Transferring your pension from Canada

Taking your pension insurance with you to Germany - Is that possible?
Antonia Sophie Belz
Juni 15, 2023
4 min

Das Wichtigste in Kürze

A German-Canadian social security agreement on pension insurance has been in force since 14 November 1985. There is also a social security agreement with the province of Quebec.
The agreement stipulates that your periods of insurance can be added together. No "total pension" will be paid by any country.
The German-Canadian double taxation agreement provides that the tax must generally be paid in the source state.

You have worked temporarily in Canada and would like to transfer your pension provision to Germany? In addition to many organisational measures, questions regarding pension provision must also be clarified. Can you transfer your pension from Canada to Germany so that your pension assets are not lost?

You can find general information on transferring your pension plan here.

1. German-Canadian Social Security Agreement

A German-Canadian social security agreement for pension insurance has existed since 14th November 1985, and a social security agreement exists with the province of Québec. These entered into force on 1st April 1988.

The agreement applies to persons who are insured under the German or Canadian pension insurance. The agreement with Québec, in turn, applies to persons who live in Québec or who have paid contributions into the Québec pension insurance scheme.
The subject matter of the Agreements is the Canada Pension Plan system and the Québec pension system, "Regime de rentes du Québec/ Québec Pension Plan".
This ensures that you will not suffer any disadvantages in the event of a pension if you move back to one of the countries.

1.1. Aggregation of insurance periods

The agreement stipulates that your insurance periods can be added together. This is particularly relevant if, for example, you do not have a sufficient number of insurance periods in Germany and would therefore not be entitled to a pension. Such a regulation can also be found in the agreement with Québec.

1.2. No "total pension"

As in many other countries, pension payments are made by the respective country itself. There is therefore no aggregation of pension entitlements and no "total pension" is paid out by a country.
For the calculation of the pension from the respective country, you should note that ultimately only the respective insurance periods in the countries themselves determine the amount of your pension entitlement.

1.3. OAS pension ("Old Age Security" scheme)

For the payment of the OAS pension (tax-financed "Old Age Security" scheme) abroad, it is a prerequisite that you have lived in Canada for at least 20 years after your 18th birthday. With regard to OAS pension periods, the agreement can also take into account periods during which you were insured or lived in Germany. However, here too, pensions are only paid out to the extent of the periods actually residing in Canada.

If you have lived in Canada for less than 40 years, you will only receive a pro-rated OAS old-age pension.

2. Tax payment

If you receive a pension from Canada, income tax must be paid in Canada. This is irrespective of whether you actually live in Canada. In principle, however, this is already done by the insurance carrier itself, which already withholds income tax from your pension on a monthly basis. This is a consequence of the German-Canadian double taxation agreement of 19 April 2001. According to Art. 18 Para. 1 lit. 1 and Para. 2 of the agreement, the tax is withheld in the source country, i.e. in the country from which the pension is drawn.
It also follows that Canada has no right of taxation on pensions from the German statutory pension insurance.

3. Applying for your pension

If you are already living in Germany again and you are entitled to a pension in Canada, you do not have to contact Canadian authorities separately. Rather, you can also apply for your Canadian pension at the German pension insurance or at any German office where pension applications can generally be submitted.
Under the agreement, when you apply for a pension in one country, you also apply for it in the other. In other words, when you apply for your Canadian pension, it is also an application for your German pension. It is only important to note that you have also completed insurance periods in the other country.
The payment does not have to be made at the same time. You can decide here.

4. Transfer of pension provision using the example of the insurance provider Canada Life

It is possible to transfer the direct insurance contract between employer and employee. Provided that the employers agree.

It is still possible to convert salary into direct insurance. There is a legal right to deferred compensation. A new deferred compensation agreement must be concluded with the new employer.

If the future employee does not agree to the insurance transfer, it is still possible to transfer the existing pension assets from the old employer to the new employer. Since 1 January 2005, you have a legal right to do this. You can therefore ask your former employer to transfer your pension capital. The only condition is that no more than twelve months have passed since you terminated your contract with your former employer.

This is based on the GDV transfer agreement. Canada Life is a party to this agreement. It also guarantees that no additional acquisition costs will be incurred in the event of a transfer.

It is also possible for the employee to take out the policy himself. In this case, the content of the contract is limited to the time when the employment relationship ends. The employee can then continue the contract privately.

5. Any questions?

Do you have any questions about transferring your retirement savings out of Canada?
STC will be happy to advise you - simply complete the form below and contact us!

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