Can I Access My UK Pension In Canada?
Canada is a fantastic destination for British expats looking to start a new chapter abroad, offering stunning landscapes, a high quality of life, and welcoming locals.
Whilst relocating to Canada can be the start of an exciting and refreshing new chapter, managing the financial aspects of a move can feel daunting, especially when it comes to your pension.
If you’re planning to move to Canada or are already living there, you may be wondering how to access your UK pension pot as a resident in Canada.
Should you leave your pension scheme in the UK or transfer it to a Canadian retirement account?
Our guide will explore your options, helping you make an informed decision which aligns with your unique needs and circumstances.
British Pension Planning
As a UK expat living in Canada, keeping your pension scheme in the UK can present several challenges. UK pension schemes are primarily designed for UK residents, meaning you could encounter difficulties accessing your funds, making adjustments to your portfolio, or receiving payments into a Canadian bank account. Many expats also find it hard to maintain a UK bank account after relocating.
Additionally, regularly transferring pension payments from Sterling to Canadian Dollars exposes you to currency exchange risks, with market fluctuations potentially leading to losses. Over time, these unfavourable changes can significantly erode your retirement funds. Another complication is that UK pension providers may not be authorised to advise on or manage your pension once you become a Canadian resident, leaving you to seek support from a locally regulated provider for investment advice and management.
On top of this, you may face limited drawdown options and remain subject to UK tax on your pension income. As these factors can create a complex and stressful situation for expats, it is essential to explore alternative pension solutions which may be better suited to your new circumstances.
The Wealth Genesis: Financial Advice For UK Expats In Canada
UK Pension Transfer To Canadian QROPS
As of January 2025, it is still possible to transfer your UK pension to a Canadian pension plan, provided the scheme is approved by HMRC as a QROPS (Qualifying Recognised Overseas Pension Scheme).
To avoid the Overseas Transfer Charge (a substantial 25% tax on the total value of your transfer) the scheme must be based in Canada. Canada is currently one of the few countries with pension schemes that qualify for QROPS status, and you can find an up-to-date list of these schemes here. However, as HMRC regularly updates this list, it’s essential to verify the most current information before proceeding.
To transfer to a qualifying scheme in Canada, you must meet specific criteria: you need to be at least 55 years old, a tax resident of Canada, and planning to reside in Canada for at least five years. Whilst transferring your UK pension to Canada might seem like a straightforward solution, it’s vital to evaluate all your options carefully.
Depending on your circumstances, this transfer may not always offer the most tax-efficient outcome, so it’s worth seeking expert advice before making your decision.
Pension Plan Transfer to International SIPP Canada
For UK expats living in Canada, the International SIPP (Self-Invested Personal Pension) offers a more advantageous solution for managing retirement savings. This UK-based pension scheme is specifically designed for non-UK residents, ensuring that transferring your current pension is a non-taxable event whilst retaining the robust protections of UK pension regulators.
The International SIPP provides several key benefits:
Currency Risk Mitigation
This pension product reduces currency risk by allowing you to hold and invest in multiple major currencies, including CAD, protecting your savings from the losses associated with frequent currency conversions.
Portability and Flexibility
The scheme also offers exceptional portability and flexibility, enabling you to manage your pension and investments from anywhere in the world. You can access your funds with flexible drawdown options, including a 25% tax-free lump sum, which may be taxable in Canada but can potentially be offset by contributing to a local Canadian RRSP (Registered Retirement Savings Plan).
Wide Range Of Investment Options
Additionally, the International SIPP offers a diverse range of investment opportunities, allowing you to grow your retirement savings over time whilst managing tax liabilities effectively. With the ability to control how much you convert to CAD, this scheme empowers you to tailor your pension strategy to suit your unique circumstances and goals.
Expat Financial Advice For Canadian Residents
If you’re a UK expat living in Canada or planning a move, evaluating your pension options is a crucial step in securing your financial future.
Transferring your pension doesn’t have to be stressful.
At The Wealth Genesis, we are specialists in helping expats in Canada find pension solutions tailored to their unique needs.
