UK pension living in Japan

[ichii]

Claiming a UK private pension in Japan is taxed differently from the public pension? If so, perhaps as "self assessed income tax on individual income"? So up to 1,950,000jpy, at 5%, and from there to 3,300,000 at 10%, and so on?

I think annuities from UK government backed private pension schemes such as SIPP and workplace pensions are taxable as as pension income.

Not easy finding info on taxation of personal defined contribution pensions. Page 3 here mentions "Personal income tax and social security contributions - Taxation of pensioners" with 25% to 5% rates described.
https://www.oecd.org/els/public-pension ... -Japan.pdf

The retirewiki does not mention personal pensions as far as I can see. https://retirewiki.jp/wiki/Japanese_pen ... m#Overview

I will make a new thread if no luck. Thank you.

[TunaSki]

Claiming a UK private pension in Japan is taxed differently from the public pension? If so, perhaps as "self assessed income tax on individual income"? So up to 1,950,000jpy, at 5%, and from there to 3,300,000 at 10%, and so on?

I think annuities from UK government backed private pension schemes such as SIPP and workplace pensions are taxable as as pension income.

Not easy finding info on taxation of personal defined contribution pensions. Page 3 here mentions "Personal income tax and social security contributions - Taxation of pensioners" with 25% to 5% rates described.
https://www.oecd.org/els/public-pension ... -Japan.pdf

The retirewiki does not mention personal pensions as far as I can see. https://retirewiki.jp/wiki/Japanese_pen ... m#Overview

I will make a new thread if no luck. Thank you.

Things such as iDeCo are taxed in two separate ways, depending on how you withdraw them.

Anything from iDeCo you withdraw as a lump-sum, is retirement income.

Anything from iDeCo you withdraw as an annuity is pension income.

(Your Kokumin and Kosei Nenkin can only be withdraw as an annuity, which is why that is only pension income. The only way to withdraw your Kokumin and Kosei Nenkin as retirement income is to do the early lump-sum withdraw, which can only be done by foreigners, who have less than 120 months contributed, and leave Japan)

Which is why I believe the same applies to any SIPP and workplace pension which you may have in the UK and withdraw from Japan. Because like iDeCo being a government backed defined contribution pension, SIPP and workplace pension are government backed defined contribution pensions too.

[Tkydon]

This has brought up a few questions in my mind.

I assume the taxable event will be "when the money is brought over to Japan?"
I assume it will be calculated on the "exchange rate" on the transfer day?

No, the taxable event is when you receive the pension and the exchange rate on that day.

It then depends how long you have been in Japan, and if less than 5 years in the last 10 years, whether you remit any funds to Japan in the same year.

Is it better to do one massive lump transfer or a monthly transfer? I would assume one massive transfer is easier for tax purposes if exchange rates have to be taken into account.

Is there any way to lower our tax liabilities? Please note. This is not tax avoidance but being tax efficient.

It doesn't matter. You have to calculate every monthly payment at its own exchange rate.

https://www.murc-kawasesouba.jp/fx/past_3month.php

[Tkydon]

Claiming a UK private pension in Japan is taxed differently from the public pension? If so, perhaps as "self assessed income tax on individual income"? So up to 1,950,000jpy, at 5%, and from there to 3,300,000 at 10%, and so on?

I think annuities from UK government backed private pension schemes such as SIPP and workplace pensions are taxable as as pension income.

Not easy finding info on taxation of personal defined contribution pensions. Page 3 here mentions "Personal income tax and social security contributions - Taxation of pensioners" with 25% to 5% rates described.
https://www.oecd.org/els/public-pension ... -Japan.pdf

The retirewiki does not mention personal pensions as far as I can see. https://retirewiki.jp/wiki/Japanese_pen ... m#Overview

I will make a new thread if no luck. Thank you.

All your pension and other income will be added together and taxed under the Aggregate Taxation System, unless you have specific income that can be taxed under the Separate Tax method, and you choose to do so if optional.

After adding all the Aggregate Taxation System income, you will apply all of your Allowances, Deductions, and if you receive qualified Public Pensions (Japan National Pension, UK National Pension, US Social Security, etc.) you will also claim the Public Pension Allowance, leaving the Total Taxable Income, and you will then apply the Marginal Tax Rates to the income bands.

