No matter if you are one of those thousands of British ex-pats who call Canada home or a Canadian who has developed a pension after working for years in the United Kingdom, you have the freedom to transfer your UK pension to RRSP in Canada.
The procedure
In order to move your pension without any recurring tax payments, you will require to transfer it to a Qualifying Recognized Overseas Pension Scheme (QROPS) in Canada, usually in a Registered Retired Savings Plan (RRSP).
It just involves three simple steps:
- An interview is held to know your condition and assess if it would be good for you to move ahead with your UK pension transfer to a Canadian RRSP. A request for information form is sent to you to acquire related information from the UK Pension provider on your behalf.
- If it is in your good interest to transfer the pension and both parties have no issues with it, then an authorization letter is sent to the UK pension provider to transfer the amount.
- After the paperwork is received, the client can perform the final paperwork to receive the funds transferred directly to their Canadian RRSP.
Is it beneficial to transfer your UK pension to Canada?
Well, there are a lot of benefits to moving your UK pension. Some of them are:
No or low cost: Usually, you aren’t charged for the pension transfer procedure.
Currency fluctuation: While moving your UK pension over QROPS Canada RRSP, your pension is received in Canadian dollars at retirement. This doesn’t let the fluctuating exchange rate affect your pension.
Better flexibility: Though pension funds permit limited investment options, you can draft a portfolio according to your requirements and level of risk.
Flexible retirement income options: Many pension plans need to start drawing your money on a fixed time (say from 55 years of age). So, when you transfer your pension to Canada, you have higher flexibility on the amount of income you will get during retirement.
Zero liability on UK tax to pension income: After transferring to a QROPS, pension income is only taxable in the resident nation. When transferred to a QROPS, UK pension rights exclude them from the IHT tax levied on the death for pension above the age of 75.
Easy spousal rollover: In the United Kingdom, many company pension schemes pay just half the mentioned pension income on the death of the person, which means your beneficiary can lose around 50% of the pension. But, with your money in a Canadian RRSP, upon the pension holder’s death, full value is transferred to the spouse, and it is completely tax-free.
Is moving your UK pension to Canada good for you?
Well, you have so many benefits of moving your UK pension to RRSP in Canada. However, hiring a financial adviser can ease it for you. If you are unsure about whether it is right for you, then hiring a financial adviser would help you transfer your pension in a simple and tax-simple way. Dominion Financial Management is a highly recognized name in this field. It will consider your unique needs and help you out in all situations.
