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Old Nov 6th 2017, 3:27 am   #1
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Default UK Final salary pension question

I have an old final salary pension back in the uk, I only paid into the scheme for a handful of years when I worked for my old employer so it’s no big pension pot and will provide only a very small monthly payment to me at retirement . I recently received a buyout figure so I am considering my options as the pension scheme in its current form would allow me to take a yearly pension from 50yrs old ( about 3 years away ) if I choose although this would be a very small yearly payment amount or take the buyout option and transfer this to another pension / saving plan. I have heard a little about SIPP and QROPS but really know very little about either or if either are options for me in Canada.
All help welcome.

Last edited by joinerboy; Nov 6th 2017 at 3:36 am.
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Old Nov 6th 2017, 6:36 am   #2
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Default Re: UK Final salary pension question

Only in special circumstances https://www.pensionwise.gov.uk/en/yo...sion-before-55 can you take your pension BEFORE 55.
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Old Nov 6th 2017, 6:47 am   #3
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Default Re: UK Final salary pension question

There are no Qualified Retirement Overseas Pension Schemes (QROPS) currently available in Canada in which you can transfer a UK pension. If your current UK pension is offering a Buy out check to see what the multiple buy out is worth. Anything more than 30x is worth considering. E.g your annual pension is £10K per year equates to a lump sum of £300K. You can use the lump sum to transfer into your own Self Invested Pension Plan (SIPP) and take 25% out tax free when you reach 55.
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Old Nov 6th 2017, 2:30 pm   #4
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Default Re: UK Final salary pension question

Quote:
Originally Posted by glendem4 View Post
There are no Qualified Retirement Overseas Pension Schemes (QROPS) currently available in Canada in which you can transfer a UK pension. If your current UK pension is offering a Buy out check to see what the multiple buy out is worth. Anything more than 30x is worth considering. E.g your annual pension is £10K per year equates to a lump sum of £300K. You can use the lump sum to transfer into your own Self Invested Pension Plan (SIPP) and take 25% out tax free when you reach 55.
Many thanks for your reply
I was not too sure if I could have a SIPP in the UK whilst still living in Canada.
I will do some research on SIPP options / providers and set costs, if anyone has any recommendations it would be appreciated.
Thanks again
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Old Nov 6th 2017, 2:33 pm   #5
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Default Re: UK Final salary pension question

Quote:
Originally Posted by glendem4 View Post
Only in special circumstances https://www.pensionwise.gov.uk/en/yo...sion-before-55 can you take your pension BEFORE 55.
Thanks for the reply, I will look into this a little further but when I contacted my pension scheme provider they did say I could take the pension from 50 yrs but it would be a reduced payment.
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Old Nov 6th 2017, 3:40 pm   #6
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Default Re: UK Final salary pension question

Quote:
Originally Posted by glendem4 View Post
There are no Qualified Retirement Overseas Pension Schemes (QROPS) currently available in Canada in which you can transfer a UK pension. If your current UK pension is offering a Buy out check to see what the multiple buy out is worth. Anything more than 30x is worth considering. E.g your annual pension is £10K per year equates to a lump sum of £300K. You can use the lump sum to transfer into your own Self Invested Pension Plan (SIPP) and take 25% out tax free when you reach 55.
Isn't there a thread (or threads) on here basically where people are talking about taking a buyout of an occupational pension, putting it into a SIPP but Revenue Canada not recognising a SIPP as a pension and taxing it accordingly?
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Old Nov 6th 2017, 4:34 pm   #7
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Default Re: UK Final salary pension question

Quote:
Originally Posted by Atlantic Xpat View Post
Isn't there a thread (or threads) on here basically where people are talking about taking a boyout of an occupational pension, putting it into a SIPP but Revenue Canada not recognising a SIPP as a pension and taxing it accordingly?
Sounds like I may need to do some more research before I decide what to do.
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Old Nov 6th 2017, 5:17 pm   #8
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Default Re: UK Final salary pension question

Quote:
Originally Posted by joinerboy View Post
I have an old final salary pension back in the uk, I only paid into the scheme for a handful of years when I worked for my old employer so it’s no big pension pot and will provide only a very small monthly payment to me at retirement . I recently received a buyout figure so I am considering my options as the pension scheme in its current form would allow me to take a yearly pension from 50yrs old ( about 3 years away ) if I choose although this would be a very small yearly payment amount or take the buyout option and transfer this to another pension / saving plan. I have heard a little about SIPP and QROPS but really know very little about either or if either are options for me in Canada.
All help welcome.
Read me, pension rules, UK to Canada Posted on 17 May 2017 On Canada forum.

