When you decide to move to Canada from another country you will be thinking of many things including finding a new house, schools for the kids, employment for you and moving your home contents, but may of us forget the things that are probably more important – what to do with our money.
We think to transfer our bank accounts, we try to get good exchange rates for our fund transfers but have you thought about your pension? Probably not, because after all it is sitting in an account of one sort or another, just idling away waiting for you to retire and use it. But did you know you can transfer your British pensions to Canada?
There are many things to consider when undertaking moving a pension of any sort, so good financial advice should always be sought, but here we hope to answer some of the more obvious questions and put you on the path to deciding what is the best option for you.
Can anyone move any pension to Canada?
Any Canadian permanent resident can move any occupational or private pension to Canada as long as you have not started to receive payment from it already.
Your pension benefits can only be transferred to a plan which is recognized by HMRC as a qualifying recognized overseas pension scheme (QROPS). A financial institution must apply to have QROPS status, and therefore only 23 institutions in Canada are currently authorized to make the transfer.
What are the advantages of moving a pension?
Probably the most important advantage is flexibility in accessing money because 30% of the lump sum transfer amount goes into an RRSP, it is accessible at any age, and can be accessed as lump sums or an income stream. Also, when you start collecting an income from your “locked-in” portion, you can choose to receive any amount between the legislated minimum and maximum. If you don’t need the maximum, you can choose a lesser amount in order to let more of your money continue to grow on a tax-deferred basis; customized investment portfolios the money is invested according to your personal risk tolerance and objectives, and you can make changes anytime; increased estate value surviving spouse receives 100% of value, and if there is no surviving spouse, your kids or other beneficiaries receive the full after-tax value.
If you kept your money in the UK pension, your surviving spouse would typically only receive 50% or less of your pension, and your kids typically wouldn’t receive anything) financial planning advice when your money is invested with a financial planner here in Canada, you have access to their advice on all areas of your personal finances; consolidation you may have more than one private pension in the UK. When you transfer them, they can all go into the same RRSP and LIRA, which will simplify keeping track of your personal finances. Even if a married couple only had one pension each, it would be much simpler dealing with one financial institution here in Canada, than two pension administrators overseas.
This is a general source of information only. It is not intended to provide personalized tax, legal or investment advice, and is not intended as a solicitation to purchase securities. Vincent Spadafora ) is solely responsible for its content. For more information on this topic or any other financial matter, please contact an Investors Group Consultant.
Vincent Spadafora
