A nice light topic
The pension service website seems like a good place to start, but there are still unanswered questions.
What exactly is required to join if you haven’t been paying in? How many years are you obliged to pay in back payments? How many years can you pay if you want to get further towards vesting?
There is also the matter of this rumoured change from vesting in 25 years to vesting in 10 (which would make the system much more attractive to people joining halfway). Is that going to happen? If so, when?
And the thing about getting free years of eligibility for the time you weren’t in Japan back to the age of 20…
I have a bit more time for projects over the next couple of months, so am planning to pop into the local pension office and ask them some questions.
If you have any questions you’d like me to add to my list please let me know in the comments or via the contact form if you would like more privacy. Deadline end of this week!
I’ve been paying in on my own since I left my last full-time job a few years ago but confess I don’t understand the system terribly well either; I’ll be interested to read what you come up with.
My main question is: if I am around 20 years from now to take payment of the pension, will the money actually even be there?!
Hi David
I’ll go into it more in the post, but I believe the pension system will be around in some form (probably with slightly lower payments than the current one).
The 10yr vesting is dependent on VAT being increased to a higher level – don’t recall the target…
Hi Eruc
Thanks. Someone said on Facebook that it was 10% and is currently supposed to happen next year. We’ll see what the pension office says 🙂
Love your blog. For those of us who are not resident in Japan and are just trying to learn more about how things work there, some insight into the structure of the pension system (who is eligible, how are contributions made, how is the system funded, etc.) would help. Also, now that deflation appears on its way to being defeated in Japan, does that change the incentives of people to save or direct their savings? If so, how?
Hi Adam
Thanks! I will try and address those questions in the post. Not too sure about deflation being defeated (it seems to be winning) but I have noticed that my personal basket of goods has seen rising prices (particularly food). The oil price collapse has made things seem cheaper in Japan but I’m sure that will change once it goes back up.
Good topic.
Not a question, but was recently talking to a few colleagues and the topic of My Number came up. We’re all self-employed, and one colleague mentioned that we are some of the main targets of things, given that payment for things like health insurance and nenkin aren’t directly pulled from our paychecks and require us to volunteer our money. Obviously, not everyone does.
Now being American, I’m subject to self-employment tax in the US no matter where in the world I live. However, if I stay insured and pay into the pension here, that pretty much exempts me from paying this onerous 15%(!) tax as it is comprised of Social Security (pension) and Medicare (health insurance). Paying Japanese pension at 15,000 yen a month is WAY better for me than paying 15%.
My non-American (Japanese) friend, however, said that no one currently raises a stink as long as he makes a pension contribution once in every 2-3 months or so. There are plenty that haven’t been paying at all due to the lack of real penalty to date.
Ok, so now a question: have you looked into the possibility/logistics of how pulling Japanese pension or transferring works if you happen to leave the country and retire elsewhere? I know it’s one of the things they advertise far and wide so it is possible, but I’ve never contacted the American side, for example, to see how that would work, and I forget what my local nenkin office said about it. I do remember that Japanese nationals can collect from foreign post offices and the like… if they’ve paid in for at least 25 years. I believe they told me that it’ll be paid out separately from SS if/when I go back to the States, not rolled into it, although again I need to confirm that with the US SS office.
Hi S3ndug
We should get lunch again soon 🙂
That’s a great question. I’ll add it to the list.
The pension office is getting much more active recently. They are farming out collection to private companies and I imagine if My Number takes root it will be a better way to track things.
My daughter is not paying into the pension system at the moment because she is planning to move abroad permanently next year, and she’s getting letters and guys coming to the house on a fairly regular basis.
I don’t think there are penalties (it’s like NHK I guess) but there is some degree of psychological pressure.
Yeah, January was pretty nuts, but looking to slow things down a bit in February. The wife is working her way through YMOYL now, by the way. I’ll be in touch soon.
Just a matter of time on them building in penalties, I’d imagine. On the flip side of my question, a quick search leads me to assume that as working years abroad count towards the nenkin year requirements, a foreigner that say worked abroad for 20 years and in Japan for 5 years would still be eligible to collect nenkin at 65? Confirming all those minimums and requirements would be informative.
It seems as though currently paying a combination of 25 years abroad and in Japan would be enough to receive nenkin at 65, but the full amount requires 40 years worth of contributions. From next year it looks like it will only be ten years, but of course that would only entitle you to 25% of the pension.
I’d be interested to know what happens to someone like me who leaves the country for a few years then comes back. Do I restart where I left?
Hi SB
As long as you didn’t take the lump-sum withdrawal and still have your documents (nenkin techo) I think that’s how it works.
You can register to see your account online here: http://www.nenkin.go.jp/n_net/
If I’m collecting a pension from another country (say, Social Security from the US), would that reduce my Japanese pension payments (if I had enough years working to qualify in both countries)? (Doesn’t seem logical to me, but I’ve heard anecdotes about that people running into situations like this …)
Hi Steve
I don’t see how that would work. If you have paid into a pension scheme in a treaty country (like the US) that will count towards your eligibility here, but I don’t think it would reduce the amount of your monthly pension payments.
