Some good news for a change
Well, it seems like the government has given up on increasing the sales tax to 10%, so they are going ahead with unconditional changes to the pension system without tying them to the tax increase.
From August, the minimum period to vest in the Japanese state pension (kokumin nenkin and kousei nenkin) will be reduced to ten years from the current twenty-five.
This has been a long time coming. We wrote about it on the blog here almost a year ago, and most of the details are the same.
Basically, as long as you have paid in for ten years you can get a pension. To get a full pension you would have to pay in for 40, so anything less than that gets a proportion of the full pension (so ten years would get you 1/4 of the full pension amount).
I think it’s quite positive that the pension agency has made this English language leaflet (the image above is taken from it) that emphasizes that you can apply for and receive the pension from abroad.
The twenty-five year minimum was, in my opinion, excessively harsh and put a lot of people off paying into the pension (which is mandatory in Japan, if currently unenforced). You could have paid in for 24.5 years and then not received a single yen back.
This change will hopefully change that and help the system be more robust (more people paying in is a good thing).
So good news for now. This may even change my own thinking on retirement, as I had been aiming to make sure my twenty-five years was paid before leaving work or moving out of Japan. Under the new system I have already vested (I’ve paid in for exactly 17 years).
How about you? Where do you stand vis a vis the Japanese state pension?
I just started paying the state pension a few months ago. I have lived here for 13 years and although I have not paid 13 years pension so I can register my 13 years of 空間（unpaid pension years). My understanding is that if I pay only one year. I will have over ten years of unpaid pension, so I will get something.
Also, as I have been paying my UK state pension so I did not have to back pay two years to the Japanese state pension.
You can see your projected payout online at nenkin.net or on the annual teikibin postcard they send you 🙂
This may be a silly question with all the talk of the pension program “collapsing” in a couple decades, but seeing that it is a retirement fund can we add to it? Add extra? I’m assuming even if we could the answer would be to stick with our other retirement investments.
I think you mentioned, we can only collect one government retirement fund. For example if I work 20 years in Japan then 20 years in the USA. I can’t collect SS and Nenkin. Too bad I can’t put my SS payments into nenkin. Or opt out of SS payments.
Hi Bob
The US does have a treaty with Japan that combines the two programs 🙂
Check it out here: https://www.ssa.gov/international/Agreement_Pamphlets/japan.html
I’m not sure about overpaying the Japanese pension. I think you can do it but I’m not sure about the exact rates.
Are there any additional benefits to joining state pension ? Social programs, additional health care, etc ? The rate you pay is fixed, yes ? My Japanese health care started reasonable but has risen to be quite expensive.
Hi Eric
Apart from avoiding future problems due to not being enrolled, paying into the state pension gets you a minor tax break, allows you to open iDeCo account, and comes with disability insurance.
The tax relief is it for the value of your year’s contribution like the health insurance?
Yes, exactly 🙂
It’s the social security tax allowance.
I have been here since 1991.
I had a few years of contribution to Kosei Nenkin in one of my early jobs. Then, for 6 years I was in small companies that weren’t in the system, followed by 8 years of working freelance during which I did not contribute. I didn’t have much faith or interest in it. Bad attitude, I know.
A few years ago I joined a company with the standard set of benefits including matching Kosei Nenkin contributions. I also spoke to a financial advisor who convinced me that it is a worthy system. I forget what her logic was. Maybe just the fact that the monthly payout after retiring is is not half bad, considering it was something you can count on for life.
So I decided to try to shoot for the 25 years of contribution. You are allowed to contribute retroactively for a maximum of 10 years, so I did that (eliminating a big chunk of savings). I guess I now have around 16 years. I also worked in Canada for a couple of years (between finishing university and moving to Japan) so I have that as well (the countries have a reciprocal agreement for counting the years).
It’s great that the coverage period has been reduced to 10 years, although I hope to keep contributing and attain the 25, in order to get the max benefits.
I understand that Japan and the UK do not have a totalization agreement, but do you know if it would be possible for any UK state pension that I may be eligible for to be paid to me separately in Japan?
Hi Paul
Apologies for the delay! Your comment got lost there for a while.
You can receive both UK and Japanese pensionat the same time provided you have paid in the minimum (ten years for each).