And now for something completely different!
Everyone paying into nenkin should receive an annual update, called nenkin teikibin (ねんきん定期便). This will either arrive by post, in the form of a postcard, or (if you have selected the option) will only be delivered via the nenkin website. Personally I opt to receive the postal version as I want the paper record and find it easier to read than the website (particularly the future pension estimates).
You can see the Pension Update 2017 here (this post explains a lot of the format etc.), the Pension Update 2018 here, the Pension Update 2019 here, and the Pension Update 2020 here, and the Japan Pension Update 2021 here.
This year for the first time, instead of a postcard I received a thick package in a blue envelope. At first I thought it might be a change for everyone, but then I read the contents and it seems they send out a special package to people when they turn 45. It was very exciting.
The contents were basically a printout of everything on the nenkin net website, along with the usual annual report.
The key figures are highlighted as follows: 1.) total amount contributed so far (this includes employer contributions from kosei nenkin and public servant nenkin): 9,650,285 yen, 2.) number of months contributed (you need 120 to receive a pension and 480 for a full pension): 261 months, and 3.) my projected annual pension based on contributions so far: 1,062,639.
The projected pension amount is based on contributions これまで. That number will continue to rise (hopefully) as I continue paying in for the next twenty years. People who are closer to retirement will see a different number, based on continuing to pay in at the current level.
I am currently planning to delay receiving my pension in order to receive a larger amount (your pension is increased by a certain amount for each month you delay, up to +42% from age 70 and +84% from age 75). This can be a good idea for some people.
Nenkin is valuable
The true value of the government pension is that you can receive it for as long as you are alive, so it provides you with a minimum income even if you become unable to work (or manage your investments!). It also provides diversification as it is not affected by stock market movements, etc.
Nenkin also includes disability insurance, and a survivors pension should you die and leave dependents behind.
Of course, the state pension is unlikely to allow you to live the kind of life you want or are used to, so it is important to also save and invest money on top of this. The Japanese government estimates the average couple will need 20m yen in savings on top of a full pension to help pay for retirement.
Check out some of the resources on the site or ask in the forum if you are not sure how to save and invest your way to 20 million 😉
A change in circumstances
I had been assuming my wife and I would end up with Japanese state pensions worth around 200,000 yen a month in retirement between us, but this estimate is starting to look like it might be on the low side.
So far I have been paying into kosei nenkin (kyosai nenkin) through my employer, and my wife has been paying into kokumin nenkin.
I finished working in March and am now paying into kokumin nenkin. This is a fixed payment of 16,590 yen a month rather than a variable amount based on your pension. It also gives me access to iDeCo at the freelancer rate (I can pay up to 68,000 yen a month into iDeCo and this amount is taken off my income for income tax purposes).
My wife is considering incorporating her business (she is currently a sole proprietor) which would result in both of us enrolling in kosei nenkin.
Kosei nenkin is much more valuable than kokumin nenkin, so us paying into it for another 6-11 years (in my wife’s case) and 16-21 years (in my case) is likely to result in pensions worth at least a combined 250,000-300,000 yen a month. Not quite enough to fund the lifestyle we want, but probably enough to pay the bills.
I think included in your time periods above, but worth mentioning explicitly for completeness sake: you’ll be able to pay voluntary kokumin nenkin from 60 to 64 since you’ll have less than 40 years paid up. This also means you’ll be able to continue paying into iDeCo for that time, too.
Good point! I suspect we’ll see those ages increased further by then too (I’ll be 60 in 2037). Reckon we’ll be allowed/encouraged to pay into nenkin/iDeCo/similar until 70 or later.
As an aside, I recently saw a survey that a city government is planning on sending to its residents. For the question “until what age do you plan to keep working?”, the youngest response was “until 70”.
That is classic ^-^
Personally I’m having a lot of fun now freelancing, so I plan to ‘work’ until I die…