If you are in the kyosai nenkin system, you should read this
From October this year, Kyosai Nenkin (共済年金) will disappear, and all public servants will be moved into the Kosei Nenkin (厚生年金) system. Kosei Nenkin is also known as ‘salariman nenkin’ and is the system that regular company workers tend to join.
There is no paperwork to complete and you don’t have to do anything. The process is supposed to be automatic and seamless. Hee hee hee.
This is a fait accompli. It was decided by the Diet a couple of years ago (I coincidentally heard a bit of one of the debates at the time in the car) and to all extents and purposes has already happened, so this is not actionable information.
My impression is that Kyosai Nenkin was better than Kosei Nenkin, as it included a supplementary payment (so contributions were higher) and was ring-fenced, so could be treated differently to the general pension fund. No longer.
However, there are two good points to come out of this. They don’t outweigh the bad, but I’ll take the silver lining wherever I can find it 🙂
1. Once you are moved into Kosei Nenkin you should be able to log into the Nenkin website and see all your contributions, generate simulations of how much pension you might expect to receive, etc. If I do that now I can see my previous Kosei Nenkin and Kokumin Nenkin contributions, but the months I have been in the Kyosai system are blank. Being able to check everything is correct and get accurate information about projected pension payments will be very useful.
2. Perhaps more excitingly, once you are paying into the Kosei Nenkin system, and provided your employer does not provide a supplementary pension (mine isn’t planning to), you will be able to open a J401k (see link on the site menu for more info). This is very good news, and I will be applying as soon as possible after the changeover.
It took me four phone calls to find out if I would be eligible for a J401k (I called my HR department, the Kyosai office in Tokyo, the Nenkin hotline, and finally the J401k hotline). As far as anyone could tell me, it looks good.
I’ll post again once I manage to get an account open. Stay tuned!
My wife is a Public Servant, we were told she will be able to open a J401K with this change. So I think what you found out is correct.
Thanks Trevor! It’s good to have confirmation. I’ll be opening an account in October, so I will write it up on the blog once I finish the process.
Very exciting stuff.
Thanks for this information – very useful to know about the change and the new possibility of j401k for those of us whom it affects.
Do you know if the 25 year required pay-in rule is going to change in October, too?
It was supposed to be reduced to 10 years, but hasn’t happened yet ;(
Thanks!
Hi Brian
I am not sure about that. I have heard that the change from 25 to 10 years has been decided, but as you say it hasn’t been implemented yet. I’ll post here if I get more information.
What is the advantage of opening a 401K in Japan?
Hi Shirley
Thanks for the question. J401k accounts are available to residents of Japan who pay into the pension system. For them it’s an excellent tax-advantaged account (pay in with pre-tax income, cash out tax-free up to a limit).
Not much use to non-residents though.
Why is it not much use to non-residents?
Does the J401k take cash straight out of our j-paycheck before tax?
Also, what if after working 50 years in Japan and paying in the j401k I decide to retire in the USA?
Hi Robert
I’m guessing non-residents wouldn’t be paying into the pension scheme and therefore ineligible to have an account.
Also, non-residents don’t pay tax in Japan, so a J401k would be kind of pointless (unless it was a temporary non-residence I guess).
Money is taken out of your bank account each month and you get a receipt at the end of the year to give to the tax office.
If you have an existing J401k account and leave the country, you can no longer pay in but get to keep it until it vests when you are 60 and you can take the payout normally between 60-70 years old.