"This is a very important message to those of you who have immigrated to Canada and after the event drawn a UK Pension which allowed for a Tax Free Lump Sum ( in the UK )

As you are Tax Resident in Canada you have to declare all worldwide income to CRA and pay tax accordingly.

My husband was in the position of receiving a Tax Free Lump sum. We nearly had a heart attack when we had to report this amount on our Canada Tax Returns. We were given a bill for nearly $40k.

This does not apply to your monthly income from a Pension.....sadly that is taxable in Canada as Worldwide Income

I know from reading articles here that many of you have paid the tax on this lump sum in Canada.

If that is the case you should be entitled to a REFUND because you are not permitted by HMRC to draw more than 25% of your crystalisation amount as a lump sum. In other words your total Pension Pot. SO...under the Tax Treaty with the UK this is also TAX Free In CANADA up to 25%.

What you need to do is to go back to your pension provider and request a letter clearly stating that under HMRC rules you were not permitted to take more than 25% as a Tax Free Lump Sum. That the amount you received as your lump sum was under that Percentage. You then need to go back to CRA and tell them that you want a refund as you have wrongly paid tax on this amount.

We have this on first hand knowledge having challenged why Canada thought they had any claim on a Pension which was paid into over many years in the UK. That it had nothing whatsoever to do with Canada and that it was simply robbing a pension pot from someone who was trying to settle and needed every penny in order to do so. That is was totally perverse and clearly not right by any standards.

I want to wish you all well in the challenge. If you have any other questions please feel free to PM me
I hope I have cheered some of you up. Have a great day
Stef "
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Old Nov 6th 2017, 5:43 pm   #9
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Default Re: UK Final salary pension question

Quote:
Originally Posted by dave2003 View Post
Read me, pension rules, UK to Canada Posted on 17 May 2017 On Canada forum.

"This is a very important message to those of you who have immigrated to Canada and after the event drawn a UK Pension which allowed for a Tax Free Lump Sum ( in the UK )

As you are Tax Resident in Canada you have to declare all worldwide income to CRA and pay tax accordingly.

My husband was in the position of receiving a Tax Free Lump sum. We nearly had a heart attack when we had to report this amount on our Canada Tax Returns. We were given a bill for nearly $40k.

This does not apply to your monthly income from a Pension.....sadly that is taxable in Canada as Worldwide Income

I know from reading articles here that many of you have paid the tax on this lump sum in Canada.

If that is the case you should be entitled to a REFUND because you are not permitted by HMRC to draw more than 25% of your crystalisation amount as a lump sum. In other words your total Pension Pot. SO...under the Tax Treaty with the UK this is also TAX Free In CANADA up to 25%.

What you need to do is to go back to your pension provider and request a letter clearly stating that under HMRC rules you were not permitted to take more than 25% as a Tax Free Lump Sum. That the amount you received as your lump sum was under that Percentage. You then need to go back to CRA and tell them that you want a refund as you have wrongly paid tax on this amount.

We have this on first hand knowledge having challenged why Canada thought they had any claim on a Pension which was paid into over many years in the UK. That it had nothing whatsoever to do with Canada and that it was simply robbing a pension pot from someone who was trying to settle and needed every penny in order to do so. That is was totally perverse and clearly not right by any standards.

I want to wish you all well in the challenge. If you have any other questions please feel free to PM me
I hope I have cheered some of you up. Have a great day
Stef "
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Important though that is, it's not the converting final salary pension to SIPP thread that I recalled. I think this is it: Cashing in final salary pension.
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