Kosei Nenkin — Applying for Your Private School Pension

Ever wondered about how difficult it might be to apply? Wonder no more.

Contributor par excellence Mason Dixon returns with another treatise that will be of interest to many of our readers: the exact process to apply for your pension.

With RetireJapan as the single best source in assisting foreigners in Japan to plan for their retirement and financial independence, readers posting their experiences can provide further aid. In that spirit, I wrote a 2019 posting, “The Economics and In-economics of Home Ownership in Japan” (October 22), itemizing my expenses, and sale costs, and the potential financial and personal benefits to owning a home, preferably a slightly older property, and therefore depreciated in price, in Tokyo. This posting describes my application for the 厚生年金 (kosei nenkin), or private pension.

Rather than an entitlement, a government-provided benefit, a pension, might be best viewed as an individual insurance policy in which a contributor pays a fixed monthly premium in order to collect monthly benefits at some future date. Historically, companies and governments established pensions to provide economic security for the elderly and to alleviate poverty. Writing in The Expat’s Guide to Growing Old in Japan: What You Need to Know, Penn (2017) provides an overview of the Japanese pension system and its benefits, briefly summarized here.

(interview with the author here)

Of the potential three sources for one’s income in retirement in Japan, first is the 国民年金, kokumin nenkin, or public pension, to which everyone working, Japanese or foreign, makes modest monthly contributions of ￥16,490 which after 40 years will provide an equally modest annual pension benefit of ￥779,300, paid bi-monthly, or six times each year on the 15^th of each of six months. In the past, one needed a minimum of 25 years in order to qualify. But as of August 1, 2017, people could receive a Japan public pension after contributing for as little as 10 years although the benefits would be very small. I recently heard that this ruling was retroactive, meaning that foreigners who had paid into the kokumin nenkin for at least 10 years and did not take a lump sum withdrawal on leaving Japan may also be entitled to pension benefits.

The second source of cash is the 退職金, taishokukin, retirement or severance money, a cash payment for years of service. At universities, it is based on the number of years you have been a tenured employee. There is a base payment for the year you start and then increments each year, depending on the size and economic footing of the school, with bigger increments, at 20 years, 25 years, and so forth. You can determine this easily by inquiring at your university administration office. In my case, although by age 62, I had worked at my university for 25 years, I was only tenured for 18 of those, so I would get ￥14,536,200 at 62 but an additional￥830,604 if I retired one year later.

The third pension, the kosei nenkin, is much larger than the national pension because the employer matches the individual’s pension contributions which also are much larger than those deducted for the kokumin nenkin. My pension comes from a private university, of which, according to Statista.com (2019), there are 607 of a total of 786 universities in Japan. These pensions are administered by the Promotion and Mutual Aid Corporation for Private Schools of Japan (PMAC), founded in 1953 and head-quartered in Tokyo from where it also provides members with health insurance, home loans, travel discounts, and recreational facilities.

As I began researching my own benefits, I was disappointed at the lack of assistance at my university. The administration focused on taishokukin which was their institutional responsibility and left me largely on my own regarding my potential kosei nenkin benefits. Equally surprising to me was how little my colleagues, both Japanese and foreign, knew about their projected benefits or about their financial pictures once retired. Networking with retired teachers from our university was a good starting point, but also a very frustrating one. Few of them, Japanese or foreign, remembered much about applying. Often, they were reticent about describing their pension amounts even though these were calculated on years of service and not academic merit or popularity with students and colleagues. When I asked Japanese friends who had retired from other occupations, I found a similar restraint, or for those who were still working, very little knowledge about their future pensions, perhaps due to cultural attitudes about work and retirement.

Just before my 60^th birthday, I received a large package noting my months of pensionable earnings at the time and requesting that I determine the year that I planned to retire. Although I enjoyed my job a great deal, had excellent colleagues, and loved working with young people, I was growing tired. Time was passing, and I was worried that I might be missing opportunities to develop my writing, to travel and enjoy the outdoors, and to develop other interests while I had my strength and health. Because I was born before 1957, I was eligible to retire early at 62. This was also an opportunity, because over time, the eligibility dates for retirement is creeping upward, presumably to better fund the PMAC pensions, and in subsequent years, early retirement is slated for 63, then 64, and so on.

Figure 1 shows my pension contributions calculated based on￥620k for each month x 12 months each year plus ￥1,500k x 4 for my two bonuses (two months’ salary), paid in December, and then again in June. At the time of the issue of this form (which was not the end of the school term and therefore my contributions), I had made a total of￥14,289,675 in pension contributions.

