QROPS – UK Pension Transfers to Canada

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What is a QROPS?

A QROPS is a qualified recognised overseas pension scheme.  The purpose of this scheme is to facilitate the transfer of private sector pension plans in the United Kingdom (UK) to pension plans in other countries that meet the requirements established by Her Majesty’s Revenue and Customs (HMRC).

Who would be a good candidate for a transfer to a QROPS?

QROPS are designed for UK residents who meet all the following criteria:

  • Now reside in Canada with expatriate status or are looking to relocate shortly.
  • Plan on residing in Canada for a minimum of five (5) years.
  • Plan on retiring in Canada.
  • Wish to have their pension savings in the same country in which they reside, in Canadian dollars.

Why should a UK pension scheme be transferred to a QROPS?

To benefit from:

  • Market growth potential with all the benefits of segregated funds.
  • A company with over a century of outstanding financial strength.
  • A wide range of funds managed by highly competent professionals.
  • Creditor protection.
  • A quick, confidential transfer to heirs at your death (no probate fees).

What kind of pension plans are eligible for transfer?

Here are some examples:

  • Defined contribution (DC) pension schemes.
  • Private-sector defined benefit (DB) schemes.
  • Funded public-sector defined benefit (DB) schemes.

What kind of pension plans CANNOT be transferred?

Here are some examples:

  • UK state pension.
  • Unfunded public-sector defined benefit (DB) scheme.

What is the minimum age to establish a QROPS ?

You must be between 55 and 71 years of age to open a QROPS with funds from a UK pension plan.

Why is there an age limit to open a QROPS?

HMRC regulations stipulate that no payment of pension may be made before the day on which the member reaches normal minimum pension age, which in this case, is 55 years of age.

  •  Possible with a beneficiary designation.
  •  For more information on pension schemes and their transferability you may contact a UK tax specialist or UK financial advisor (fees may apply).

What happens if there is a change in circumstance (i.e. I move outside of Canada)?

If there is a change of circumstance within the five (5) full UK tax years of the transfer, there could be a taxation fee of 25%. Moreover, for a period of 10 years where you are no longer a UK resident, you could be subject to UK taxes should there be a withdrawal or transfer during this period.

How will taxation and fees be administered in Canada?

Since the sums are deposited in a regulated pension scheme, the same rules and regulations apply for Canadian taxation as a regular RRSP.

Will the transfer of a UK pension plan to a QROPS in Canada be tax-free?

The transfer may, in some circumstances, be free of UK taxes.

Have any questions? 

Contact our team of professional advisors and QROPS specialists to learn more.

Email: service@perfectiming.com

Phone: 416-861-9771

Other Resources:

https://www.gov.uk/government/collections/overseas-pension-schemes

https://www.gov.uk/topic/business-tax/pension-scheme-administration

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