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Old Apr 6th 2017, 2:37 am   #16
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Default Re: Cashing in final salary pension.

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Originally Posted by scottymallo View Post
As far as I can see nothing changes regarding any tax implications. Transferring from a UK final salary to a UK sipp. The same tax rules will apply you would pay tax in Canada on your UK drawn sipp pension if at the time you are a tax resident of Canada. This would be treated as world wide income. You are not a tax resident of the UK and hence no tax would be owed to hmrc. As the pension would be UK based you cannot access it before age 55. Therefore there are no UK penalties to worry about for access to the funds before turning 55.
I agree, but as Aviator says it maybe worth checking.... last thing we want is CRA coming after a large whack of our pensions!

Let me know if you find anything out 👍🏼
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Old Apr 6th 2017, 6:08 am   #17
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Default Re: Cashing in final salary pension.

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Originally Posted by stokesey View Post
I have no idea at this stage, certainly something I'll look into prior to cashing in.

I'm assuming there are no tax implications until you start to draw the pension at which stage you'd pay tax (again assuming in the country you're tax resident)??
It might be worth pointing out that a UK IFA has to authorise the transfer and then sign an appropriate advice letter to the trustees. If the IFA refuses, and many do if this is not in your best interests, then it may not be as straightforward as you think.

I note earlier comments about a bond and 10 year lock in. Insurance bonds with hefty upfront commissions have no place in pensions, whatever the salesperson may say.
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Old Apr 6th 2017, 9:22 pm   #18
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Default Re: Cashing in final salary pension.

Hi, I transferred my UK final salary pension into a UK SIPP a few years ago, after I moved to Canada. The provider was prepared to accept it since, although I was living in Canada, it all derived from UK employment. There was the usual anti-money laundering paperwork etc. to complete.

I made a withdrawal of some of the SIPP fund last year, when I turned 55. From a tax point of view:
* Beforehand, I got the CRA to sign off a Double Taxation treat form, saying I was a Canadian resident for tax purpose. My aim was to receive the pension gross and only have to deal with the Canadian tax. UK HMRC did not accept this, due to the nature of the pension (effectively variable lump sums rather than a steady stream).
* The SIPP provider therefore deducted tax. They deducted a lot more than I was expecting, due to their using an emergency code. I got HMRC to send them a regular code (at the moment, you can receive up to GBP10,500 before paying tax, while 25% of the lump sum should be tax free) and I got a rebate. You may want to ensure the provider has a code first.
* The income is fully taxable in Canada, but you can offset the UK tax payable.
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Old Apr 6th 2017, 10:01 pm   #19
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Default Re: Cashing in final salary pension.

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Originally Posted by BexB View Post
Hi, I transferred my UK final salary pension into a UK SIPP a few years ago, after I moved to Canada. The provider was prepared to accept it since, although I was living in Canada, it all derived from UK employment. There was the usual anti-money laundering paperwork etc. to complete.

I made a withdrawal of some of the SIPP fund last year, when I turned 55. From a tax point of view:
* Beforehand, I got the CRA to sign off a Double Taxation treat form, saying I was a Canadian resident for tax purpose. My aim was to receive the pension gross and only have to deal with the Canadian tax. UK HMRC did not accept this, due to the nature of the pension (effectively variable lump sums rather than a steady stream).
* The SIPP provider therefore deducted tax. They deducted a lot more than I was expecting, due to their using an emergency code. I got HMRC to send them a regular code (at the moment, you can receive up to GBP10,500 before paying tax, while 25% of the lump sum should be tax free) and I got a rebate. You may want to ensure the provider has a code first.
* The income is fully taxable in Canada, but you can offset the UK tax payable.
Thanks for the reply, that's useful information.

This is one of my concerns in that both countries may want the taxes payable to them. Did HMRC pay you back without too much trouble?
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Old Apr 6th 2017, 10:38 pm   #20
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Default Re: Cashing in final salary pension.

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Originally Posted by stokesey View Post
Thanks for the reply, that's useful information.

This is one of my concerns in that both countries may want the taxes payable to them. Did HMRC pay you back without too much trouble?
As a Canadian tax resident, your liability should be to Canada. If you pay tax in the UK, with the appropriate receipts of tax paid, you would only pay any difference that is owed to CRA.
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Old Apr 6th 2017, 10:49 pm   #21
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Default Re: Cashing in final salary pension.

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Originally Posted by Aviator View Post
As a Canadian tax resident, your liability should be to Canada. If you pay tax in the UK, with the appropriate receipts of tax paid, you would only pay any difference that is owed to CRA.
Hi - yes I understand that, and agree 100% my liability is to Canada (I just love the way Trudeau spends my tax $$ 😡), but in real world situation how easy is it to claim back from HMRC should double taxing occur?
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Old Apr 6th 2017, 10:56 pm   #22
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Default Re: Cashing in final salary pension.

