Although the number of UK expats in Japan is only circa 15,000, due to the high number of people relocating for work there is a large amount with UK pension schemes. Once you add on any of the numerous Japanese who go to work in the financial sector the demand for pension transfers becomes high. If you’re living there you might be considering a UK Pension transfer to Japan.
Within this blog we shall be looking at:
- UK Pension Scheme Transfers
- Qualifying Recognised Overseas Pension Scheme
- Options for a Japanese Resident
UK Pension Transfer Background Information
All UK pensions, whether they are personal pensions, company pensions (which can be defined contribution or defined benefit) fall under UK Pension legislation and as such have to follow a strict procedure. If you are wanting to transfer out of an existing scheme then it is important to be taking qualified, regulated advice.
Can I transfer my UK Pension to Japan?
In short, no you can’t. There are no HMRC recognised schemes in Japan so you cannot transfer your pension into the country. This doesn’t mean you cannot transfer out of your existing scheme to a more suitable solution in line with your requirements and needs. By staying in your current scheme you may have issues such as;
- Currency risk – being invested in GBP when eventually drawing down in YEN
- Accessibility – Under the Pension Freedom Act, 6th April 2006 you are able to access your pension from the age of 55. The majority of UK schemes will not let you gain flexible access if you are a Non-UK Resident.
- Management – being part of a large pension plan either personal or through work means the funds are managed on mass. The result is that the portfolio is not bespoke to your ongoing requirements and as such can result in your funds being down when you need them most.
UK Pension Transfer Options for Japanese Resident
As previously mentioned any UK pension can only be transferred to another recognised scheme by HMRC. For a resident of Japan, there are in essence 2 options:
- QROPS (Qualifying Recognised Overseas Pension Scheme) – In order to gain flexible access, it would make sense to utilise a Maltese based scheme. The key advantage of a QROPS is that there is no Lifetime Allowance Limit (LTA), currently £1.03m. However, from 9th March 2017 the UK Government brought in the Overseas Transfer Charge (OTC) which meant anyone residing outside of the European Economic Area (EEA) would incur an OTC charge of 25% of their gross pension. On this basis alone we would be disregard using a QROPS.
- International (Non) Resident SIPP – Consider the “International” a branding exercise. For all intensive purposes, this is UK based SIPP specifically created for non-residents. This really does offer a “best of both worlds” solution. By being held in the UK it is regulated by the Financial Conduct Authority, as such giving you the highest level of protection possible which you wouldn’t receive offshore. As the product has been created for non-residents you gain the ability to have flexible access, utilise other international products which allow for multicurrency investments and the pension managed on your behalf but specialist offshore financial advisers.
Where do I start?
Before making any knee jerk reactions which is easily done with all the scaremongering of Brexit and various implications you should speak to a qualified regulated independent financial adviser. Harrison Brook specialise in UK pension transfers, work from a fully transparent fee basis and there is no cost for an initial consultation over the phone. We hold a 5-star rating by Independent Review site Feefo and are here to help you, make a well-informed decision.
The information contained herein is for informational purposes only which is subject to change and should not be relied upon. You should seek advice from a professional adviser before embarking on any financial planning activity.