Understanding pensions and their terminology requires large doses of Alphabet soup.

A QROPS on the HMRC list that’s also an RRSP recognized by the CRA. (Who writes this stuff?)

A Qualifying Recognised Overseas Pension Scheme (QROPS), is an overseas pension scheme that meets mandatory requirements set by Her Majesty’s Revenue and Customs (HMRC). A QROPS can receive transfers of UK Pensions. In Canada, QROPS are often also approved as a Registered Retirement Savings Plan (RRSP) by Canada Revenue Agency (CRA).

DB vs. DC?

A Defined Benefit (DB) plan, is a retirement account for which both an employer and employee make contributions that promise the employee a set payout at retirement e.g. two thirds of final salary. You do not have your own retirement pot but instead have a defined income. A Defined Contribution (DC) plan is a retirement account where both an employer and employee make contributions to an employee’s own individual retirement pot – the employee has flexibility to take the income any way they wish but the amounts depend on how much was contributed and how those contributions were invested.

Did You Know?

Your RRSP contribution limits are not affected even if you deposit a large amount from a recognized UK pension plan to a Canadian QROPS.

Your RRSP contribution limits are not affected even if you deposit a large amount from a recognized UK pension plan to a Canadian QROPS. You declare the amount transferred as income on your Canadian tax return and then take a…

Did You Know?

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

If you leave your plan in the UK and it comes into payment, you will normally be paid in British pounds. You will have all the hassle and expense of converting every payment to dollars.

Did You Know?