The Nenkin Thing

We need to talk

I had an interesting email exchange this week with a reader about nenkin. We’ve also had some questions on the forum. And I often see this topic pop up on the r/japanlife board on Reddit.

Perhaps it’s time we had a chat. If you are currently paying into the Japanese national pension (either through kosei nenkin or kokumin nenkin) and you are happy with your understanding of the system, you probably don’t need to read this post.

If you are not paying nenkin, or if you are unsure of how it works, or you have a friend who isn’t paying, by all means settle in and follow along 🙂

What is nenkin anyway?

Nenkin is the Japanese national pension. All residents of Japan must join and pay into the system. If your income is very low (and you are paying kokumin nenkin) you can request to make lower payments or have your payments suspended.

There are two types of nenkin: kosei nenkin (sometimes referred to as salaryman nenkin) and kokumin nenkin (aimed at part-time workers, the self-employed, etc).

If you work full-time your company should enrol you in kosei nenkin (very small companies with fewer than five employees are exempt) but many companies break the law by failing to do this. It may be worth consulting with a union if you are in this situation. Kosei nenkin scales with your salary but has higher benefits in retirement.

If you work part-time, or work at various places, or are self-employed (or your company is breaking the law by not enrolling you in kosei nenkin) you should pay into kokumin nenkin. Kokumin nenkin is a fixed payment of 16,410 yen (from April this year). However, the eventual pension is considerably lower than kosei nenkin.

To vest (become eligible to receive a pension) you need to pay in for 120 months. To receive a full pension you have to pay in for 480 months. If you pay in for less, your pension will be reduced proportionally.

Do I really have to pay? My friend doesn’t…

Yes. In the past the Japanese government seemed willing to turn a blind eye to non-payment, but recently they have been going after people who are not in compliance (either paying or registering for reduced/waived payments).

The way it works is that they will send you a bunch of reminders and requests to contact the pension office. They may outsource your account to a private company that will also try to contact you. These steps can be ignored I guess, but there is a chance not paying your pension will affect your credit score (and it can also be a factor when renewing a visa). The final step, however, is that the government will take the funds directly from your bank account or salary.

To avoid this, go in and speak to the pension office. I really recommend going to the actual pension office for your area, not the desk at city hall or the ward office. The latter seems to be staffed by temp staff that don’t know what they are talking about (at least in my experience).

You will be asked to pay a maximum of two years’ worth of backpayments (just under 400,000 yen) but may be able to negotiate to pay in installments. Their main goal is to get you into the system and paying.

Having said that, it is a very good idea to have a government pension.

How can I see my nenkin status?

There are two easy ways to check how much you’ve paid into nenkin, or what you will be entitled to after reaching retirement age. The first is just to wait until you get your annual pension statement by mail. These are sent out around your birthday.

The other is to make an account at Nenkin Net (this is fairly straightforward) where you can see the same information.

Anything else?

Well, you can overpay your pension, which may be a good idea, and defer the date you receive it in exchange for a higher payout (probably a good idea if you can afford it). Nenkin also includes disability insurance, and will pay out to a surviving spouse and children if you die.

Also, don’t forget that your nenkin payments are tax deductible! Make sure you include them on your tax return or hand in the certificate to your company if they do your taxes for you.

Any questions? Anything we missed or got wrong?

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32 Responses

  1. I moved to Tokyo last month, when I had an interesting exchange with the pension desk at my ward office. I have submitted a request to pay voluntary UK National Insurance Contributions (following an article I read here, thank you!) since I can and I want to qualify for the UK pension.

    I went to the ward office and said “I want to pay into the Japanese pension system, but FYI I am also going to pay into the UK system. Is that a problem?”. They were stumped; apparently they often get requests from foreigners not to pay into the system, but never the other way around. I was told I would get a call back.

    About one week later, I finally got a call back: apparently I can’t pay into the Japanese system until after five years / when I stop paying into the UK system!

    This was disappointing for me: I wanted to set up an iDeCo…

    1. I believe that is completely wrong, and possibly an example of why you should avoid talking to anyone other than the actual pension office.

      My understanding of the UK-Japan tax treaty is that you cannot be compelled to pay into both (for example, people here working for the UK government). Voluntary payments don’t count. I predict the person you talked to misunderstood what you were saying.

  2. “Kokumin nenkin is a fixed payment of 16,410 yen (from April this year). However, the eventual pension is considerably lower than kosei nenkin.”

    What is the actual difference? (Do you have a link?)

    1. No because it depends on your salary 🙂

      I believe it’s something like 2-4 times kokumin. Which is one reason kokumin nenkin payers get such a large iDeCo allowanve…

      1. A large iDeCo allowance, minus the kokumin nenkin contribution. I think. I’m pay into kokumin nenkin and also pay 51,000 yen a month into iDeCo. I can’t go any higher than that, if I’ve understood correctly.

        1. No, you can use the full 68,000 (unless you are paying into fuka nenkin or kokumin nenkin kikin, which do use the same allowance as iDeCo).

          Time to change your monthly payments? 😉

          1. Thanks! I pay fuka nenkin – does that mean my iDeCo limit is 16,000 yen less than it would be if I didn’t? Doesn’t seem worth it for 200 yen a year…

          2. No, fuka nenkin is only 400 yen a month, so it reduces your monthly iDeCo allowance to 67,000 (as it is paid in multiples of 1,000). You may also be paying nenkin kikin perhaps? Otherwise you should be able to use your full allowance…

      1. That seems unreal. Way back when I was paying Kokumin nenkin because my employer said that since I wasn’t working out of an office for a fixed amount of time then they weren’t obliged to include me in the system. I paid kokumin nenkin for about 15 years. I turned 62 last year and started receiving kokumin nenkin along with the nenkin from work……the kokumin part came out to about 3,000 yen a month…….not 30,000……3,000. How would any one have to pay that much? I paid a few thousand every two months.

