RKS_in_Calgary

Hi

I've read some good disussions on here about moving pensions from UK to Canada under QROPS and am seriously considering doing so. My question is, what happens if, in the future, we decided to move back to the UK. Not something we are planning on, but with aging parents etc, who knows what will happen in the next 20 years! Can we 'reverse' the QROPS process, what would the tax implications be etc? Anyone have any experience of this?

Gazza613

I considered this when I transferred mine last year. You cannot reverse the process. However if you emigrate back to UK once you are a non-resident for tax purposes you can withdraw the RRSP at a 25% tax rate. I think if you convert it to RRIF and take regular periodic payments the non-refundable withholding tax to non-residents is only 15%. For me their were two big reasons in favor of transferring into a QROPS approved RRSP:
1. As a UK pension my only option on redemption was an annuity, and if you want a a joint-life annuity with spouse the payment is significantly reduced. With an RRSP->RRIF on your death the RRSP goes 100% to your spouse. With a drawdown from a RRIF you have more control of your investment/better bang for the buck than an annuity especially in todays low interest enviroment. I think I read somewhere in the recent UK budget they are making non-annuity drawdown option easier, but I don't think it is the same as RRSP->RRIF drawdown.
2. My pension was with Equitable Life (Whole other story but due to some cock-up its value got reduced and it was invested low interest investments giving only 3% annual return ongoing.) In a self-directed RRSP expect to do better than that.

RKS_in_Calgary

Thanks for the info, my reasons for thinking about the transfer to RRSP are the same (lack of control over investments in the UK, transfer to spouse etc). Do you know what the tax implications of a Canadian RRSP / RRIF would be (over and above the Canadian tax?)

Gazza613

The transfer is tax free and does not depend on any RRSP contribution rule. Providing you do not withdraw from it within 5 yrs of Canadian residence date there is no British tax payable. For Canadian taxes it is just a normal RRSP, ie. tax free investment, when you withdraw it is taxed at your marginal tax rate.