Pension system, mortgage tax cut, adult age reduction ... 2022 money law amendment

[Haystack]

The JPX website has a great review of the changes coming this year.

Does anyone have any thoughts or concerns?

https://money-bu-jpx.com/news/article035777/

Deepl Translation-

..........................................................................................................



Amendments to the Pension System in 2022, Noteworthy Amendments You Need to Know

On May 29, 2020, the "Act for Partial Amendment of the National Pension Act, etc. for the Purpose of Enhancing the Functions of the Pension System" was enacted and promulgated on June 5, 2020. This revision of the pension system will take effect in April 2022.

What aspects of the pension system will be amended in this revision? Let's take a look at what we should pay special attention to.

There will be more options for when to start receiving the old-age pension [from April 2022].

You will be able to receive the old-age pension when you turn 65. If you want to start receiving your pension earlier than age 65, you can choose to receive it earlier, and if you want to start receiving it later than age 66, you can choose to receive it later. Some of the details of these ways of receiving benefits will change from April 2022.

With accelerated payment, you will receive your pension earlier than usual, so the amount of your pension will be reduced. The rate of reduction is 0.5% per month. If you receive your pension early until age 60, the reduction rate will be 30%.

However, from April 2022, the reduction rate will be relaxed. The rate will be 0.4% per month. If you move up to age 60, the reduction rate will be 24%. Even a slight reduction in the amount of reduction is helpful.

There is also an amendment to the deferred receipt of benefits, which delays the start of receiving benefits. Until now, the upper age limit for receiving deferred benefits was 70 years old. However, from April 2022, the upper age limit will be raised to 75. If you defer your benefits until age 70, your pension will be increased by 0.7% per month. If you defer until age 70, the rate of increase will be 42%, but if you defer until age 75, the rate of increase will be 84%.

In addition to the public pension, it is good to have more options for receiving benefits, including private pensions and retirement benefits. However, an increase in the pension will result in an increase in taxes and social insurance premiums. For this reason, we recommend that you carefully consider how you want to receive your pension.

Defined contribution pensions will also start receiving benefits from April 2022.

In the case of iDeCo (Individual Defined Contribution Pension Plan), you pay your own contributions and invest them. In addition to iDeCo (individual defined contribution pension plans), defined contribution pension plans (company defined contribution pension plans) are managed by participants with contributions from their companies. Under the amendment, the start date for receiving pension benefits will be raised.

Until now, the pension benefits for both iDeCo and corporate DC have been paid from age 60 to 70. However, from April 2022, the upper limit will be raised from 70 to 75 years old. In other words, you will be able to choose when to start receiving your pension benefits within the 15-year period between the ages of 60 and 75.

Relaxation of requirements for membership in defined contribution pension plans (from May 2022)


Until now, only people under the age of 60 have been able to join an iDeCo. However, from May 2022, those who are insured under the Employees' Pension Law and those who are voluntarily enrolled in the National Pension Law will be able to join even if they are under 65.

However, from May 2022, those who are insured under the Employees' Pension Plan and those who are voluntarily enrolled in the National Pension Plan will be able to enroll even if they are under the age of 65.

Relaxation of requirements for corporate DC participants to join iDeCo (from October 2022)

Until now, corporate DC participants could not join an iDeCo unless their company's rules allowed it and the maximum employer contribution was reduced. However, from October 2022, even if there is no stipulation in the company's rules or a reduction in the employer's contribution, as a general rule, employees will be able to join an iDeCo as long as the employer's contribution is deducted from the maximum contribution amount.

In principle, it will be possible to join an iDeCo if the employer's contributions are deducted from the contribution limit.

In order to stabilize their lives in old age, more and more people are trying to work as long as possible. Since you can participate in the Employees' Pension System until the age of 70, you can increase your pension amount by working for the system. However, if you work while receiving a pension after the age of 65, the amount of pension you receive did not increase until you retired or reached the age of 70 due to the system of revision at retirement.

However, from April 2022, a new system will be introduced, whereby the pension amount will be revised once a year even while you are still working.

For example, if you work for one year with a standard monthly remuneration of 200,000 yen, the increase in your pension will be about 13,000 yen per year (about 1,100 yen per month) at the age of 65. Although this is not a very large amount, it will support your livelihood as the pension amount will gradually increase every year.

The application of social insurance will be expanded [from October 2022].


From October 2022, short-time workers such as part-time workers who meet certain requirements are expected to be able to join the social insurance system.

