Pension Query

[akizoid]

Hi All,
I am 37 and have paid into Japanese pension system for around 7 yrs already as regular employee. I was working on my retirement planning but could not clearly identify my expected monthly pension amount at my retirement.
My current pension contribution so far is:

I was looking at calculations for expected pension based on following criteria:
- Monthly contribution to pension: 56000 yen
- Bonus contribution to pension(per/yr):100000 yen
- My wife is my dependent and not japanese. I plan to stay in my home country once I retire.
- Duration of contribution:
1. Paying into japanese pension for another 3 yrs(ie total of 10 yrs min) and migrate to my home country.
2. Paying into japanese pension till retirement ie age 65yrs.(ie staying in japan atleast till retirement)

I do understand that there are large number factors but I wanted a rough estimate based on above criteria.

I would also like understand the calculation behind the number if possible.

Thanks in advance
Aki

[adamu]

If you register for the official site, they have a simulator that can give you an estimate of how your pension might look in the future.

I'd take it with a pinch of salt though, as the rules could change at any time.

https://www.nenkin.go.jp/

Tip: Write down your secret questions and answers somewhere when registering. Trying to remember how you spelled your mother's maiden name in hiragana 3 years down the line won't be very easy

[Kanto]

If you register for the official site, they have a simulator that can give you an estimate of how your pension might look in the future.

I'd take it with a pinch of salt though, as the rules could change at any time.

https://www.nenkin.go.jp/

Tip: Write down your secret questions and answers somewhere when registering. Trying to remember how you spelled your mother's maiden name in hiragana 3 years down the line won't be very easy

Lastpass is great for this.

I always forget that my online banking password needs to be in Full-Width Kana。

You can just save it in the notes section for the site and copy and paste.

[RetireJapan]

I believe you'll start getting predictions on your annual statements one you pay in enough to get a pension (120 months paid in).

[Roger Van Zant]

Hi All,
I am 37 and have paid into Japanese pension system for around 7 yrs already as regular employee. I was working on my retirement planning but could not clearly identify my expected monthly pension amount at my retirement.
My current pension contribution so far is:
PensionCapture.PNG

I was looking at calculations for expected pension based on following criteria:
- Monthly contribution to pension: 56000 yen
- Bonus contribution to pension(per/yr):100000 yen
- My wife is my dependent and not japanese. I plan to stay in my home country once I retire.
- Duration of contribution:
1. Paying into japanese pension for another 3 yrs(ie total of 10 yrs min) and migrate to my home country.
2. Paying into japanese pension till retirement ie age 65yrs.(ie staying in japan atleast till retirement)

I do understand that there are large number factors but I wanted a rough estimate based on above criteria.

I would also like understand the calculation behind the number if possible.

Thanks in advance
Aki

The screenshot shows you can expect 468,096 yen per year when you retire, as of the date this card was printed.

[akizoid]

Thank you for your reply.
I have already registered for Nenkin and tried there simulator. It says that I will get 165000 per month.
Now, I am not sure how to interpret the result.
Does it mean that this value is based on my contribution so far?
Or based on what I will contribute till I retire?

Also, wanted to understand what is the monthly contribution people on average make to pension?
Just to see, if my monthly contribution is good or bad.


Regards
Aki

[Moneymatters]

1. Paying into japanese pension for another 3 yrs(ie total of 10 yrs min) and migrate to my home country.
2. Paying into japanese pension till retirement ie age 65yrs.(ie staying in japan atleast till retirement)

I do understand that there are large number factors but I wanted a rough estimate based on above criteria.

I would also like understand the calculation behind the number if possible.

Thanks in advance
Aki

regarding 2. And just remember.

"I would also like understand the calculation behind the number"

You asked for this.
The base pension 国民年金 is currently about 780,000 and requires 40 years (480 months) by age 65 to receive the full amount.
As you started at 30, the most you can contribute is 35 years. So the most you'd expect is 35/40ths of whatever the base pension is at that time.
65 - 30 (the age you started) = 35. Right now that would equate to approx 682,000 per year.

