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Did You Know?

If you live in Canada and intend to retire there too, there is little value of having a UK pension that allows you to take a tax free lump sum.

Many UK pension plans allow the beneficiaries to make a withdrawal of 25% on reaching the retirement age. In the UK that 25% lump sum is not taxed. Unfortunately, this does not apply in Canada.  Most withdrawals from a pension plan are taxable for Canadian residents.

If eligible, the entire proceeds of the UK pension could be transferred to Canada and could be invested for you in a special type of RRSP. The plan can grow, tax free, until you are ready to take out some income. Invested wisely, over time these investments could grow substantially and the increased value could outweigh the loss of the tax that could have been saved on the 25% lump sum. However, as we all know, investments can go down as well as up.

Managing a pension plan from over 3,000 miles away is hard. Give us a call or e-mail and we would be happy to explore if you are eligible to transfer a UK pension and whether or not it makes sense for you.

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Did You Know?

You might need advice before you are allowed to transfer a UK Defined Benefit pension plan.

To protect you from fraud the UK’s tax authority – HMRC – will not allow trustees to transfer a DB pension with a value of £30,000 or more without the advice of a consultant regulated by the FCA.
Did You Know?

If you are going to retire in Canada and you have a Defined Benefit Pension in the UK, life might be better if you transfer the funds to Canada.

Your retirement expenses will be growing in line with Canadian inflation (which could be quite different from UK inflation). So a transfer out into a QROPS may be a better fit with your retirement plans.
Did You Know?

Some pension amounts are defined as “Trivial” and you can cash them in.

Right now, but subject to change, if the total lump sum value of your UK Defined Benefit and Defined Contribution pension plans is £30,000 or less you can withdraw the Defined Benefits amounts in cash and bring it to Canada.