See

https://www.nta.go.jp/taxes/shiraberu/s ... df/050.pdf

[TunaSki]

.

All your pension and other income will be added together and taxed under the Aggregate Taxation System, unless you have specific income that can be taxed under the Separate Tax method, and you choose to do so if optional.

After adding all the Aggregate Taxation System income, you will apply all of your Allowances, Deductions, and if you receive qualified Public Pensions (Japan National Pension, UK National Pension, US Social Security, etc.) you will also claim the Public Pension Allowance, leaving the Total Taxable Income, and you will then apply the Marginal Tax Rates to the income bands.

See

https://www.nta.go.jp/taxes/shiraberu/s ... df/050.pdf
[/quote]

Aware of that. The discussion is about if annuities from UK government backed private pensions such as SIPP and workplace pension are pension income (so therefore qualify for the pension income deduction) or if they are not pension income.

Any annuity you get from your iDeCo is pension income. So I think SIPP and workplace pension annuities from UK also get to be pension income in Japan too

[ichii]

I am learning about pensions from now really, so the terminology is new to me. When I say personal DC pension, I am not thinking of annuities though I understand that is an option (some years away for my wife and I). Looking at page 10 of the linked document shared by TunaSki, I see DC pensions classed as "miscellaneous income: public pensions". This is where I'm lost now since in my reading I learnt there were two categories of 1) public pensions (including state pensions) and 2) private pensions (DC). But the page 10 table adds DC pensions under public pensions, so they are not "private pensions" at all!? Sorry for the probably basic question.

Thank you for the document - going to be useful!

[TunaSki]

I am learning about pensions from now really, so the terminology is new to me. When I say personal DC pension, I am not thinking of annuities though I understand that is an option (some years away for my wife and I). Looking at page 10 of the linked document shared by TunaSki, I see DC pensions classed as "miscellaneous income: public pensions". This is where I'm lost now since in my reading I learnt there were two categories of 1) public pensions (including state pensions) and 2) private pensions (DC). But the page 10 table adds DC pensions under public pensions, so they are not "private pensions" at all!? Sorry for the probably basic question.

Thank you for the document - going to be useful!

Oh sorry, the link was actually shared by TokyoDon (my quoting syntax ability didn’t quote it correctly)

Pension income is a category of miscellaneous income, but it’s taxed differently to miscellaneous income because it has a pension income deduction applied to it.

IDeCo or a DC account is a government pension scheme overseen by the defined contribution pension act.

That is why annuities from an ideco or a DC account are taxed in Japan as pension income. And that is why I believe that UK SIPP and workplace pension annuities get the same treatment. Because they are UK defined contribution pensions schemes.

[ichii]

Thank you TokyoDon for the document.

"Private" and "public" is neither here nor there then for pension tax it seems. I am weighing up adding money to my private pension to get the government 20% refund for up to the last three years. Since Japan tax rules will apply (and so UK rule of first 25% tax free becomes meaningless), I have to consider whether I will get my money back, and therefore should forego the 20% refund and invest myself (current 5% interest rate for example), not least where a private pension has disadvantages to weigh up (access from age 57+, etc.).

[Wales4rugbyWC23]

Thank you TokyoDon for the document.

"Private" and "public" is neither here nor there then for pension tax it seems. I am weighing up adding money to my private pension to get the government 20% refund for up to the last three years. Since Japan tax rules will apply (and so UK rule of first 25% tax free becomes meaningless), I have to consider whether I will get my money back, and therefore should forego the 20% refund and invest myself (current 5% interest rate for example), not least where a private pension has disadvantages to weigh up (access from age 57+, etc.).

Are you paying into a private pension in the UK now?

I am weighing up adding money to my private pension to get the government 20% refund for up to the last three years.

[ichii]

Wife and I both have UK private pensions (DC with provider Standard Life) but are moving to Japan, so paying nothing as of last September. Having sold our UK house last December we suddenly have all this cash with most spread across 5% interest accounts, the rest moved to Japan (rate was suddenly good, but now it's in JPY there is nothing like low risk UK interest rates to benefit from sadly).