QROPS – UK Pension Transfers to Canada

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Are you a resident of Canada with a pension in the United Kingdom?  If so, we may be able to help you transfer the funds to Canada.

Perfect Timing Family Wealth is one of the few investment management firms in Canada with the expertise and resources to facilitate the transfer of your non-government UK pension to a Canadian RRSP.  If you are a resident in Ontario, Alberta, British Columbia, Saskatchewan or Nova Scotia, we can help you transfer your UK pension.

A QROPS is a Qualified Recognised Overseas Pension Scheme. The purpose of this scheme is to facilitate transfers between 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).  As of October 2019, just three companies in Canada were approved by the UK government as able to open and maintain QROPS accounts. 

Key Benefits:

  • Consolidate your investments in Canada
  • Reduce currency-related investment volatility
  • Lock in the exchange rate of your pension assets
  • Access to a wider range of investment options
  • Flexibility as funds are not locked in
  • Ease of estate planning
  • Tax efficiency

Who are QROPS for?

  • Anyone that holds a UK pension scheme who is a Canadian resident taxpayer and intends to live in Canada for a minimum of 5 years
  • You must be 55 years of age or older to open a QROPS account
  • Defined Benefit (final salary) pensions greater than £30,000 and Defined Contribution (money purchase) pensions greater than £30,000 with a guarantee about what you’ll be paid when you retire require an FCA approved, qualified UK financial advisor to complete a full analysis of your UK pension scheme and provide you with a Certificate of Advice
  • There are a limited number of these UK firms who have the right qualifications, experience and expertise but fortunately we already have a strong relationship with a reputable firm that offers this service to clients all over the world
  • Public Sector (including National Health Service, Teachers, Civil Service) pensions may NOT be transferred outside of the UK

Tax implications:

  • Ongoing reporting to HMRC is required for withdrawals that occur under two possible circumstances:
    1. During any period when the client has been a U.K. tax resident in the year of the transaction or any of the previous five U.K. tax years, or
    2. Within 10 years of the date that pension funds were deposited into the QROPS account.
  • All withdrawals made within 10 years of the original transfer date are reported back to HMRC
  • Withdrawals made by clients within 5 years of them ceasing to be a UK resident may be subject to UK taxation
  • If you leave Canada within 5 years of the transfer, the QROPS plan would not be a recognized transfer and a 40% tax charge could be levied
  • Regular RRSP Canadian withholding taxes are applied when money is withdrawn from the account

Other Relevant Information on QROPS Transfers:

  • Mutual Funds and Segregated Mutual Funds are currently the only available investment options
  • A QROPS is effectively set up as an RRSP account.  Clients must be 55 years of age or older to open a QROPS account
  • The UK minimum pension age of 55 applies before benefits can be taken, however, QROPS arrangements can offer considerably more flexibility, greater income potential and more investment freedom than a UK pension
  • Funds received from multiple UK pension providers can be deposited to the same QROPS account
  • Defined contribution transfers, not requiring advice, can often be transferred within a few weeks
  • Defined benefit transfers can take up to 3-6 months to arrive as they are more complex

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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