Recognized Overseas Pension Scheme (ROPS)
iA Clarington and most other Canadian financial institutions previously approved as ROPS providers have received a request from Her Majesty's Revenue and Customs (HMRC) to meet additional Pension Age Test requirements.
HMRC has decided to suspend transfers as of November 15, 2016.
Until these additional requirements are met, iA Clarington will not be processing ROPS transfers. We will advise once we have received acknowledgement from HMRC that we are able to resume the administration of ROPS transfers.
How to transfer your U.K. pension
What is ROPS?
A Recognized Overseas Pension Scheme (ROPS) is a retirement savings plan that allows people with U.K. pensions to transfer those savings to another country. iA Clarington's RRSP and RRIF plans are approved by HMRC to accept ROPS transfers.
How it works
ROPS is appropriate for anyone who holds a U.K. pension and intends to live outside of the U.K. for more than five years. With the help of your advisor, transferring your U.K. pension is relatively straightforward.
The investor submits the following forms via an advisor to iA Clarington:
- iA Clarington application
- U.K. Transfer Application Form
- Copy of statement
- Original termination and/or transfer forms provided by the U.K. pension administrator to the client
- HMRC member information form (APSS263)
iA Clarington submits the following items to the U.K.:
- Completed transfer forms for the U.K. company administering the pension, with copies for the U.K. Pension Administration
- Letter showing ROPS registration status with HMRC
- Banking details for wire transfer
- HMRC member information form APSS263 completed by the client
U.K. Pension Administration sends pension funds to iA Clarington
Cheque or wire transfer is sent from the U.K. to iA Clarington (amounts may be in U.K. currency, requiring conversion to Canadian dollars).
Once iA Clarington receives the money, it will invest it according to the investor’s instructions.
In most cases, the U.K. minimum pension age of 55 will still apply, and benefits cannot be taken before then. However, a ROPS can offer considerably more flexibility, greater income potential and more investment freedom than a U.K. pension.
Ongoing reporting to HMRC is required for withdrawals that occur under two possible circumstances:
- During any period when the client has been a U.K. tax resident in the year of the transaction or any of the previous five U.K. tax years (the U.K. tax year ends April 5), or
- Within ten years of the date that pension funds were deposited into the ROPS account.
If payments in the reporting period are considered "unauthorized payments," they would be subject to U.K. tax charges and possible penalties. HMRC will review the nature of the transfer and/or withdrawal and determine whether a 40% unauthorized payments charge and possible additional 15% surcharge will apply.
A client in 2013 who has resided in Canada since 2012 withdraws $5,000 from his account. This withdrawal would be considered an unauthorized payment, as it occurred within the five year reporting period.
Please note: Had the same withdrawal been made by a client who has been away from the U.K. for more than five U.K. tax years, we would be obligated to report the withdrawal, but it would not incur tax charges from the HMRC.
iA Clarington is not required to withhold from payments any amounts subject to U.K. legislation.
iA Clarington will, however, withhold any federal or provincial taxes that are required by Canadian legislation.
iA Clarington requests ROPS money transfers by wire in GBP, but occasionally payment is sent by cheque. Funds wired in GBP will be subject to the currency conversion rate charged by the bank we use for wire services.
Note: Effective March 26, 2014, segregated funds are eligible for ROPS transfers for RRSP and RRIF plan types.