Best way to check would be to ask the US Embassy or the pension office here. Here is the embassy page: http://japan.usembassy.gov/e/acs/tacs-fb-totalization.html
Let me know if you find anything useful 🙂
Regarding the 10y vesting, this was pre-announced several years ago as being scheduled to come in at the same time as the increase in sales tax to 10%. This was on the J-language pension site, but the article has since vanished. Of course the 10% tax never came in as had been originally planned.
I wrote about this on:
http://julesandjames.blogspot.co.uk/2013/12/everything-you-never-wanted-to-know.html
So, I hope the 10y thing will happen when the tax rate rise comes along, but there seems to be no firm date for either.
I’m stuck at 12y of contributions, so it would make quite a difference to me – either a modest pension, or sweet fuck all.
Hi James
Welcome and thanks for linking to your blog post! I found it very interesting.
The two top questions I have for the pensions office when I drop in on them are the kara kikan period (I think I am entitled to two years’ eligibility for 1998-2000 but need to confirm this) and the change to ten years for vesting.
It sounds like you have left Japan and are in the UK now. A brief search turned up this page: http://www.expatbriefing.com/country/japan/financial/pensions-for-expats-in-japan.html
Which says that the pension agreement with the UK does not include totalization (combining payments from the two countries).
Might be worth looking into though.
Stay tuned for the big pension post 🙂
Thought of this blog when I spotted this article on JT floating a further delay to the tax rise, currently due in April 2017, no mention of pensions vesting though.
http://www.japantoday.com/category/politics/view/govt-considers-2nd-sales-tax-hike-delay-as-spending-falls
Yeah, I wonder if the move to ten years will also be delayed indefinitely…
From what I’ve read on Debito and elsewhere only Japanese Citizens can obtain a Japanese State Pension. My understanding is that if you are a Long term NJ resident of Japan you cannot receive the pension if you do not obtain Japan Japanese Nationality an Citizenship, even if you were to contribute for the full 40 years. I remember reading about a Chinese woman in Oita who lived, worked and made contributions all her life but never obtained Japanese Citizenship and was denied any benefits. She lost her appeal in Court.
Hi Mark
I’m afraid you are misremembering/misinterpreting that.
The case you are referring to concerns welfare, not pensions. The lady in question was applying for public assistance and the ruling was that the state was not obliged to provide it but could decide to on a case by case basis: http://www.japantimes.co.jp/community/2016/02/29/issues/landmark-ruling-sent-japans-foreign-residents-back-welfare-limbo/
The rules on pensions are very clear and nationality does not play any part in them. See the English language post about pension eligibility posted recently that encourages people to claim pensions they may have given up on: http://www.nenkin.go.jp/international/english/index.files/leaflet.pdf
I have a few concerns about Japanese Pension.
I have been in Japan for almost 7 years and work in Eikawa. No one told me about paying Japanese Pension. I pay Government Insurance since I got here but not pension as it wasn’t required at work. A few days ago, my friend told me that I could’ve paid for Japanese pension since I’ve been here. If I decide to get Japanese pension now, how will that affect me? Will I need to Pay for the entire 7 years I’ve been here or pay a smaller amount? I have no idea what to do at the moment. I’m getting married and might be staying in Japan for a long time so I need to pay Japanese Pension. If I start now, after 7 years, what will happen?
Thanks for reading and looking forward to your reply,
Ricky
From what I remember being told, you’re only allowed to make back payments for the past 2 years of contributions. Those first 5 years are just free. So as to your question, if you go to the nenkin office, they will require you to pay 2 years of back payments and then the standard monthly payment going forward. You will have enough to receive (partial) pension payments upon retirement after another 8 years (2 years’ back payment + 8 years from now).
As far as other implications, if you are non-American then that’s it; you only have to worry about the Japanese side. If you are American but work for a company, you’re also set as-is, although you are obligated to file for US taxes (your federal payment should be 0 though; state taxes due for CA/NY and maybe 1 other). If you’re American and self-employed, then you’ll have to file US taxes and pay the IRS self employment tax for those first 5 years if you haven’t already. The 2 years’ of nenkin payments are enough to exempt you from paying the self employment tax for the past 2 years and moving forward.
Hi Ricky
Thanks for dropping by! To quickly answer your question, all residents of Japan have a legal obligation to pay into the national pension scheme. This is not heavily enforced at the moment, but that could change in the future so if you are planning to stay here it might be a good idea to get that sorted out.
You will be asked to make back payments, but you can negotiate to pay in installments. There are provisions for reduced payments or stopping payments if you have low income.
The first step is to go into your local city office and talk to them. They will be able to discuss it with you.
There are lots of threads on Reddit about this topic: https://www.reddit.com/r/japanlife/search?q=pension&restrict_sr=on
Good luck!