For the employee pension portion 厚生年金 you seem to be on the max contribution.
Also, the calculation for your case isn't that complex as you've only contributed since 2003 April!
It's just head spinningly complex rather than mind bendingly.

It's based on your in-scope income for each month in the scheme (and two bonuses payments per year each of up to 1.5mil).

So let's you were at the max of 620,000 per month for the whole year the math is now simply:

620,000 * 5.481 / 1000 * 12 = 40,778 That would be your annual post age 65 employee pension payout for that one year.
If nothing changes and you earned/contributed the same for 30 years you'd get 1,223,359 per year from age 65. (Multiple by 360 months instead of 12).

However. you also need to factor in the bonus payments and changes to the amount of salary in scope (it increased to 650,000 in Sept last year.
You've only given your 100K pension contribution so it's not clear how much your bonus was. (Maybe around 1.2mil?)

This could be massively wrong but...

Maybe you'd end up with 7 years of a monthly 620K average then 23 years with the 650K average, alongside 30 years of once per year 1.2mil bonuses.
620,000 * 5.481 / 1000 * 84 = 285,450 (First seven years)
+
650,000 * 5.481 /1000 * 276 = 983,291 (Next 23 years to 60)
+
1,200,000 * 5.481 / 1000 * 30 = 197,316 (30 annual bonus payments)

That's 1,466,057

Obviously you need to look closely at the data in the nenkin site but this gives you some idea how the numbers are derived.

Just noticed you shared a projection of 165,000 per month. That will be based on base pension contributions to 60. So a target of 30/40ths approx 585,000 based on the current amount.

So 1,466,057 + 585,000 = 2,051,057 per year or 170,921.

A little higher than the projection you received but I've made several assumptions above. Hope it helps.

[Roger Van Zant]

1. Paying into japanese pension for another 3 yrs(ie total of 10 yrs min) and migrate to my home country.
2. Paying into japanese pension till retirement ie age 65yrs.(ie staying in japan atleast till retirement)

I do understand that there are large number factors but I wanted a rough estimate based on above criteria.

I would also like understand the calculation behind the number if possible.

Thanks in advance
Aki

regarding 2. And just remember.

"I would also like understand the calculation behind the number"

You asked for this.
The base pension 国民年金 is currently about 780,000 and requires 40 years (480 months) by age 65 to receive the full amount.
As you started at 30, the most you can contribute is 35 years. So the most you'd expect is 35/40ths of whatever the base pension is at that time.
65 - 30 (the age you started) = 35. Right now that would equate to approx 682,000 per year.

For the employee pension portion 厚生年金 you seem to be on the max contribution.
Also, the calculation for your case isn't that complex as you've only contributed since 2003 April!
It's just head spinningly complex rather than mind bendingly.

It's based on your in-scope income for each month in the scheme (and two bonuses payments per year each of up to 1.5mil).

So let's you were at the max of 620,000 per month for the whole year the math is now simply:

620,000 * 5.481 / 1000 * 12 = 40,778 That would be your annual post age 65 employee pension payout for that one year.
If nothing changes and you earned/contributed the same for 30 years you'd get 1,223,359 per year from age 65. (Multiple by 360 months instead of 12).

However. you also need to factor in the bonus payments and changes to the amount of salary in scope (it increased to 650,000 in Sept last year.
You've only given your 100K pension contribution so it's not clear how much your bonus was. (Maybe around 1.2mil?)

This could be massively wrong but...

Maybe you'd end up with 7 years of a monthly 620K average then 23 years with the 650K average, alongside 30 years of once per year 1.2mil bonuses.
620,000 * 5.481 / 1000 * 84 = 285,450 (First seven years)
+
650,000 * 5.481 /1000 * 276 = 983,291 (Next 23 years to 60)
+
1,200,000 * 5.481 / 1000 * 30 = 197,316 (30 annual bonus payments)

That's 1,466,057

Obviously you need to look closely at the data in the nenkin site but this gives you some idea how the numbers are derived.

Just noticed you shared a projection of 165,000 per month. That will be based on base pension contributions to 60. So a target of 30/40ths approx 585,000 based on the current amount.

