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UK Pension Transfers

Qualifying Recognised Overseas Pension Scheme (QROPS)

UK Pension Transfers-QROPSEvery year thousands of British Citizens immigrate to Canada. When they settle in Canada they take their assets with them but may not know they can transfer their UK pensions. As of 2006 UK pension transfers are permitted when moving to Canada. QROPS (Qualifying Recognized Overseas Pension Scheme) can be set up to allow UK citizens and residents who have moved to or will be relocating to Canada to transfer their UK pensions without tax deduction or UK tax liability. The rules are more complex but generally the transfer can be accommodated seamlessly.

Tax legislation and international treaties can and do change. Take advantage of the window of opportunity to transfer your UK pension to Canada while transfers are still permitted.  

There are certain restrictions to which Canadian financial institutions a UK pension can be transferred to. Stone-Hedge Financial Group Inc. deals with financial institutions that have been approved by HMRC to receive QROPS transfers in Canada from UK pensions. 

How Does the transfer process work?

A Qualifying Recognised Overseas Pension Scheme (QROPS) allows British expatriates who are Canadian residents to transfer their registered UK pension to a Canadian registered plan. There are some additional restrictions, withdrawals within the first ten years will be reported to HM Revenue & Customs Revenue in the UK. HM Revenue & Customs Revenue can assess a substantial penalty on unauthorized withdrawals.

What type of plan can receive UK Pension transfers in Canada?

A UK pension can be transferred directly to an individual QROPS registered in Canada. The transferred Canadian QROP is registered as an RRSP.

Is it always advantageous to transfer a UK pension to Canada?

In most cases yes. However some of the older plans that were locked in at high interest rates may not be advantageous to transfer. Every situation is different and has to be assessed based on one's personal financial objectives.

Are there any minimums or maximums that can be transferred into a Canadian QROPS?

No, there are no minimum or maximums on permitted transfers from UK pensions. You can transfer any amount.

How long does it take to complete a transfer?

A typical transfer can take a month to complete. It really depends on how long the UK pension provider takes to process the transfer documents.

Who takes care of the transfer in Canada?

The Canadians financial institution that is receiving the pension funds into a QROPS has designated specialists on staff that are trained to deal with UK pension transfers. A Stone-Hedge Financial Group Inc. financial advisor will assist you to prepare all the necessary documents and track the transfer application to ensure everything is completed in good order.  

What does Stone-Hedge Financial Group Inc. charge for their services?

Stone-Hedge Financial Group Inc. financial advisors do not charge any fees for the transfer. They earn a commission paid by the financial institution to invest the pension funds.

Benefits of transferring UK pension to Canada: 

  1. Currency Fluctuations - Canadian dollar can help protect your retirement income from the impacts of currency fluctuations of the British Pound.

  2. Tax deferral benefit - Canadian rules allow for greater flexibility. You can choose when to start receiving income from your pension. Pension funds can grow tax deferred up to age 71. 

  3. Control over your investments - Unlike restrictive UK pensions your Canadian pension will allow you to choose your investments to suite your investment objectives and risk tolerance.

  4. Income flexibility at retirement - After a period of time you can access your retirement funds to receive ongoing income and make lump sum withdrawals. 

  5. Automatic Spousal Rollover - If you die your pension funds are rolled over to your spouse's or common law partner's RRSP or RRIF tax free.

  6. Estate planning benefit - UK inheritance tax can be as high as 55%, Canada does not have the same high taxes. In some cases it may be possible to avoid UK taxes altogether including UK Capital Gains Tax and UK Income Tax.

  7. Access to UK pension funds - In some cases it may be possible to access up to 30% of UK pension plan funds transferred to a Canadian QROPS.

  8. Benefit from Canada's retirement plans - Under certain circumstances you can benefit from the same programs Canadians have in their RRSPs such as First Time Home Buyer Plan and Lifelong Learning Program.

 


The information provided on this web site is intended for general information only. It should not be construed as legal, accounting, tax or specific insurance and investment advice. Clients should consult a professional advisor concerning their situations and any specific insurance and investment matters. While reasonable steps have been taken to ensure that this information was accurate as of the date hereof, Stone-Hedge Financial Group Inc. and its affiliates make no representation or warranty as to the accuracy of this information and assume no responsibility for reliance upon it.





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