You are Going to Work Abroad: What Should you do About Your Retirement?
It depends on the country you are going to work in.
It also depends on whether you are moving abroad permanently or whether your employer is sending you to work in another country temporarily.
You are working abroad temporarily
Let's say you are going to work abroad temporarily, either for an employer in Québec or as a self-employed worker.
Country that signed an agreement with Québec
If your host country is one of the countries that has a social security agreement with Québec, your employer may apply for a certificate of coverage for you with Retraite Québec's Bureau des ententes de sécurité sociale. If you are a self-employed worker, you can apply for one yourself. With the certificate, you will be able to continue contributing to the Québec Pension Plan (QPP). Your contributions could increase the retirement pension you will receive later. In addition, you will save significantly because you will not have to pay contributions in your host country.
The certificate of coverage is only valid for a certain time. You can request to extend the duration of this period, but we will need to obtain approval from your host country. These services are free of charge.
Under certain agreements, healthcare and hospitalization may be covered. In the event of a work-related accident or occupational illness, the Commission des normes, de l'équité, de la santé et de la sécurité du travail (CNESST) would cover those expenses.
Retraite Québec's Bureau des ententes de sécurité sociale can also help you with the steps to take to receive benefits if you worked in a country that has a social security agreement with Québec throughout your career.
Let's take a look at two examples to better understand the possibilities offered by social security agreements:
Victoria's example
Victoria's employer is sending her work in Denmark for a year. Since she is covered by a certificate of coverage, she does not need to contribute to Denmark's pension plan. The income she earns in that country is also recorded under the QPP because she and her employer continue to contribute to it. In addition, thanks to her certificate, her healthcare in Denmark is covered. Once she retires, her pension under the QPP will be calculated based on the income she earned throughout her career, including the income she earned from her employer when working in Denmark.
Nicolas' example
V Nicolas worked every winter for 10 years in the lumber business in the United States. During those winters, he did not contribute to the QPP. Instead, he contributed to the U.S. social security plan. By taking the necessary steps with Retraite Québec's Bureau des ententes de sécurité sociale, he will receive a pension from the U.S. government once he retires. He will also receive a pension under the QPP, which will be calculated based on the income he earned in Québec.
To find out the steps to take based on your situation, you can consult the Working abroad section.
Country that did not sign an agreement with Québec
What happens if your employer sends you to work in a country that does not have an agreement with Québec? We could make an arrangement with your employer so that you can still contribute to the Québec Pension Plan. In this case, you may also need to contribute to the plan in your host country. Once you return to Québec, verify whether you can recover your contributions paid abroad and invest them in a registered retirement savings plan (RRSP).
You move abroad
If you move abroad permanently, note that once you retire, you will be able to receive a pension under the QPP. The amount will be based on the contributions you made while working in Québec.
What happens with your savings?
Even if you no longer live in Canada, you do not lose the RRSP or TFSA contribution room you accrued. However, you can only accrue contribution room if you have a Canadian resident status for tax purposes.
You can keep your tax-free savings account (TSFA) in Canada, even if you no longer live here. However, if you no longer have your Canadian resident status, you can no longer contribute to it.
It is different for the First home savings account (FHSA). If you already opened one before you left, you can contribute to it even if you leave the country. You will need to do so from a Canadian account. However, to use the money in your FHSA to buy a home or a condo in Canada, you must be a Canadian resident.
What about the registered retirement savings plan (RRSP)? You can contribute while you are abroad from a Canadian account, as long as you have contribution room that has not been used. The contributions will decrease the income on which you pay taxes only once you return to Canada.
It is important to seek guidance from your accountant or tax specialist, who is familiar with our laws and those of the country where you will be working. It will be time well spent to avoid costly mistakes.