Should university students pay back their pardoned pension?

[Oliver]

Should my son pay his pardoned pension after his university or should he invest into NISA instead?
Does he even have a choice?

[captainspoke]

Rather than the word 'pardon', for our kids it was considered to be an exemption, and they have not tried to backpay it. No idea if you can actually do that.

I'd think NISA would be a better used of the funds, and if such a person does end up working here, missing a couple years won't be much of a hit come pension time. The fact that they would have a degree and likely higher overall lifetime earnings should more than offset that.

[adamu]

I don't know the answer, but I think it would be found by: calculate how much paying back would affect the pension, and determine if it's worth it considering the other things they could use the money for. You also need to consider when to repay, as the repayments are adjusted if made more than 3 years later.

Another point to consider: if your son is not Japanese and does not have PR, having a clean slate for the pension could be useful for a potential Permanent Residence (and maybe even Naturalisation?) application.

https://www.nenkin.go.jp/international/ ... html#cms02

[RetireJapan]

Under normal circumstances (planning to work and retire in Japan) I would not bother paying the exempted years, as your son would still get eligibility for those years and will be able to pay for another 40+ years easily.

Putting the money into new NISA instead, invested in something sensible, and left to grow for 40-50 years is likely to give him a 15-30x return

[Oliver]

Super good advice! Thank you!

[Tkydon]

Under normal circumstances (planning to work and retire in Japan) I would not bother paying the exempted years, as your son would still get eligibility for those years and will be able to pay for another 40+ years easily.

Putting the money into new NISA instead, invested in something sensible, and left to grow for 40-50 years is likely to give him a 15-30x return

https://www.nenkin.go.jp/international/ ... nsion.html

An exempted month only counts as 1/2 of a month

"(2) Number of full contribution-exempted months*** × 1/2"

At today's Basic Pension allowance, a marginal half month would be worth an extra Y828 per month if starting to receive the pension at age 65...