Very informative for the first time
Accordingly, it now shows how much pension I would be entitled to according to what I have paid in so far, and presuming the rules don’t change in the future.
I think it best to consider this a rough estimate and not become too attached to the figures.
- 93 months of kosei nenkin (from when I was working for the Sendai and Miyagi boards of education),
- 12 months of kokumin nenkin (from when I was between jobs and working part-time -most of this was at a reduced rate),
- and 97 months of kyosai/public servant nenkin (now folded into kosei nenkin with a little something on top).
A total of 202 months of eligibility, comfortably over the 120 currently needed to vest and receive a pension. You can see all this information in Section 1 in the photo above.
So based on my contributions so far, I will receive 323,084 yen a year from kokumin nenkin, 182,875 yen a year from kosei nenkin, and 282,445 yen a year from kyosai nenkin, for a total pension of 788,404 yen a year. This is just over the maximum annual payout for kokumin nenkin, which is currently 779,300 (based on paying in for the maximum 40 years).
Looking at the amount I have paid in, at first glance kokumin nenkin seems to be an amazing deal, yielding an annual pension of 323,084 yen from just 97,250 yen contributed. However, this ignores the fact that paying into kosei or kyosai nenkin also includes the basic kokumin nenkin payment, so in fact I have paid 202 months into kokumin nenkin and that is reflected in the amount of pension due.
Also, 97,250 is nowhere near 12 months’ of kokumin nenkin payments. This is because I successfully applied for a waiver of some of my payments due to low and unstable income (I was not renewed at my job and had to get by on part-time work for a year before finding my current full-time position). This is a relatively simple procedure you can do at your local pension or ward/city office and is better than not paying as it still gives you eligibility towards vesting.
I have mixed feelings about the 6,463,359 yen I have paid into the system. On the one hand, if I were able to get a refund and invest that money now for the next thirty years, I think I would have a good chance of doing better than my projected payout (factoring in both yield and principal).
On the other hand, recently arrived in Japan 22-year old me would not have set money aside for retirement, lacking both the knowledge and the discipline to do so, so the compulsory saving represented by the pension is better than nothing. I suspect this is the case for many people.
Another benefit of the government pension is that it provides diversification from my other investments, insurance against longevity risk, and simplicity as I get older and less able to manage my investments. That is one reason I have also applied to pay into the UK pension scheme on a voluntary basis.
Having a regular payment from the government is worth a lot, especially if you become frail or lose your mental faculties.
I can imagine making another 5 years of kyosai nenkin payments, and then about 16 years of kokumin nenkin, on top of what I have paid in already.
My wife will have about 40 years of contributions once she is done (split between kosei nenkin, kokumin nenkin, and the freebie for being a dependent spouse). She’s also paying fuka nenkin, which will increase her eventual pension amount slightly.
200,000 yen a month between us once we are both claiming seems to be a reasonable (slightly pessimistic) estimate, and will give us a nice income floor. We shouldn’t starve, at least 😉
I imagine a lot of people will be getting these estimates this year now that we are all vesting after ten years. How’s your pension situation? Any questions?
I think I would starve on 20 man yen per year, or am I misunderstanding something? I paid into the scheme for three or four years, but then I opened up my own school and decided to save for myself. At the time, there was a lot of talk going around that the system was going to collapse on itself and leave people with nothing. I figured I would have a better chance of having something if I was in control. But we won’t know how that will work out if I get Alzheimer’s, or something like that.
Ah, sorry! I think my wife and I will get 20万 a month from the Japanese pension…
If we stopped paying now we’d get about 15, but I am assuming we’ll keep paying and they will reduce the payouts 🙂
Of course I intend not to need that money, but it’s nice to have as a backup (and extra discretionary spending).
I don’t think the system will collapse entirely, as 1) people would riot, and 2) it would cost more to pay welfare for everyone.
I believe they will increase the pension contribution amounts, make everyone pay (it’s a legal obligation now, but it’s not enforced), and reduce the payouts, but people who paid in will get something.
There’s a chance you may get a little more than calculated.
I thought I had it figured–had been to the pension office for a printout, and had talked to 私学共済 (now rolled into 厚生年金) several times and also rec’d various paperwork from them. I’ve rec’d two payments so far–mid June and mid Aug–and both were more than expected (June quite a bit more).
One reason June was more is that 国民年金 seems to have paid for six months, starting with January, rather than starting with my first actual month of retirement, April. It seems odd that this happened, but I haven’t been back to the pension office to ask about it. OTOH, the monthly payment that they’d previously estimated for me was accurate (fractionally off by tens or a hundred yen, but close enough).
The other component was the surprise, higher by about ¥19,000 than expected. (And no, I haven’t called to ask…!) This kind of confirmed what a colleague had told me last fall or winter when I was talking numbers with him (he retired the year before)–he’d said then that it’d be more than expected.
