Opting out of Japanese pension

[Tkydon]

You can go to the local Ku-Shi-Son-Cho Yakusho or Shutchojo and ask them regarding your options

[kuma]

I got PR with 6 years living in Japan, including 2 years where I was exempted of nenkin because I was paying in my country. So I don't think I have enough payments to quality for a pension at the moment. Having PR doesn't mean I've decided to stay here all my life. I'm just trying to understand what are my options.

Having PR means you might qualify for a Japanese pension with fewer than 10 years of contributions. See
https://retirewiki.jp/wiki/Japanese_pen ... ion_period

Having PR also means you’ve probably jumped through enough Japanese bureaucratic hoops to know that evasion of the contributions is unlawful.

If you’re considering avoidance (above-board non-payment measures), then the exemptions, exclusions, etc are covered here: https://retirewiki.jp/wiki/Japanese_pen ... n:_summary

Oh, and there’s always the ‘dependent’ case, whereby dependents’ contributions are covered automatically by the head of household’s kosei nenkin.

In addition to these cases, it may be possible to legitimately retain PR and reside outside of Japan for a period of time and not be liable for Japanese pension contributions, but my understanding is that this would require not retaining a Japanese domicile. This is an answer to the original Q of ‘an opt out of the Japanese pension whilst being a permanent resident’. If your overriding goal were to not pay pension contributions at all, there may be countries without a system or where foreign residents are excluded (eg most of the Gulf States).

But assuming none of the above avoidance ‘techniques’ are relevant or appealing, and further assuming you are or will be a Category 1 insured person (otherwise your contributions would be made automatically, and you may not be asking the Q in the first place), have you looked into fuka nenkin (https://retirewiki.jp/wiki/Fuka_nenkin) and iDeCo (https://www.retirejapan.com/ideco-j401k/, https://retirewiki.jp/wiki/IDeCo)?

You mention yield. Few government-backed investments give a yield as high as that on fuka nenkin (an exception being the UK’s Class 2 national insurance contributions). Highly recommended. By raw numbers, a 2.4% increase to your pension contributions can lead to a 12.3% increase in benefits. Exclusively available to Category 1 pension contributors.

iDeCo is highly tax efficient. Possibly the most recommended investment option on this forum. Available to (almost) all pension contributors.

The Japanese pension isn't the best in the world, but contributions are enshrined in law.

If income is low, exemptions are available. If a worry is that you'll not stick around to benefit, then PR means you might well be able to vest as is, and the pension can be drawn globally. If you do leave Japan, you can look into the lump sum withdrawal option (there is also a similar system for iDeCo), so as to get some of the funds back.

Having a job with kosei nenkin coverage is another pension-boosting technique. At about the JPY300,000/month salary level, the benefits for kosei nenkin (employed) are roughly double the benefits for kokumin nenkin (self-employed, etc). And the company contributes. (And dependents can hop on for free.)

The RJ site, forum and wiki has a wealth of information and advice for improving financial circumstances within the legal framework.

[zeroshiki]

Amazing post kuma. I wish there was a thumbs up button here because this is a great, non-cynical post laying out all the things around pension.

To anyone who is reading this thread and thinking about it, pension is important. Not paying into pension is effectively the same as not paying tax. You shouldn't gamble your future or your family's future on the misguided idea of sticking it to the man. At the end of the day, unless you are Japanese, there are myriad ways for them to throw us out so let's not tempt the bear. The pension is a requirement AND its good for you.

[captainspoke]

As an american, I can only wonder at the kind of looks someone would get if they asked about not paying social security taxes--"what are my options for not paying that?" or "I've heard that some people don't pay, and I was wondering if I could do the same."

After a worker had dealt with this inquiry, there'd be a story to tell (and probably laughter) in the lunchroom, or at the water cooler--"Listen this one--you'll never believe it! Someone was in earlier asking about how they could just not pay for social security!"

[TokyoBoglehead]

As a final note if someone finds 1.6 man a month onerous, they are probably most in need of a steady, reliable stream of income in retirement.

