More of the same
My birthday is this month, so I received my annual pension statement last week. If you are paying into the Japanese state pension system you should receive your annual statement (年金定期便) around your birthday. If you don’t receive a statement I recommend following up, as something may be wrong with your account.
You can see the Pension Update 2017 here (this post explains a lot of the format etc.) and the Pension Update 2018 here.
Not much has changed this year.
I’ve been paying into the nenkin system for nineteen years now, 12 months of kokumin nenkin (at a reduced rate due to low earning), 93 months of kosei nenkin, and now 121 months of kyosai kosei nenkin (basically kosei nenkin for public servants). In total I have paid in almost eight million yen and made 226 months of contributions.
This is more than the 120 months needed to vest, so I can also see my projected pension (based on my payments to date). This is currently about 900,000 yen a year (roughly 75,000 yen a month).
Eventual pension
I still have another 18 years to pay nenkin, and if I remain in my current job those contributions will be larger than the ones to date, so I assume my eventual pension will be larger than the current projection.
Even the most optimistic projection is still around two million yen a year, which I could probably live on in a pinch but would rather not try to.
And that is on a solid middle-class salary, paying into kosei nenkin for almost the full 40-year contribution period. Most people may have fewer contributions, or smaller ones.
If you are paying into kokumin nenkin, your maximum pension is currently 780,000 yen a year, and it is possible this may be reduced in the future. If you have paid less than 40 years, your pension will be reduced proportionally.
Be the ant, not the grasshopper
So I think the main takeaway here is the importance of preparing for retirement and old age yourself, through saving, investing, building up alternative sources of income, and planning to work past the regular retirement age. If you can, you can considerably increase the amount of nenkin you receive by delaying the date when you claim it.
The government has recently released reports that suggest that the average family needs to have an extra 20 million yen on top of their state pension.
Taking advantage of iDeCo and NISA if you can, and investing to increase your capital rather than just keeping it in the bank can help, but at the end of the day you probably need to be putting away 10-30% of your income for the future.
If you need help or have questions about any of this, the RetireJapan forum is a great place to start.
Thank you for sharing this. It helps me understand my own statement. Section one and two, I understand- it looks the same. But #3 on my statement is different. It seems the “bottom line”, (section 3, #1+2) is the same however. This would be the anticipated yearly pension, correct?
Section 3 is ‘pension based on contributions so far’. It’s not a projection, but rather what you would get if you stopped paying in now 🙂