Until now, short-time workers have been obliged to join social insurance if they meet certain requirements at business establishments with 500 or more employees. However, from October 2022, establishments with 100 or more employees will also be required to enroll Part-Time Workers who meet certain requirements in social insurance.

For your information, those who are eligible to join social insurance are as follows.

Full-time employees
Employees (including part-time workers) whose weekly working hours are three-quarters or more of full-time workers.

Part-time workers who meet certain requirements are as follows

The prescribed working hours per week are 20 hours or more.
Monthly wage is 88,000 yen or more.
Expected to be employed for more than 2 months (until October 2022, "expected to be employed for more than 1 year")
You are not a student.

If you are enrolled in social insurance, your take-home pay will be reduced because the premium will be deducted from your salary. On the other hand, there are some advantages such as "an increase in the pension you can receive in the future" and "an injury and illness allowance and maternity allowance.

The deduction rate for the housing loan tax reduction system will be reduced.

In the 2021 tax reform, the deduction period for the mortgage tax reduction system was extended from 10 years to 13 years, and in the 2022 tax reform, the deduction rate for the mortgage tax reduction system will be reduced from 1% to 0.7%.

The mortgage tax reduction system is a system to deduct 1% of the year-end balance of the mortgage from income tax and inhabitant tax when a mortgage is taken out for the purpose of purchasing a house. The mortgage tax reduction system was set to expire on December 31, 2021, and if you signed a contract within a certain period of time and moved in by December 31, 2022, you could receive the deduction for 13 years.

The new amendment extends the deadline by four years (until 2025), and the deduction rate is reduced from 1% to 0.7%.

In addition, the deduction period depends on the year of occupancy and the house.

In the case of a new house

＜(1) Certified housing

If you move in by 2025, the deduction period is 13 years.

＜Other new homes

If you move in by 2022 or 2023, the deduction period is 13 years.
If you move in in 2024 or 2025, the deduction period is 10 years.

Used Home

If you move in by 2025, the deduction period is 10 years.

Furthermore, the income requirement of total income of "30 million yen or less" will be changed to receive the mortgage tax reduction, and the total income will be lowered to "20 million yen or less" from 2022.

Amendment of the Civil Code to make 18-year-olds adults

In April 2022, the Civil Code will be amended to lower the age of majority from 20 to 18. This means that even high school students will become adults when they reach their 18th birthday.

The concern here is the occurrence of consumer problems. Since 18- and 19-year-olds do not have enough knowledge about contracts, they may get into trouble with contracts. In order to avoid such a situation, it is recommended that parents tell them exactly what they need to be careful about in contracts, etc.

Conclusion
In 2022, there will be a series of amendments to the pension and social insurance systems, as well as the lowering of the age of adulthood, which are relevant to our daily lives. It is important to keep an eye out for new systems and changes, as well as to check the systems that are relevant to you.

[Written by Tomoko Maebutsu, Financial Planner]

[Haystack]

Seems like there are lots of positive changes.

1. I wonder how the 20->18 legal adult status change will affect J-Nisa accounts.

2. I wonder how many retirees aged 65-70 are going to signup for nenkin+ideco and use their existing savings/taxable investments to fund them. Or is this simply for those working part-time looking to extend their savings?

3. The mortgage home loan tax reduction incentives are not quite enough to make the case for ownership in the current market for us.

[TJKansai]

Forcing part-timers to pay in makes sense since they are less likely to be saving on their own. I wonder how the companies will deal with having to match the payments.

[Tkydon]

Amendment of the Civil Code to make 18-year-olds adults

In April 2022, the Civil Code will be amended to lower the age of majority from 20 to 18. This means that even high school students will become adults when they reach their 18th birthday.

The concern here is the occurrence of consumer problems. Since 18- and 19-year-olds do not have enough knowledge about contracts, they may get into trouble with contracts. In order to avoid such a situation, it is recommended that parents tell them exactly what they need to be careful about in contracts, etc.

[Written by Tomoko Maebutsu, Financial Planner]

How is this different between 18- and 19-year-olds and 20-year-olds ???

"It is recommended that parents tell them exactly what they need to be careful about in contracts, etc." - If only the parents knew...

[Haystack]

Tomoko Maebutsu, Financial Planner

She may be biased as she has probably seen her share of disasters and had to help pick up the pieces.

Also, her career relies on people believing they cannot handle financial matters by themselves...

Luckily, Japanese young adults can`t ruin their lives option trading on Robinhood with margin.

Exhibit A ->

[Tkydon]

Good job she's not buying Commodities Futures for Physical Delivery