Since I’ve only just gotten my second such payment, this is only anecdotal–maybe there’s something that will get settled out or adjusted in the future, or maybe not. After a few payment cycles, I’ll feel more confident. I had expected 148k/month, and am apparently getting 167k.
I’m as yet unsure how taxes will work with this. No problem with Japan on this, but as a US person, pension is not earned income, and so the foreign earned income exclusion doesn’t apply. Hopefully, at about $18k/yr, it’ll fall under any tax thresholds, but with some other passive income added on, maybe not.
Incidentally, my wife has always worked and still has a few years to go, so in the usual ways here, we lead separate financial lives, and when the time comes, she’ll be getting her own pension.
Hi CS
Interesting! I guess there is a chance we’ll get quite a bit more than my pessimistic baseline, but I’m not counting on it 😉
Guess I’ll find out in twenty-five years’ time…
Very interesting — thanks. I paid kosei nenkin for a similar amount of time when I worked for a school, but that was over 20 years ago.
The only record I have is my old payslips. Do you think the pension office would accept these as proof?
Hi John
Ideally you’d have your pension book (recent ones have been orange or blue and the size of a passport). Failing that, knowing your pension number would probably do it. If you don’t have that, I would call them up and see if they can trace you based on your name, DOB, address at the time, etc.
The website has basic information: http://www.nenkin.go.jp/international/english/index.html
Will do that. Thanks again! I think the world’s biggest pension fund ($1.2 trillion?) can afford to pay me another 15,000 yen a month.
This site is a great resource for a graying gaijin like myself. I paid those contributions when I was a native/naive English teacher in my 20s. I never imagined then that I would end up retiring here.
Nathaniel Hawthorne: “We defer the reality of life, in such cases, until a future moment, when we shall again breathe our native air; but, by and by, there are no future moments; or, if we do return, we find that the native air has lost its invigorating quality, and that life has shifted its reality to the spot where we have deemed ourselves only temporary residents.”
http://www.eldritchpress.org/nh/mf50.html
Very true! Can’t imagine myself going back to the UK…
Hope the pension works out. Keep us posted 🙂
I receive slightly threatening looking yellow envelopes from the nenkin office stating how much I owe. I have permanent residency but do not want to pay into the system. Does anyone know if Japan has or will enforce payment? Or can I keep ignoring the mail!? Appreciate any insight.
Hi Nopen
All residents of Japan are legally obliged to pay into the pension. However, this is currently mostly unenforced.
The government has started farming out the collection to debt collection agencies.
I believe they will move to enforce payment in the future, but there are still many people that do not pay in.
Hopefully, the My Number system will tie things together so as to make collection/enforcement easier. This system should have been set up years ago.
Thank you for the reply!
Hi, I may be a bit late to this discussion but I have a question: Pension contributions in Japan are split between the employer and employee. The reverse side of the pension postcard shows a partial list of contributions made but does this show both the contributions or only the employee one? Is your total contribution your sole contribution or inclusive or your employer ones as well? Is there a way to check the amounts contributed by the employer?
Hi James
In the case of kosei nenkin, I believe the employer pays half. Not sure if this shows up on the postcard. I just had a look at nenkin net, and it shows my salary at the time, not the actual contribution. You can see how much you are paying on your payslip each month.
Thanks for the prompt reply! Yes, my online nenkin account also shows my salaries at the time of contribution but I was wondering if the total contributed sum included the 50% paid by the employer or not. Prior to Japan I was working in Switzerland and when I left I was refunded my 50% (amounts shown deducted in my payslips) and the 50% paid by the employer. In the Swiss online account, I could login and see the 50% paid by me as well as the 50% paid by the employer. Here, I have not seen the employer contributions stated anywhere!
It’s a good question. Presumably they are included.
However, I see from my payslip that I am paying about 35,000 yen a month into kosei nenkin. Presumably my employer is matching that, so I am paying about five times as much in kosei nenkin as I would be in kokumin nenkin.
I kind of doubt the eventual pension will be five times as high 😉
>> I kind of doubt the eventual pension will be five times as high 😉
Yes, any pension paid in future might be less than the contributions However, if one leaves Japan before retirement, I wonder if they get 100% of the contributions as a lump sum refund
Heh, sadly not: http://www.nenkin.go.jp/international/english/lumpsum/lumpsum.html
If you have paid in enough to vest (ten years), absolutely do not claim the refund and waste your very cheap government-backed annuity! You can receive a Japanese pension anywhere in the world.
How interesting. I have been living and working here for nearly 20 years and have never received a pension update. I remember about 10 years ago there was a big scandal as man y people had not been en tered into the system by gov’t employees. I guess I am going to have to take a trip to the ward office to see what is going on.
I recommend calling the pension office directly by phone. In my experience the pension counters at the ward offices tend to be staffed by people who don’t really know what they are doing…
Definitely follow up though -it’s possible they don’t have your current address, or it might be a more serious problem.