So 1,466,057 + 585,000 = 2,051,057 per year or 170,921.

A little higher than the projection you received but I've made several assumptions above. Hope it helps.

OP has a big fat zero for 国民年金 in the above photo though....

By the way, you can only pay into your Japanese pension up until 60 years old, not 65.

[Moneymatters]

1. Paying into japanese pension for another 3 yrs(ie total of 10 yrs min) and migrate to my home country.
2. Paying into japanese pension till retirement ie age 65yrs.(ie staying in japan atleast till retirement)

I do understand that there are large number factors but I wanted a rough estimate based on above criteria.

I would also like understand the calculation behind the number if possible.

Thanks in advance
Aki

regarding 2. And just remember.

"I would also like understand the calculation behind the number"

You asked for this.
The base pension 国民年金 is currently about 780,000 and requires 40 years (480 months) by age 65 to receive the full amount.
As you started at 30, the most you can contribute is 35 years. So the most you'd expect is 35/40ths of whatever the base pension is at that time.
65 - 30 (the age you started) = 35. Right now that would equate to approx 682,000 per year.

For the employee pension portion 厚生年金 you seem to be on the max contribution.
Also, the calculation for your case isn't that complex as you've only contributed since 2003 April!
It's just head spinningly complex rather than mind bendingly.

It's based on your in-scope income for each month in the scheme (and two bonuses payments per year each of up to 1.5mil).

So let's you were at the max of 620,000 per month for the whole year the math is now simply:

620,000 * 5.481 / 1000 * 12 = 40,778 That would be your annual post age 65 employee pension payout for that one year.
If nothing changes and you earned/contributed the same for 30 years you'd get 1,223,359 per year from age 65. (Multiple by 360 months instead of 12).

However. you also need to factor in the bonus payments and changes to the amount of salary in scope (it increased to 650,000 in Sept last year.
You've only given your 100K pension contribution so it's not clear how much your bonus was. (Maybe around 1.2mil?)

This could be massively wrong but...

Maybe you'd end up with 7 years of a monthly 620K average then 23 years with the 650K average, alongside 30 years of once per year 1.2mil bonuses.
620,000 * 5.481 / 1000 * 84 = 285,450 (First seven years)
+
650,000 * 5.481 /1000 * 276 = 983,291 (Next 23 years to 60)
+
1,200,000 * 5.481 / 1000 * 30 = 197,316 (30 annual bonus payments)

That's 1,466,057

Obviously you need to look closely at the data in the nenkin site but this gives you some idea how the numbers are derived.

Just noticed you shared a projection of 165,000 per month. That will be based on base pension contributions to 60. So a target of 30/40ths approx 585,000 based on the current amount.

So 1,466,057 + 585,000 = 2,051,057 per year or 170,921.

A little higher than the projection you received but I've made several assumptions above. Hope it helps.

OP has a big fat zero for 国民年金 in the above photo though....

By the way, you can only pay into your Japanese pension up until 60 years old, not 65.

Hi Roger!

His 国民年金 is covered in the 老齢基礎年金 and you can voluntarily contribute to the base pension for
60-65.

[TokyoWart]

Thank you for your reply.
I have already registered for Nenkin and tried there simulator. It says that I will get 165000 per month.
Now, I am not sure how to interpret the result.
Does it mean that this value is based on my contribution so far?
Or based on what I will contribute till I retire?

Also, wanted to understand what is the monthly contribution people on average make to pension?
Just to see, if my monthly contribution is good or bad.


Regards
Aki

Here are the numbers from my most recent pension projection (by postcard during my birthday month):

Contributed for 280 months so far
Contributed a total of 16,964,897 yen to the pension system
Expected pension at age 65 (I am currently 58; my understanding is that this is the figure if I stop contributing now): 1,781,962 yen per year
of that amount 499,962 yen is 基礎年金 and 1,282,000 is 一般厚生年金.

For your question about monthly contribution it currently maxes out at 59,475 yen/month (was 56,730 yen/month until a few months ago) and I think around 193,980 for bonus.