Plan (RRSP). At retirement your pension income will therefore be paid in Canadian dollars avoiding a fluctuating exchange rate and its detrimental effect on incomes from pensions remaining in the UK.
In 2015 the UK Government introduced the “Pensions Age Test” for all QROPS providers which means that no withdrawals are allowed from UK pension funds transferred into an RRSP before the age of 55. This is to fall in line with current UK pension regulations.
Every client is different.
As every client is an individual, every pension has to be looked at on its own individual merits. There may be occasions where it may not be beneficial to move your UK pension to Canada. Therefore, it is imperative to seek the correct advice on whether this is the right course of action for you to take.
Having advised on pensions in the UK for over 10 years, I can discuss your individual needs and provide you with the help and expertise needed to successfully transfer your pensions to Canada.
What Does it Cost?
In the majority of cases, I do not charge for my services. Instead, I receive remuneration from the RRSP provider of the Canadian plan. Therefore, I do not have to charge my clients for helping them transfer their UK pension funds to Canada.