Nenkin Lost Years

[thejunman]

How many years do we need to pay in order to get the full pension?

40.

Basic Pension: Kokumin Nenkin

That probably excludes a lot of foreign residents then because it would mean they'd have to be in Japan from 20 years old.

Have many years can we back pay? I've read it is only two years.

Does our final payment depend on our total contributions?

[RetireJapan]

Not sure if it's a problem on my side or not, but I see a "this page can't be found" error message when I click on the link.

Sorry, we redid the blog and all the links changed: should be this now

https://www.retirejapan.com/blog/pensio ... vestments/

[beanhead]

That probably excludes a lot of foreign residents then because it would mean they'd have to be in Japan from 20 years old.

Have many years can we back pay? I've read it is only two years.

Does our final payment depend on our total contributions?

Yes, most of us cannot get the full 40 years. Voluntarily paying from 60 until 65 is possible. This could be extended to, say, 70 in the future?
Once you hit the 120 months of payments which gets you a minimum pension they don't allow you to backpay, I believe. That is what I was told, anyway.
Yes, your final payment depends on your years of contributions. It is pro-rated. So 20 years paid in would get you half of the full pension.

[adamu]

How many years do we need to pay in order to get the full pension?

40.

Basic Pension: Kokumin Nenkin

That probably excludes a lot of foreign residents then because it would mean they'd have to be in Japan from 20 years old.

For the full pension, yes. On the plus side, since you are from the UK you are probably eligible for the UK pension too - make sure you've maxed that out as much as possible!

[banders]

A year on and as I see it you can now pay into iDeCo until 65, in which case there's no need to pay into the J pension for that right. NISA and iDeCo are far better ways to invest.

[adamu]

you can now pay into iDeCo until 65, in which case there's no need to pay into the J pension for that right.

I don't think you can pay into iDeCo unless you are also paying into Nenkin. iDeCo is considered a supplement to Nenkin, so paying Nenkin is a prerequisite.

Voluntarily paying Nenkin over 60 = can pay into iDeCo.
Not paying Nenkin over 60 = can't pay into iDeCo.

[banders]

Dammit Chloe, I thought we could pay into iDeCo aged 60~64 without paying into the pension fund. Guess I need to recalculate my future. Thanks for the head up!

[Tkydon]

Dammit Chloe, I thought we could pay into iDeCo aged 60~64 without paying into the pension fund. Guess I need to recalculate my future. Thanks for the head up!

If you are in full time employment, and paying Kokumin Nenkin and Employee Pension, then iDECO will allow an additional Y23,000 per month, or Y276,000 per year, with a tax deduction at your Marginal Income Tax Rate.
If you are not in full time employment, and only paying Kokumin Nenkin, then iDECO will allow an additional Y68,000 per month, or Y816,000 per year, with a tax deduction, but if you don't have any income, you don't get the benefit of the tax deduction on that money on the way in, so you lose any tax benefit as the money will be Post-Tax... in which case it will be no different than a regular investment.
iDECO will be taxable when you take the distributions in retirement.

So, if the money has already been taxed, and you don't have any income against which to take the tax deduction, then you should probably use NISA.
In 2024, you will be able to input up to Y1.2M per year in Tsumitate Portion, or up to Y100,000 per month, and up to Y2.4M per year in Regular NISA Portion, and any gain will be completely tax free when you take the money out.

Each is a Tax Arbitrage Play; iDECO is Tax Advantaged against a higher Marginal Income Tax Rate on the way in and taxed at a lower rate in retirement on the way out, and would (probably/hopefully) compound faster due to the larger input available due to the tax deduction.
NISA is not Tax Advantaged on the way in, but is Tax Free in retirement on the way out.
Assuming you are probably going to choose the same investment instruments/funds, which Tax Advantaged method you choose to use will depend on whether you have income tax to offset or not.

[banders]

Thanks Tkydon for that explanation. Very helpful!