Personally as a hejokin, I do not factor it into retirement at all. It will be a nice supplement to everything else I plan.

[imaginatorium]

Just as a point on the graph... We moved to Japan in the Year 5BI (Before the Internet, OK, but I use the term in its popular confusion with the WWW), and I have been self-employed ever since; first as a (fairly well paid) technical translator, more recently running my puzzle shop mostly for fun. At no time did anyone indicate to me that I was supposed to contribute to kokumin nenkin, and as a non-kokumin I could hardly be expected to guess I was. When I finally got round to applying for PR, a year or so ago, there was a question about pensions, and being past pension age I responded that I had about 50% of a basic state pension from the UK, a (small) company pension from the UK, and income on invested savings. Basically they made no fuss about this at all. (I can't remember - I might have been asked a question at the office in Utsunomiya, but my answer was just accepted.) This is no recommendation to try avoiding payment, but suggests that it is not necessarily a big problem. (Of course it is also the old "Case by case"...)

[adamu]

When I finally got round to applying for PR, a year or so ago, there was a question about pensions, and being past pension age I responded that I had about 50% of a basic state pension from the UK, a (small) company pension from the UK, and income on invested savings. Basically they made no fuss about this at all.

Interesting. The official guidelines state that you need to supply evidence of paying into the pension.

Also, is "a year or so ago" earlier than July 2019? That's when they started requiring this information.

[TokyoBoglehead]

Just as a point on the graph... We moved to Japan in the Year 5BI (Before the Internet, OK, but I use the term in its popular confusion with the WWW), and I have been self-employed ever since; first as a (fairly well paid) technical translator, more recently running my puzzle shop mostly for fun. At no time did anyone indicate to me that I was supposed to contribute to kokumin nenkin, and as a non-kokumin I could hardly be expected to guess I was. When I finally got round to applying for PR, a year or so ago, there was a question about pensions, and being past pension age I responded that I had about 50% of a basic state pension from the UK, a (small) company pension from the UK, and income on invested savings. Basically they made no fuss about this at all. (I can't remember - I might have been asked a question at the office in Utsunomiya, but my answer was just accepted.) This is no recommendation to try avoiding payment, but suggests that it is not necessarily a big problem. (Of course it is also the old "Case by case"...)

This is outdated information, please be very careful about providing such advice to other foreigners in the future as it may cause them huge issues.

The official guides do indeed state you need to provide proof of payment. I was told 3 years, but 2 is apparently sufficient according to the source.

You need to have Zero issues during this period. No late missed payments, no missed payments, etc. Your guarantor must also meet these qualifications.

If your wife is sponsoring you, and she was late paying last years March Nenkin bill there is a good chance you'll get rejected.

Documents which prove payment of public pension insurance premiums over the past two years

Please thoroughly black out the applicant's personal pension number if it appears on any of the documents being submitted.
Those who are paying into pension plans other than the national pension plan (such as employee pension plans) should submit the documents listed in either a or b.
Those who have been enrolled in the national pension plan for the past two years should submit the documents listed in c, in addition to those from either a or b.
Applicants who have been continuously paying into their pension plan for the past two years do not need to submit item c. If it will be difficult to submit records for the full two-year period (24 months), please explain the circumstances in a separate document (any format), in addition to those from either a or b.
https://www.isa.go.jp/en/applications/p ... jyu02.html

[captainspoke]

...
Personally as a hejokin, ...

Minor question, but...
ひじょうきん／非常勤 ？

[imaginatorium]

When I finally got round to applying for PR, a year or so ago, there was a question about pensions, and being past pension age I responded that I had about 50% of a basic state pension from the UK, a (small) company pension from the UK, and income on invested savings. Basically they made no fuss about this at all.

Interesting. The official guidelines state that you need to supply evidence of paying into the pension.

Also, is "a year or so ago" earlier than July 2019? That's when they started requiring this information.

I applied for PR in late 2021, and received it in March 2022. As I said, I was past pension age anyway, so it is not clear that they could have demanded I start paying and come back in 2 or 3 years.

I repeat for those with reading difficulties that this is not "advice", it is merely me recounting my own experience.