Hi.

I hope this question has not been asked before, I did search previous posts.

Can I transfer my pension into a recognised QROPS scheme, then flip it into an investment of my choice?

Regards, Steve

Funny you should ask this question just now. Just recently we transferred some small pensions over with Scotia Bank to test the process and we were told that it had to sit in a GIC; now I don't know whether this is peculiar to this type of transfer, we're still working out the kinks with the financial advisor.

I'd be interested to hear anyone else's experieinces.

Cheers - Steve

A lot depends on which company you use to transfer it.

Hi Steve,

I would be interested to know a little more about the GICs that you transferred your UK Pension funds into.

Are they GIC's within an RRSP or RIF ???

The reason I ask is that the whole idea/process of QROPS was to allow people to move their pension funds out of the U.K into equivalent types of pension schemes within the overseas country i.e in Canada the money would have to go into an RRSP or RIF. The receiving scheme will only be granted QROPS if they follow the HMRC rules regarding being a pension scheme within the specified country.

If Scotia Bank have transferred the U.K pension funds straight into a normal GIC which is not part of an RRSP/RIF they may have carried out an unauthorised transfer. However it is also up to the UK scheme to make sure that the money is going to a qualified QROPS otherwise they should not have released the money.

What did the advisor at Scotia Bank tell you about the rules of QROPS and overseas transfers when they arranged the transfers for you ??

Hi Steve,

The reason that QROPS was introduced by the HMRC in the UK is that they only wanted peoples pension funds to be transferred to qualified overseas schemes, of which the HMRC has granted them that qualification.

This is because they do not want people being able to transfer U.K pension funds into any type of scheme/investment that the HMRC do not recognize, and do not follow broadly what a pension is in the UK. Therefore they still want some control in the process and where the money is being sent.

Therefore you can only transfer your pension fund into a company in canada that has the QROPS qualification.

However, once it has transferred over to the QROPS, there may be various options open to you on moving your money, based on your personal circumstances, i.e how long you have been left the U.K etc.

It is important that you know the rules clearly otherwise there could be a large tax penalty imposed by the HMRC if their rules are not followed correctly.

Unfortunately, the forum isnt the right place to give specific advice, only generalities, but as mentioned, it is important to seek the correct information if you are aiming to move your pension money straight from the QROPS provider in Canada to another company.

Thanks guys for your replies.

I now have the answer to my question.

Oh and don't worry, I will be following the QROPS rules on this matter.

Regards. Steve

Yup, it went into a GIC in an RRSP in an approved QROPS scheme.

Hi Steve,

Following on from your original thread, and the fact that you were told by Scotia that it had to go into a GIC with them.

In General ,your pension money can go into any funds that the QROPS provider can offer , so it may be only Scotia's rule that it has to go into a GIC with them. Most QROPS providers in Canada will be able to provide access to 30 + fund options that they would have available.

The problem with Scotia only offering a GIC for your funds is that GIC rates are particulary low, and you may have enetered into a GIC that is locked away for a specific period of time.

GIC's are not a bad option, but in the current interest rate climate, there may be better alternatives.

The main thing is that it is in a GIC within the RSP which was my main concern when you originally made the post.

One thing people new to Canada need to understand is the difference between the programme and the investment.

RRSPs are a programme that basically informs the tax man how to deal with your money, both as it grows, and when it's taken out.

Within that programme many types of investment are available. While growing inside the RRSP they are not taxed. When you come to draw income from the investment both the principal and the growth/income are taxed as income (even if the investment only had capital gains) at your highest marginal tax rate.

A pension transfer from the UK usually goes into an RRSP over here. Since it is a transfer there will be no tax refund. However, when you invest new money into your RRSP you do get a refund based on your marginal tax rate.

Some QROPS, however, lock-in the transferred pension plan in a Locked in RSP or Locked-n Retirement Account, in which case the money is not available until you are 55. However, a transfer to an RRSP gives more discretion to the owner. Note, however that HMRC has a five year rule whereby they can penalise any withdrawals made within 5 years of landing in Canada.

Also, remember that all RRSPs have to be turned into a Retirement Income Fund at age 71, and a regulated minimum amount is withdrawn each year.