Figure 2 refers to 291 months of contributions over some 25 years and the total contribution that would fund my pension when I retired (though again, there would be additional contributions between the date of the notice and my last month of teaching.) The columns under 1a indicate potentially different employers I might have worked for and subsequent insurable earnings for those months. In my case, I only worked fulltime at one university for the duration of my 25 years in Japan. I would be eventually drawing an annual pension of ￥1,608,000 or ￥134,000 monthly. At age 65, there will be an additional annual benefit of ￥457,839, or ￥38,153 monthly from my kokumin nenkin.

The following year, I received an update of my insurable months and then at 62, a hefty nine-page retirement application form with a sample that had been filled out and was annotated with explanations. Even though I worked through that Japanese application form and the explanations very carefully, and over a number of months, and had the assistance of bilingual friends, department secretaries, and colleagues, I blundered completely and sent it in incompletely done. I retired at the end of the school year in March 2018, but received nothing.

Fortunately, I’d been keeping up an e-mail correspondence with several friends who had retired earlier. One suggested I use a private firm of notaries, charging him about ￥6,000 per hour and one of a growing number in Tokyo assisting foreigners in applying for their Japanese pensions. A second told me to contact PMAC directly where there was some English support, and most helpful of all, a written checklist of documents needed for the application and an annotated application in English (unfortunately, I was unable to obtain permission to post these on the Internet). I made an appointment at their office and with their help, I worked my way through the documents and information required which I sketch out here:

1. 年金手帳, nenkin techo, Japanese pension book or a document showing your pension number
2. 住民票, juminhyo, certificate of residence (or if living abroad, government-issued identification showing age, address, and birthday)
3. bank information for transfer of funds
4. work history and pension contribution periods
5. 源泉徴収票gensen cho shuhyo, official tax form indicating income tax paid for the current tax year
6. 戸籍謄本, kouseki touhon, family register
7. marriage certificate (if in English, a Japanese translation)
8. spouse’s gensen cho shuhyo
9. spouse’s nenkin techo, pension information
10. 納税管理人の届け書, Nozei Kanri nin no Todoke sho, Declaration Naming a Person to Administer Taxpayer’s Tax Affairs, (if the pensioner is leaving Japan)
11. a tax declaration for U.S. citizens

The application form requires the pension claimant to provide certain information. This will include your PMAC number, name, birthday, government pension number, your spouse and pension number, bank name and account, photocopy of the pension book, work history, type of pension applied for, information about your spouse, birthday, pension information, dependents such as children (who may be eligible for benefits), and insured periods in other countries.

Once you have successfully applied for your pension and begin receiving it, every year before your birthday, for the remainder of your life, you will receive a small card in the mail, 現況届, genkyo todoke, your address and condition report, requiring your signature (verifying that you are alive), your My Number, and a verification of your address. It must be returned within one month of your birthday or your pension may be stopped. You can also download a form from the private pension website to complete if you don’t receive the card in the mail. There are survivor benefits to your spouse who is entitled, if they apply for it, to 50% of your pension. Again, dependent children under the age of 18 may also draw benefits. Fig. 3 shows the report form, pages 1 and 2.

After my initial anxiety over whether or not I had properly applied, I began receiving the benefit, regularly transferred to my bank account every two months. I also received the benefits for the months I had missed due to my late application. Obviously, I will have to keep a number of documents for reference. With the experience of applying for my kosei nenkin behind me, and a history of receiving the benefits, I have prepared this short primer to assist others, and to minimize their anxiety about a pension they had contributed to and may not completely understand, nor be sure how to access.

When I reach 65 and receive both my kosei nenkin and my kokumin nenkin, I will receive a combined monthly pension of ￥172,153, of which the kosei nenkin will also be subject to a 10% withholding tax if paid overseas instead of to a pension holder living in Japan or at least to a bank in Japan. It is a modest sum compared to pensions in other G20 countries. In the educational sector, these can range from 50% to 80% of an employee’s annual earnings. But my pension is far better than that of many in Japan, including the adjunct faculty working at my university and contributing so much yet only vested in the kokumin nenkin. Citing 2016 Ministry of Health, Labor, and Welfare reports, Penn (2017) notes that of some 30 million people receiving kokumin nenkin,less than 15 million collected kosei nenkin, too, so around 15 million people are trying to survive on kokumin nenkin benefits alone. These circumstances make individual planning for retirement in Japan more important than ever and demonstrate the value of websites such as Retire Japan that discuss the problem and outline strategies and resources.

Penn, W. (2017). The Expat’s Guide to Growing Old in Japan: What You Need to Know. Sapporo, Japan: Forest River Press.

Shigakukyosai (2020). English. Retrieved November 16, 2020, from https://www.pmac.shigaku.go.jp/en/about/about_01/index.html

Statista (2020). Retrieved November 16, 2020, from https://www.statista.com/statistics/647382/japan-university-number-by-type/

Wow, thank you so much Mason Dixon, for taking the time to write this up and give us an idea of how the system works. It is very useful indeed and I am sure our readers who are getting close to retirement age will find it interesting.