Sorry to drag up this old “pearl” again...
In Feb this year I began the transfer of a UK Private Pension Plan to Canada, to a recognised approved Canadian QROP (Had I remained in the UK this pension would have matured in May anyway & then been invested into an Annuity to provide a pension income) the funds are now here invested in a Canadian RRSP.
Long story short... the UK provider was so lethargic & unhelpful it took until mid May before funds were actually sent, they were then sent as a cheque (not by wire) the cheque took 3 weeks to arrive & a further 3 weeks to clear. In all that time my funds have not realised any interest at all.

I emigrated to Canada in Sept of 2002 & I’m now a Canadian Citizen (not a PR) so I’ve been non-UK resident since that date (April 2003 for Tax purposes) Now the funds are here & invested in an RRSP I understand they are subject to the “new” (April 2012) UK Revenue rules. I’m advised that I may

1. withdraw up to 30% of the pension pot tax free- my understanding is that although the UK Revenue will allow this withdrawal tax free, (& I thought the figure was 25% not 30%) Canada Revenue will not, & any lump sum taken would be classed as income for this year & taxed. Am I correct?

2. invest the remainder in a diverse portfolio & convert it to a RIF to provide an income

3. I’m advised that because I have been here more than 5 years reporting restrictions to the UK Revenue no longer apply. (I am also 63). – my understanding is that the new Canadian provider has to report to UK Revenue for 10 years after the transfer is made & it has nothing to do with how long I’ve been non UK resident or my age.

4. I understand there is no tax payment due on the actual PPP transfer itself & that the Canadian Revenue allow this as a “one time transfer” that is not subject to tax. Am I correct?

My other investments here have fallen over the past few years & I think my advisor’s strategy is to use the 25% or 30% “available cash” as a ‘buffer’ for me to live on in the near future (to avoid selling investments that are down) & trust that things improve over the coming few years, but I’m not sure this would be allowed, or would at least be subject to Canadian tax.
My objective in transferring my pension was to give me more freedom in its use but to use it as a pension income. I have seen many comments & queries on here re QROPS but wanted to make absolutely certain that I’m doing nothing that will attract penalties either in the UK or here. can anyone 'in the know' clarify these new rules, in simple terms. I’m looking for some input on what I can & more importantly what I cannot do with the transferred funds & remain within both the UK & Canadian Revenue requirements for a QROP.
Thank you in advance for any information. Sorry this post is long but hopefully any answers will also help others, who like me are just confused by all these rules that are often misinterpreted.DKinBC

Hi DKinBC,

In regards to the new rules that were introduced in April 2012 , as you are over 55( this is the age you are able to draw a UK personal pension from ) the new rules will not affect you in regards to any UK tax implications if you make withdrawals based on the criteria as if that pension was still in the U.K.

Also important to bear in mind is that any penalty that the U.K may make for unauthorised withdrawals from a pension that has been transferred from the U.K ( i.e not following U.K pension withdrawal rules ) has not changed since QROPS was introduced in 2006. The major change that took place from April 2012 is that ANY withdrawal made within 10 years of a transfer taking place will now be reported to the HMRC. The reporting procedure has changed.......the tax implications have not !!!

The TAX FREE lump withdrawal that you mention will now not be applicable as the pension is in an RRSP. any withdrawal that you make from the RRSP will be based on Canadian tax rules........not the U.K . (There will only be U.K tax implications if a withdrawal is made and it is deemed an unauthorised withdrawal ........as mentioned above ) If you withdraw a lump sum from an RRSP you will be subject to witholding tax and it will be added to your income for that year.

As this is a transfer from a U.K pension this can fall outside of your RRSP limit for the year it was received, however it is important that your tax return is completed correctly to show this otherwise the CRA may assume the amount received has overfunded your RRSP. Again this is something your Advisor/Bank that dealt with the transfer should be able to help you with.

I presume this is all information that your advisor/bank provided you with before you made the transfer. Ultimately you need to be confident in the advisor/bank that you have used and happy that they have provided you with the correct information, especially as this is a QROPS transfer.

Gather as much information as possible about the person/company you are aiming to use to help transfer your UK pension i.e how long have they been transferring UK pensions, qualifications, etc etc and If possible seek personal recommendations from people that have already used that company.This should help you find the right person/company, with the relevant experience and knowledge to help you with your QROPS transfer.

I hope this has helped with your questions.

Thanks for the reply & yes that did help, you confirmed my thoughts. fyi The Canadian provider is a very large pension provider, that was chosen by my advisor because they were "on the approved list' & I'm told they have transferred eight QROPS since January, BUT as large as tey are I'm not sure that they fully understand 'the rules', especially the latest reporting rules.

Any comment on whether the lump sum that can be taken is 25% or 30%? I always understood 25%. & I accept that any sum taken would be subject to Canadian RSP/ tax laws.
What exactly is meant by a "witholding tax" is that simply another name for "income tax?"
On another note the PPP has now been transferred so presumably it is now "locked in" to the new Canadian provider & cannot be moved elsewhere without penalty?
Thanks again!

Hi DKinBC,

The lump sum figure is 30% although this somewhat becomes irrelevant based on the timescales that you have been out of the U.K and the U.K tax implications of making a withdrawal.

Important to remember is the RRSP is not designed for withdrawing lump sums due to the tax penalties imposed by the CRA.

By withdrawing from an RRSP the CRA with levy withholding tax which is taken at source, and this is based on the amount that you withdraw.

For amounts between 0 to 5 K = 10%
amounts over 5 to 15k = 20%
amounts over 15 k = 30%

I hope this has helped to clarify the situation.

Hi again!
Yes thank You, but I'm not sure what you mean by
"The lump sum figure is 30% although this somewhat becomes irrelevant based on the timescales that you have been out of the U.K and the U.K tax implications of making a withdrawal".

If I interpret this correctly you're saying that I could take 30% (if I wanted to) & there would be no UK tax implications if I did this, BUT as you pointed out, there would indeed be Canadian ones.
Thanks again for you input.

Yes , based on the scenario you have provided above , the only tax implications would be from the Canadian perspective !!

Ok I think that's cleared up the getting the pension here & what implications it may have
Can anyone advise further, now the money is here & in an RRSP that will soon be converted to a RRIF (I'm 63 & if I'd stayed in the UK this pension would now have 'matured' & been converted to an annuity to provide a pension income)
Does anyone know... Will there be any UK tax implications to any pension paid to me in Canada from the RRIF?
Or will the RRSP/ RRIF now be subject only to Canadian tax requirements (acknowledging what has previously been posted re the UK taxman & unauthorised payments)
Thanks again for any info.
DKinBC

Hi DKinBC,

For more general tax advice im sure Jonboye will be along to help clarify your specific situation.

With the caveat of the bold bit (because mjwalker007 is better qualified to speak on this) from a pure tax point of view as long as you remain tax-resident in Canada I don't see how the UK has any interest in your RRIF or the pension it provides. The CRA will want their pound of flesh.

Thanks Guys help much appreciated. I couldn't see why the UK would be interested either, I haven't filled in a UK self assessment form since 2004, but with those guys you just never know