Understanding UK Pension Schemes for Canadian Residents
For Canadian residents with UK pension schemes, managing retirement savings across borders can feel like navigating a maze. From tax treaties to transfer options, understanding the rules is crucial to making the most of your hard-earned savings and ensuring a secure financial future.
UK SIPPs for Canadian Expats – What You Need to Know
For many UK expats living in Canada, pensions can be one of the trickiest parts of cross-border financial planning. If you’ve worked in the UK and built up pension savings, you may be considering a Self-Invested Personal Pension (SIPP) to give you greater control over your retirement funds.
However, for Canadian residents, the rules and options around SIPPs are far from straightforward. This guide explains what a SIPP is, why some providers won’t deal with Canadian clients, and what alternatives may be available.
What is a UK SIPP?
A Self-Invested Personal Pension (SIPP) is a type of UK-registered pension that allows you to choose and manage your own investments. Unlike a standard personal pension, a SIPP offers:
• A much wider choice of investment funds, shares, and bonds
• Flexibility to manage your portfolio as your needs change
• Access to pension drawdown from the UK’s minimum retirement age (currently 55, rising to 57 in 2028)
Many expats use SIPPs to consolidate old workplace pensions, reduce fees, and gain more control over their investments.
The Challenge for Canadian Residents
Although it’s perfectly legal to keep a UK pension while living in Canada, many UK SIPP providers will not accept Canadian residents. This isn’t because of UK pension law, but due to Canadian regulations.
Canada regulates investment activity at the provincial level. If a UK SIPP provider services a client in Canada, they may be considered to be “carrying on business” in that province. That could mean registering with Canadian securities regulators – a complex and expensive process for the small number of clients it would affect.
To avoid this risk, many UK SIPP companies apply a blanket policy of not opening or servicing accounts for Canadian residents. Even if you had a SIPP before moving to Canada, some providers may ask you to transfer it elsewhere.
Why Direct Transfers to Canada Aren’t Possible
Some Canadian expats hope to move their UK pension into a Canadian plan, but this isn’t currently an option.
UK pensions can only be transferred abroad tax-free into a Recognised Overseas Pension Scheme (ROPS) approved by HMRC. At the time of writing, there are no ROPS in Canada. This means you cannot transfer your SIPP directly to a Canadian pension without triggering significant UK tax charges.
The Role of International SIPPs
For Canadian residents, one of the main solutions is to use an International SIPP – a UK-registered pension specifically structured to work with expats.
International SIPPs:
• Are regulated in the UK by the FCA
• Allow you to invest in a wide range of assets and currencies
• Can be serviced by advisers experienced in cross-border planning
• Continue to give you access to UK pension freedoms, including drawdown
These platforms allow you to hold investments in GBP, CAD, USD and other currencies, making them a good fit for clients with cross-border lives.
Taxation of a UK SIPP in Canada
Once you’re resident in Canada, the UK–Canada Double Taxation Agreement means your UK pension is taxable only in Canada, not the UK (except for certain government service pensions).
This means:
• Your SIPP withdrawals will be taxed at your Canadian marginal rate
• Canada does not offer a 25% tax-free lump sum as the UK does
• All withdrawals – whether lump sum or regular income – are fully taxable in Canada in the year you take them
Planning withdrawals carefully around your income and tax brackets is crucial.
Key Takeaways
1. You can keep a UK SIPP in Canada, but many providers will not accept Canadian residents.
2. Direct transfers to Canada aren’t possible, as no Canadian pensions are on HMRC’s ROPS list.
3. International SIPPs are often the best solution for Canadian-based UK expats who want control and flexibility.
4. Withdrawals will be taxed in Canada, so advice from a cross-border specialist is essential.
How We Can Help
At Proctor Wealth Associates, we work with UK expats around the world – including those living in Canada – to structure and manage their pensions in the most efficient way possible. We can help you:
• Identify SIPP providers who accept Canadian residents
• Consolidate multiple UK pensions into one manageable plan
• Create an investment strategy that suits your goals and risk profile
• Plan withdrawals in a tax-efficient way under Canadian rules
If you’re a Canadian resident with UK pension savings and want to explore your options, book a call with me and we can go through the best approach for your situation.
Will is an Independent Financial Adviser with over a decade of experience helping expats make the most of their international status.