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Originally Posted by stokesey View Post
Hi - yes I understand that, and agree 100% my liability is to Canada (I just love the way Trudeau spends my tax $$ 😡), but in real world situation how easy is it to claim back from HMRC should double taxing occur?
So long as you have a certificate of foreign tax paid it should be able to be claimed on a T1 return at the end of the year in Canada as a foreign tax credit. If you don't have an accountant, I would get in touch with one.
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Old Apr 10th 2017, 4:11 pm   #23
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Default Re: Cashing in final salary pension.

Have just done a web chat with someone at the UK pension advisory and he informs me that as I am a resident in Canada I cannot set up a new pension scheme (SIPP) to transfer my company pension too.
Is he right?
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Old Apr 10th 2017, 4:44 pm   #24
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Default Re: Cashing in final salary pension.

I am using London and colonial. They will do it for non residents. I have spent months of research and there is not a lot of choice I'm afraid.
I am not sure if this is the only option but I have struggled to get something set up without having to pay £xxxxs
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Old Apr 11th 2017, 12:28 am   #25
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Default Re: Cashing in final salary pension.

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Have just done a web chat with someone at the UK pension advisory and he informs me that as I am a resident in Canada I cannot set up a new pension scheme (SIPP) to transfer my company pension too.
Is he right?
Jeez, why is nothing straightforward hey?
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Old Apr 11th 2017, 3:04 pm   #26
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Default Re: Cashing in final salary pension.

I found the concern wasn't the fact I resided in Canada, more the SIPP provider needing to make sure the funds all derived from when I worked and resided in the UK. Try A Bell You Invest, you could send them an email to explain your position.
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Old Apr 11th 2017, 4:09 pm   #27
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Default Re: Cashing in final salary pension.

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Originally Posted by stokesey View Post
Jeez, why is nothing straightforward hey?
Welcome to Canada, have a nice day!
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Old Apr 11th 2017, 4:35 pm   #28
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Default Re: Cashing in final salary pension.

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Originally Posted by stokesey View Post
Hi all - I'm wondering if anyone can help me?

My wife and I (both living in Canada now for 6 years) have just got cash in values for our final salary pensions.

This is something we never though we'd consider but the cash in values are crazy high at the moment!!

My question is can we cash them in and reinvest in a pension fund back in the U.K, or do we have to bring the money here (as that's where we're tax resident) and invest in an RRSP.

Ideally I'd like to keep the funds in the U.K until the exchange rate is better.

Thanks in advance.

Stuart.

Since the changes in UK pension fund legislation there has been much discussion in the UK personal finance columns about the advisability of cashing in accrued pension funds-particular final salary or defined benefit funds. Many pension funds are trying to reduce future liabilities by offering attractive cash in values. Reference to actuarial tables showing total pension fund pay out if the fund is retained show the reason for the cash value pay out.


Many have cashed out, and regretted it.


Depending on your age, and any need for a big pot of cash now, tax implications, in Canada and the UK, and particularly where you might be living in the future are major considerations.


After living in Canada most of my life, I accrued a comfortable pension and investment income. I kept all those funds in Canada after talking to an independent actuary who advised that cashing out, for me, was not a good financial move. His words, simplified, were income is everything.
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Old Apr 11th 2017, 7:31 pm   #29
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Default Re: Cashing in final salary pension.

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Originally Posted by dave2003 View Post
Since the changes in UK pension fund legislation there has been much discussion in the UK personal finance columns about the advisability of cashing in accrued pension funds-particular final salary or defined benefit funds. Many pension funds are trying to reduce future liabilities by offering attractive cash in values. Reference to actuarial tables showing total pension fund pay out if the fund is retained show the reason for the cash value pay out.


Many have cashed out, and regretted it.


Depending on your age, and any need for a big pot of cash now, tax implications, in Canada and the UK, and particularly where you might be living in the future are major considerations.


After living in Canada most of my life, I accrued a comfortable pension and investment income. I kept all those funds in Canada after talking to an independent actuary who advised that cashing out, for me, was not a good financial move. His words, simplified, were income is everything.
Apologies Dave, just to clarify....

We wouldn't be cashing in for a lump sum payout, it'd be invested into another pension fund as we're only 45 (but plan to retire at 55).

We should (fingers crossed) never need to take out a big pot of cash as we have no real debt.

I'm really nervous about this, but to be offered 42x annual pension is probably too good an offer to pass up.

As they're linked to CPI they really haven't done much over the past handful of years and I'm sure we can get better growth investing elsewhere?
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Old Apr 11th 2017, 7:33 pm   #30
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Default Re: Cashing in final salary pension.

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Welcome to Canada, have a nice day!
Haha, you got that right!!
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