        1. Hmmm. The usual age to receive nenkin is 65. If you are receiving it three years early, your payments have been reduced by about 20%. This is generally not a great idea.

          Also, if you have paid 15 years (180 months) into kokumin nenkin, your monthly payment would be roughly 19,500 yen (80% of your projected payout of 37.5% of 65,000). If you are really only receiving 3,000 yen a month, either you have not paid in 180 months, or you need to go and have a chat with the pension office.

  3. I too recommend going to the Pension Office (Nenkin Jimusho). If you don’t know the location of the office that has jurisdiction over your area of residence, ask your ward office. The Nenkin Jimusho people are specialists – pension is highly complex and depends on each individual’s work history, so except for the basics, it’s not a “one size fits all” proposition. The staff are also very patient about explaining the details – they deal with a lot of elderly clients, but it does help to have basic knowledge about the system before you visit, and to have a record of your employment history/employers. Also, take your Nenkin Techo (pension notebook) if you have one. It’s a small booklet, with either a blue or orange cover, I think.

  4. They are starting now to take kokumin nenkin out of your bank account along with kaigo nenkin (old age insurance) as of this April.
    Since I’m actually getting kokumin and paying also for kaigo nenkin I only see about 22000 yen every two months now. People, you got to save a shit load of money if you are going to stay in Japan after the age of 65 and be debt free.

  5. my post was deleted about how low the nenkin payout is and it now comes out of your bank account and so does kaigo hoken

    1. Hi there
      Sorry to hear you are having trouble posting. We have not deleted anything. Please try to post your comment again. Thanks!

  6. Many thanks for this interesting article. The UK pension currently has a so-called triple-lock mechanism to determine the annual rise in the pension, which guarantees a rise of at least 2.5% every year. Is there anything similar for the Japanese pension (whether the kokumin nenkin or kosei nenkin)?

    Furthermore, regarding the possibility of delaying receiving the Japanese pension, is it just the kokumin nenkin that is increased or does the kosei nenkin also increase? If so do they increase by the same ratio ?

    1. Nope, the Japanese pension will probably be slightly reduced in the future.

      The triple lock in the UK is completely unsustainable, and is basically a bribe from the Tory government to try to buy the silver vote…

      For this reason we REALLY recommend UK nationals make voluntary payments to the UK state pension: https://www.retirejapan.com/blog/uk-state-pensions-5/

  7. Have you ever written an article examining in detail what payouts should be expected for each pension, and how much you make? Or is there an Japanese link where there’s a reasonably straightforward explanation.

    I always hear that I should expect like XX,000 a month, but I don’t believe I’ve ever read any direct explanation/promise from the government.

    1. That would be an interesting post! Thanks for the idea. I’ll take a look at it 🙂

      1. Thanks. I’m going to try and figure out the Nenkin.net too this week. Thanks as always

  8. My 28-year history is quite a mix: Variously Kosei or Kokumin, at different salary levels, lengthy blanks, and a big (almost 10 years worth… gotta check) Kokumin back payment that covered part but not all of said blanks.

    I trust the government (um, has anyone ever explicitly said that before?) but I’d like to be able to calculate how much I can expect to be getting when I vest. It would be a challenge for sure…

    1. You can check your projected payout by making an account at Nenkin Net as described in the post, or by looking at your annual statement that gets sent in the post (年金定期便) 🙂

  9. This really interests me as I am pretty sure I haven’t paid in for the full term, but plan to do some part time work and maybe start receiving the pension when I am 68 to 70??
    My biggest fear is …. if choose not to receive the pension until 70 and they change the law in that period (I mean as the law stand now, you can get the pension at 65, but if its change to 70!!??) I could be a big loser … if you get what I mean.
    Do you know anything about that? or thoughts?

    1. Changes to pensions are usually announced well in advance and do not apply retrospectively, so if you defer your pension under the current system I would expect you to receive the increase as written.

  10. Thanks for the article.

    Does anyone have information on how to set up fuka nenkin contributions, and can these be backdated? Also, if I choose to pay all 12 months of the 19/20 kokumin nenkin contributions in one go to receive the small discount, would I need to sort out the paperwork for my 19/20 fuka nenkin contributions before settling the kokumin nenkin bill? (Not seeing many windows of opportunity in my calendar to visit the ward/pension office before the kokumin nenkin bill is due…)

    Many thanks.

  11. Thanks for the link. I may try my luck at the ward office!

    Both your link and the following link suggest that premiums can be paid up to two years retroactively: https://www.nenkin-note.net/originality/fuka.html

    If comments on this article are still open by the time I attempt to set up my fuka nenkin and pay two years retroactively, I’ll post an update of how I got on.

      1. Just to report I was able to set up fuka nenkin very easily at my local ward office in Sapporo… a one-page form in which I only had to enter my name and phone number; no stamp of the inkan requested.

        I wasn’t able to backdate the start date — my Japanese level is limited, but my understanding of the clerk’s info was that fuka nenkin premium deadlines can be missed, as can normal nenkin premium deadlines, and both can be ‘corrected’ retroactively within a two-year window. Re-reading the link Ben supplied, that seems to match the official info. Also, I seem to remember my wife missing a pension premium once, and being surprised that a new payment slip got sent out with a deadline 2 years after the missed month in question. (I don’t remember if the premium was at the original amount or a higher amount though.)