PensionPete

Anyone considering transferring their UK pension to Canada under the QROPS (Qualified Recognized Overseas Pension Scheme) rules should note that as of April 6, 2015 Public Sector Pensions (Example: Police, Fire, NHS, Teachers) will no longer be allowed to transfer.

If this pertains to you and you intend to transfer your public service pension, then you must act fast. The process can take considerable time and the deadline is quickly coming.

I have been assured by the pension scheme administrators that they will continue to process requests according to their normal turnaround times and make every effort to fulfill requests prior to the deadline however, I am not holding my breath!

If transferring your pension makes sense for you and your personal circumstances then please act now.

Pete

farjojo71

Do you know if this would apply to someone due a part pension from the British forces?

mjwalker007

This would apply if you have not already started to draw an income or taken any part of your pension.

MartynKJones

Okay, general questions here;

1: What happens to a UK Teachers pension post April 2015 should it not be transferred before retirement? Are the funds (and any additional contributions) lost forever?
2: If you have a UK Teachers pension and do not transfer to a QROPS, is a UK bank account required for pension payments?

Update: On Question 2 I have an answer at least. Yes a UK bank account is required, but a lot of banks will only offer expensive 'offshore' accounts. High Street Banks like Lloyds TSB and building societies will force you to close your accounts if you don't live in the UK, even if the law does not compel them to do so. It's purely a bank policy thing.

mjwalker007

Hi MartynKJones,

As from April of this year, a teachers pension will stay as a deferred pension in the UK. This means that you will not have the ability to transfer the value of this pension to Canada. You will not lose the pension, you will just lose the ability to transfer the value of it into a Canadian RRSP.

A major problem with keeping a pension in the UK is that at retirement you will receive an income in GBP for the rest of your life. This could create massive problems due to fluctuating exchange rate if you have retired in Canada. This has been experienced by many people who are in this position and have been receiving a UK pension over the last 6 - 7 years.

Another problem with keeping a deferred pension in the U.K , if you are now living and aiming to retire in Canada, is that you will have an issue on death into retirement . With many Defined Benefit Schemes your spouse could lose up to 50% of the pension on death in retirement whereas in Canada, the full value of an RRSP would pass TAX FREE to a spouse on death.

MartynKJones

Okay, many thanks. Looks like we might have to get moving, sharpish.

Steve_

I'm assuming UK govt. pensions could only be drawn upon once you reach retirement age? There's no such restriction on an RRSP so I'm a bit surprised you could ever do it. This is a UK govt. decision I'm assuming, so I wonder if they thought about allowing QROPS into an LIRA, which is the closer Canadian equivalent.