Company DC vs Ideco

[adamu]

You really need to know the fees to make an informed decision. I think it's going to be difficult for us to help with only general information.

I would guess that as long as the fees are not too high, the benefits of a higher amount of savings not subject to income tax will mean the company plan will be better.

One thing to consider is what happens if you leave the company? You can take iDeCo with you, what happens to your company plan savings?

[Moneymatters]

I was going by the asterisk/footnote in column 2, but checking the (more official) site below, kosei-nenkin is referred to two times (both as a green box and a white box) and the white box covers the ¥55,000 category... so you're right.
Now I'm confused about the difference between kosei-nenkin kikin and kosei-nenkin hoken.

https://www.mhlw.go.jp/stf/seisakunitsu ... ousha.html

https://job-medley.com/tips/detail/731/

Starting with the usual.
厚生年金と厚生年金基金。字面も似ているのでまぎらわしいのですが、両者は全くの別物です。

To paraphrase. We made these incredibly similar sounding and similar looking things as mom didn't let us have motorbikes in your youth so we became bureaucrats and this is how we rebel.

Section 2. has the dirt.

厚生年金基金とは、国に代わって企業が厚生年金の給付の一部を代行し、さらに企業独自の上乗せ給付を行うことができる年金制度。つまり、国の監督のもとで実施される企業年金制度のひとつということになります。

Kousei-nenkin kikin is basically a portion your kousei nenkin payment being diverted into an industry pension fund, which is under government control. I'm not clear on the portion that would be diverted but I suspect it's the majority with only the part of kousei nenkin hoken that funds kokumin nenkin staying in that system.

Kousei-nenkin kikin is one of the three industry pension systems 企業年金制度. With the others 確定給付企業年金(DB) and 確定拠出年金(DC).

Section 3 has tabloid level dirt.

厚生年金基金 has actually been abolished! No new funds since 2014 and people being "strongly encouraged" (Not a term we use lightly around here) to transition to another 企業年金制度.

For those who have persevered this far. Here's a link to someone talking about the three types of 企業年金制度 including the one you can't enroll in anymore.

https://biz.moneyforward.com/blog/21712/

I have no actually knowledge of any company pension and the above is from a few mins online.
Assume I've misunderstood some of this.

[Roger Van Zant]

I joined by company DB (not DC, but still, almost the same) plan back when I knew nothing about iDeCo. I wish I hadn't.
Since I pay in 10,000 yen a month, I can only pay 12,000 into my iDeCo as opposed to 23,000.
My company DB plan provider is ridiculously conservative and risk-averse. I think they just invest in Japanese government bonds! I would be much better off investing that 10,000 myself in the eMaxis All Country ETF.
However, I can only quite the DB plan if I leave the company, or when I retire! Sucks.
Oh well....

[mighty58]

<snip>

From your second link, it sounds like the kosei-nenkin kikin is/was the pension fund management firm, but was abolished in 2014, and has now been replaced by what sounds like exactly the same thing, except that it's now called the kikin-gata type within the DB plan.

As this is all as clear as mud to me, I'm going to stop here, as this discussion is probably only serving to confuse more people than necessary.

[KevinC]

Thanks for all the help everyone.

If I leave the company I’m able to take the funds with me.

I’ll keep digging and look into the fees

[Tkydon]

Your Company CD Plan is probably compulsory.

There is a legal limit to how much you can commit to Tax Advantaged Pension Plans.

If you or your company are not committing the maximum permissible to the Company DC Plan, then you should ask whether you can make voluntary contributions to the max.

If yes, then do that. If no, then you can open an iDECO and commit that difference to the iDECO.

https://www.willistowerswatson.com/en-G ... s-proposed

The limits were changed once some years back, and it seems they may be changed again...

[Tkydon]

Re: Company DC vs Ideco

Post by KevinC » Fri Feb 26, 2021 7:24 am
Thanks for help guys.

You’re right the limit is ¥55,000 per month.

I couldn’t find any info on fees but found the fund list. In total there are 32 to choose from;
- deposits
- balanced lifecycle trusts (balance or target funds)
-domestic equity investment
-domestic bond
-foreign equity
- foreign bonds
- reit funds
Each category has a few choices.
Top

Assuming you are not looking to suddenly invest a very large amount in to the markets, but wish to allocate funds on a monthly basis over the next n years, I would go

50% -foreign equity
30%-domestic equity investment
20%- reit funds

and ignore the rest.

Foreign Equities would give you double benefit of the Equity Price increases and decreases AND the Exchange rate increases and decreases, and contrary to popular belief, you would want the markets to go down and down, so you can buy more and more... and then go up in the end...

[JapaneseMike]

and my company allows me to do either but not both

So, sorry to pick on this, but I am not too sure about the above.

iDeCo is a government sponsored program, and anyone can apply for it. Your company can't make you ineligible for a government program.

How I'd interpret what they've said is that that they won't pay into iDeCo & the company DC from your salary, so if you take the iDeCo you'd need to set it up to come directly from your bank account.

Regardless, having more than one DC is a great idea, so get the company DC and take whatever advantages they offer, then a month or two later, sign up for iDeCo. You'll be limited to the amount you can put into iDeCo because you are in a company DC (either 12,000 or 20,000 a month is the max i think) but that ~~should~~ allow you to do both.

There are wiser people than me here though, if what I'm saying doesn't make sense, please shoot it down.

[zeroshiki]

No, I think he's right. iDECO is tax advantaged and so is a DC plan so I'm pretty sure you can choose only one or the other. I've asked this same question to my company's HR and they told me if I want to pay into iDECO I should just increase my contributions to the DC.

In fact there's only 2 exceptions:
①企業型DCでマッチング拠出*を実施していないこと
*会社が出している掛け金に上乗せして、加入者本人も掛金を拠出できる仕組み

②会社が、企業型DCの掛金上限金額をiDeCoの掛金上限分引き下げる規約変更を、労使合意の上で行うこと

Your company needs to NOT be doing matching on your DC and your company has to agree to lower the DC limit to make up for the iDECO limit.

[JapaneseMike]

No, I think he's right. iDECO is tax advantaged and so is a DC plan so I'm pretty sure you can choose only one or the other. I've asked this same question to my company's HR and they told me if I want to pay into iDECO I should just increase my contributions to the DC.

In fact there's only 2 exceptions:
①企業型DCでマッチング拠出*を実施していないこと
*会社が出している掛け金に上乗せして、加入者本人も掛金を拠出できる仕組み

②会社が、企業型DCの掛金上限金額をiDeCoの掛金上限分引き下げる規約変更を、労使合意の上で行うこと

Your company needs to NOT be doing matching on your DC and your company has to agree to lower the DC limit to make up for the iDECO limit.

Wow, ok, happy to be corrected here.

I have a DB from my company, but I can still apply, just my limit is stupidly (12,000 / month) low. But I thought the material said if you're in a company DC you can pay somewhere between 20-23k. I guess the fine print (that I didn't read carefully enough) is the point you're making above.

Thanks