ann m

But could you remove the funds from Canada easily enough, ie, once they were placed in one of the approved funds?

I understand it might be financially stupid to move a pension again - but is it possible? As per JAJ's question, could you take those funds to Oz or back to the UK for example? Are there penalties or tax implications? Will Canada take it's bite?

I was told it would be very poor planning to bring funds over if you weren't 98% sure you were going to grow old here ! No-one can ever be 100% sure of anything, but that is one reason to tread carefully I guess.

Edit: or are there implications for leaving your pension pot in Canada, then going to live and/or retire back to the UK or move to Spain or Outer Mongolia ?

mjwalker007

Yes there would be tax implications for withdrawing from an RRSP. First and foremost it is important to remember the 5 year rule in respect of transferring the pension from the U.K to Canada. If you then withdrew from an RRSP you would be charged a witholding tax from the Canadian government of up to 35% dependent on the amount that you withdrew. This is to stop people withdrawing their pension funds to buy a car , etc etc, but funds can be withdrawn from a Canadian RRSP.

Once you convert your RRSP into a pension income, commonly an RRIF, there is a minimum that you have to take each year as an income , but there is no maximum !

Your quite right, you have to be fairly sure that you are going to stay in Canada, but I feel if most people have made the decisions to move their family half way around the world,this isnt a decision they have made lightly,and if you are then happy here, you would think that it would be for the long term.

There are also major benefits on death if the pension is held in Canada as opposed to in a UK Pension scheme.

ann m

Thanks very much for your reply

JonboyE

I'd like to pick your brains if I can.

Does this mean ANY personal pension scheme? I have understood, to now, that private personal pension schemes could not be transferred. One argument for this is that private schemes do not qualify as pensions as they do not have any employer contribution. They are tax efficient savings schemes but not genuine pensions as there is no "service" requiement to earn them.

Important clarification. Thank you.

mjwalker007

Hi JonboyE

Any pension that is classed as a Registered Pension can be transferred to a QROPS scheme. This includes Personal Pensions and Occupational Pensions.
Personal Pensions do not have to receive employer contributions to be classed as a Registered Scheme, as they still receive tax relief from the govenment for being a Pension Scheme.

Again this would include Stakeholder scheme's and any Individual Pensions.
The employer does not have to contribute for it to be recognised as a pension.

The same rules apply with Personal Pension as with most pensions (i.e not able to access them until age 55 , can take 25% of the fund as a tax free lump sum, etc etc)

Hope this clarifies some of the questions regarding the type of Pension's that can be transferred to a QROPS Scheme .

JonboyE

There is certainly a cost whenever you do something like this so it is not a good idea to transfer a pension unless you are sure it is the right thing to do.

There is also a potential advantage to leaving funds in the UK in that you are spreading your risk. If the UK economy outperforms Canada between now and your retirement then you could end up with a better pension. Obviously, there is also a risk with this strategy.

I think the biggest advantage in moving your pension funds to a Canadian RRSP is that you can have a much more hands on approach to managing the money within your RRSP.

If you cease to be tax resident in Canada there are no immediate tax implications for your RRSP. It still sits there earning tax free income. Any withdrawl from an RRSP is taxable, and as mjwalker007 has already said, there are some hefty witholding taxes. However, the witholding taxes are potentially refundable if you plan carefully.

The most effective strategy if you go non-resident from Canada is to leave your RRSP in place then make small annual withdrawls up to the personal tax credit amount (currently $9,600). The payer will withold about $1,420. You then elect under Section 217 of the Income Tax Act to file a non-resident tax return and, as your income is below $9,600 there will be no Federal tax payable and you claim the refund.

JonboyE

Thanks mj

Kokanee

I have referred to HMRC 'QROPS' list and my Canadian Employers Occupational Pension Scheme is not on the list.

My Canadian Bank have an 'approved' Pension Scheme so I can set up a scheme with them and transfer my UK Occupational Scheme.

I am not looking to withdraw monies but would I then be penalised by HMRC if I transfer between Canadian Pension Funds to put all my Pension savings in one place with my Canadian Occupational Scheme?

I actually transferred within the same company!!!! but different territories do their own thing!

mjwalker007

hi Kokanee,

In respect of the pension that you hold with your employer, is it a defined contribution or defined benefit pension. i.e is your pension based on your years worked and income earned ?
The reason I ask this is because if you transferred your u.k pension into a QROPS scheme (as you have mentioned) this will go into an RRSP.
In which case the RRSP would not be able to be transferred into your company scheme in Canada.
Also bearing in mind the 5 year rule, if you wanted to move funds and you have passed this mark, the RRSP provider is not obliged to inform the HMRC if you withdraw/transfer these funds to another provider.

I think this was the meaning of the question , but if not please let me know.

rodeo star

Thanks for your response mjwalker007.

UK Pension is Defined Contribution Scheme
Canadian Company Scheme is also RRSP, does that mean I could transfer UK Pension to HMRC approved Canadian RRSP Scheme then transfer again to my companies RRSP Scheme?

iananddave

Thanks everyone for your input to my original post.

Going through the QROPS scheme into an approved RRSP seems straight foward just a matter of who to place it with. He'll be seeking professional advice.

Cheers,

On behalf of Dave

Ian and Dave

Alan and Jo

I've hit the reply button here, because I don't know how to post a new message (Yes, I'm technically challenged with this site).
I hope everyone can read this and help me out with an answer: It's March 2009 and I'm gearing up to file our taxes. We've been claiming our UK pension for a year now. We did a buy-back of pension arrears, e.g. we paid a lump sum to buy back years in order to qualify for a decent monthly pension from the UK for the years we worked there. Can anyone advise me if there's a way to claim some kind of tax relief (on my Canadian tax form) for that buy-back? (which was about $6,000). Much appreciated.