Nisa, Ideco (civil servant) or both if you only have 30000円/monthly...

[Ichigo]

Hello everyone,

I'm in my early 40s (EU-citizen) and finally started investing thanks to retirejapan. The amount I can invest monthly is about 30.000円, it may increase next year after going back fulltime.
I am about to set up my Tsumitate Nisa.

Now I am wondering if I should enroll in Ideco as well?
There are two points that keep my from opening an Ideco account:
1. I am a civil servant and the max. amount I can invest is 12.000円 monthly. Is that even worth it or should I rather use that money to max. out Nisa?
2. I am not planning to spend my retirement in Japan, planning to go back to my home country. So far it looks like I will stay here until 60, but it could also be possible that I'll leave in 10-15 years. I am aware that I am not able to withdraw my money until the age of 60.

Should I split into:
* 12.000円 Ideco
* 18.000円 Tsumitate Nisa
Or should I invest all 30.000円 in Tsumitate Nisa?
Are there any advantages/disadvantages?

Another option is to open an IB account instead of Ideco. Then I would invest a bigger lump sum and just leave it. However, I still need to do some research about taxes etc.

Thank you for your advice!
Best regards,

Ichigo

[RetireJapan]

Welcome to the forum!

There is no correct answer here. All of your options seem reasonable.

iDeCo will reduce your income tax as well as being largely tax-free investing. That makes it better than NISA. You can currently access your money at the age of 60, and the government is considering allowing foreign nationals who leave Japan to cash out their iDeCo accounts.

With IB you will be able to keep your account when you leave Japan but any tax paperwork is a hassle compared to a Japanese broker (if you receive dividends or end up selling something).

I would recommend maxing out iDeCo and putting as much into NISA as you can. If you can max out both then maybe think about what to do with any additional investments?

[Chris]

There are two points that keep my from opening an Ideco account:
1. I am a civil servant and the max. amount I can invest is 12.000円 monthly. Is that even worth it or should I rather use that money to max. out Nisa?

Just to make sure here (because I made the same mistake when I started my iDeCo application) are you certain you're a civil servant?

For example I work as a directly hired ALT with a Board of Education. I am therefore a Fiscal Year Appointed Government Employee which bounds me to the local public servant law like all civil servants, but does not make me a civil servant, it makes me an Employee, just a Government Employee as opposed to your normal private sector employee.

Just wanted to add that there because if this does also apply to you also then you can contribute the full 23,000 JPY in an iDeCo per month like I do.

[RetireJapan]

There are two points that keep my from opening an Ideco account:
1. I am a civil servant and the max. amount I can invest is 12.000円 monthly. Is that even worth it or should I rather use that money to max. out Nisa?

Just to make sure here (because I made the same mistake when I started my iDeCo application) are you certain you're a civil servant?

For example I work as a directly hired ALT with a Board of Education. I am therefore a Fiscal Year Appointed Government Employee which bounds me to the local public servant law like all civil servants, but does not make me a civil servant, it makes me an Employee, just a Government Employee as opposed to your normal private sector employee.

Just wanted to add that there because if this does also apply to you also then you can contribute the full 23,000 JPY in an iDeCo per month like I do.

Once again the poorly worded and explained government iDeCo explanation sows confusion

iDeCo eligibility depends entirely on the type of nenkin you pay into. Nothing else matters, so whether you are a real civil servant or not doesn't matter.

The four categories are:

-Kokumin nenkin
-Kosei nenkin
-Kosei nenkin through a kyosai (public servants, but also most teachers, medical workers, etc)
-Dependent spouse of kosei nenkin enrolee

[RetireJapan]

Easiest way to check would be to ask HR/the office accountant what type of nenkin you're in. I worked in a BOE as an advisor and was paying into normal kosei nenkin, then more recently at a university kyosai nenkin.

[Ichigo]

Thank you all for your reply!

I am not a teacher and I pay into kosei nenkin through a kyosai. But I will ask the HR just to make sure .

Domo!
Best regards,

Ichigo

[Chris]

There are two points that keep my from opening an Ideco account:
1. I am a civil servant and the max. amount I can invest is 12.000円 monthly. Is that even worth it or should I rather use that money to max. out Nisa?

Just to make sure here (because I made the same mistake when I started my iDeCo application) are you certain you're a civil servant?

For example I work as a directly hired ALT with a Board of Education. I am therefore a Fiscal Year Appointed Government Employee which bounds me to the local public servant law like all civil servants, but does not make me a civil servant, it makes me an Employee, just a Government Employee as opposed to your normal private sector employee.

Just wanted to add that there because if this does also apply to you also then you can contribute the full 23,000 JPY in an iDeCo per month like I do.

Once again the poorly worded and explained government iDeCo explanation sows confusion

iDeCo eligibility depends entirely on the type of nenkin you pay into. Nothing else matters, so whether you are a real civil servant or not doesn't matter.

The four categories are:

-Kokumin nenkin
-Kosei nenkin
-Kosei nenkin through a kyosai (public servants, but also most teachers, medical workers, etc)
-Dependent spouse of kosei nenkin enrolee

Oh I see that makes more sense now.

When I was researching the 2020 changes for ALTs I noticed that among the other benefits full-time fiscal year appointed government employees get, after 1 year of service, full-time Fiscal Year Appointed Government employees are switched onto Kyosai Kumiai too. So I guess they would be able to get 23,000 a month for their first year and then limited to 12,000 after their first year. Full-time is contracted 38 hours and 45 minutes or more a week.

Just for clarification, on paper, I only work 35 hours a week so considered a part-time fiscal year appointed government employee and therefore only enrolled in Kosei Nenkin. Sucks for employment benefits, but at least the silver lining is 23,000 a month in the iDeCo.

[beanhead]

Back to the original question, iDeCo first then NISA.
Use the taxes you save with iDeCo to put as much into your NISA as you can!

[Ichigo]

Thank you all!