Mario Vitanelli is a writer and blogger who specializes in international politics and finance, retirement and investment for www.iexpats.com. His areas of expertise include European, Asian and the Med region’s economic policy; SIPP schemes and QROPS. When away from his keyboard, he enjoys photography and appreciates the rest of the Vitanelli family’s endless patience with his football dependence.
Just to make it clear right off- if you were offended by my use of the Canadian ‘aboot’ or ‘eh’, please keep in mind that my mother was born in Canada and retains citizenship (my father was… Italian; you’d never have guessed, I know). That gives me permission to poke fun of their accent and dialect. Not that Canadians would necessarily take offense- they are some of the most inclusive, light-hearted and polite people you can ever hope to meet. That, no doubt, contributed to the decisions made by the around 600,000 Brits now living among our North American cousins in the Great White North.
Let’s say that you are nearing retirement and considering increasing Canada’s British expat population to 600,001 (or more, if you’re bringing family members). The warmth of the people when measured against the chill of their winter, Canada’s boundless natural beauty and open spaces, and her clean, safe cities are an obvious draw. Unfortunately, these sorts of decisions all too often hinge upon the more pragmatic considerations, money in particular. The good news is: the cost of living in Canada is slightly lower than the UK’s. (The price of maple syrup in Canada, for instance, is rock bottom compared to the same in Blighty.)
One of the most common staples of a British retirement portfolio is the pension, and if you’re a pensioner considering moving abroad, the QROPS (Qualified Recognised Overseas Pension Scheme) is increasingly becoming the ubiquitous go-to pension management tool. Pensioners would hypothetically choose a Canada QROPS for the same reason they’d choose one anywhere else- to avoid being taxed by both the British and Canadian government; for the bypassing of income, dividend, capital gains and inheritance tax (100% pension pass to the pensioner’s relatives); the flexibility of currency used- dollar, Euro, pound, etc., and the flexibility of investment options with that currency. Those with an HMRC-recognised overseas scheme can invest their pension in almost anything- stocks, bonds, commodities and the like.
However, there is a downside to the Canada QROPS- chiefly that Canadian international tax regulation is perhaps even more bewildering than the UK’s. So much so that it’s been next to impossible for QROPS specialists to find their counterparts in Canada. Not unlike the (perhaps three) American ‘specialists’ or ‘experts’ who will virtually inevitably suggest a pensioner transfer their funds to the American QROPS- the 401(k), which provides little if any benefit- Canadian experts tend to recommend housing one’s pension assets in a Registered Retirement Savings Plan (RRSP). Sadly, an pension-to-RRSP-transfer is not only often disallowed, unless the pension meets some specific requirements, even successful transfers are frequently subject to hefty taxes.
Further confusing the issue, once said pensioner resided in Canada an RRSP transfer is no longer even allowed. Due to these and other labyrinthine tax statutes, laws and requirements, the Canadian QROPS specialist is quite as rare as the American species. If that all sounds a bit intimidating and discouraging, fear not, for there are some excellent alternatives. Among those earlier-mentioned features pensioners find so attractive about the overseas pension scheme is the limberness of jurisdictional investment. In other words, it’s perfectly acceptable (and exceedingly common) for a pensioner to live in Canada or the States or wherever else, and draw income from a QROPS in Gibraltar, New Zealand, Malta, the Isle of Man, etc. Several of those jurisdictions, in fact, have taxation and economic regulations tailored to offer attractive pension schemes to expats.
As such, most British pensioner expats in Canada end up establishing a QROP scheme in one of those friendly jurisdictions while in Canada. New Zealand and Malta both have double taxation agreements with the government of the Maple Leaf and are both very popular options. Whatever you do, it should absolutely be preceded by a great deal of research and close contact with a QROPS specialist. Those that can be contacted through iExpats.com, I’ve found, are particularly astute specimens as these experts go. Good luck and good travel!