For expats who spent years working in the UK, one of the most important financial decisions is what to do with your UK pension.
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Protect Your Retirement with a QROPS UK Pension Transfer
Through Qualifying Recognized Overseas Pension Schemes (QROPS), transfers to Canadian plans are possible, offering you greater control, flexibility, and the ability to receive income in Canadian dollars. Sterling Advisory works directly with Canadian QROPS providers to make the process clear and efficient.
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The Benefits of Moving Your UK Pension to Canada
When you look beyond the surface, the advantages of transferring your pension are significant. It’s not just about moving money from one place to another—it’s about long-term security, flexibility, and peace of mind. Here are some key reasons many UK expats decide to bring their pensions to Canada:
Automatic Spousal Rollover
A major difference between the UK and Canadian systems is what happens when you pass away. In the UK, most company pension schemes provide a reduced survivor’s pension—often only half of your original income—and those payments typically end when the surviving spouse passes. That can mean a sudden loss of income for your family, with little or nothing left to pass on to the next generation.
In Canada, if your UK pension is transferred into an RRSP, the full value of the pension fund can roll over tax-free to your spouse. This not only provides security for your partner but also keeps the estate intact, allowing beneficiaries to inherit what remains. It’s a simple but powerful way to ensure that your life’s savings benefit your family, not just the pension provider.
No UK Tax on Pension Income
Another major advantage is taxation. A pension transferred to a Canadian QROPS is taxed only in Canada—your country of residence. That means no UK tax will be deducted from your retirement income, and you’ll avoid the UK’s additional death charges on lump sums. By eliminating those unnecessary overseas tax burdens, you keep more of your own money working for you and your retirement lifestyle.
Flexible Retirement Income
UK pension schemes usually set rigid rules: you must begin drawing income at a set age, and you may have little choice in how much you can take out. In Canada, that rigidity disappears. By holding your pension in a Canadian RRSP, you gain far greater freedom in how and when you access funds. You can take more income in years when you need it, or scale back when you don’t. This flexibility allows you to shape your retirement around your life, rather than the other way around.
Greater Investment Choice
Many UK pensions limit how your funds are invested, often leaving you with a narrow range of options. Once transferred to Canada, you can build a portfolio that reflects your personal goals and risk tolerance. Whether you prefer conservative, income-focused investments or more growth-oriented strategies, the choice is yours. That ability to align your pension investments with your own priorities is something many expats find invaluable.
Income in Canadian Dollars
For expats living in Canada, receiving income in pounds can create constant headaches. Exchange rates fluctuate daily, and your monthly income can rise or fall simply based on currency movements. By moving your pension to Canada, you eliminate that uncertainty. Your retirement income will be paid directly in Canadian dollars, matching your expenses and giving you stability you can count on.
Important Rules to Know
Of course, every benefit comes with rules. Since 2015, the UK government has required all QROPS providers to apply the “Pension Age Test.” This rule states that you cannot withdraw funds before age 55, even if your pension is held in a Canadian RRSP. It’s designed to keep Canadian plans in line with UK regulations and maintain recognition by HMRC. While this may limit early access, most expats find the trade-off well worth it for the tax and estate planning advantages a transfer provides.
Is a QROPS UK Pension Transfer Right for You?
Every pension is unique. Some transfers make perfect sense, while in other cases it may be better to leave the pension in the UK. That’s why professional advice is so important.
Sterling Advisory brings more than a decade of experience in both UK and Canadian pensions. We look at your situation in detail—your age, the type of pension you hold, your retirement goals—and give you clear advice on whether a transfer is the right move. Our role is to help you make an informed decision that works not just today, but for the decades ahead.
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