Delaying pension

[RetireJapan]

I wonder what happens with the elderly with dementia etc?

Just asked my wife, and she's not sure if my father in law does a return (he can't really understand things that are written down any more).

I can't imagine the tax office would care all that much either way...

For the National Pension, National and Residents' Taxes and NHI are withheld at source, so if that is the only source of income, there is nothing to report.

Perhaps your FIL prepared a Power of Attourney that puts the admin in the hands of a proxy.

Doubt it (would have been my wife). I guess he only has pension income.

[Roger Van Zant]

Going off on a slight tangent, but what are the rules about submitting a tax return when you are retired? Will I still have to submit when I am in my 80s if I have different sources of pension income?

Yes, if you have sources of income that are not your Japanese National Pension, especially overseas pension or income, and you have any deductions that you wish to claim.

I will have the UK state pension in addition to my Japanese pension.
I am pretty sure I get the UK one after UK tax has been deducted.
Will I also have to pay Japanese income tax on this as well?

[Tkydon]

Going off on a slight tangent, but what are the rules about submitting a tax return when you are retired? Will I still have to submit when I am in my 80s if I have different sources of pension income?

Yes, if you have sources of income that are not your Japanese National Pension, especially overseas pension or income, and you have any deductions that you wish to claim.

I will have the UK state pension in addition to my Japanese pension.
I am pretty sure I get the UK one after UK tax has been deducted.
Will I also have to pay Japanese income tax on this as well?

According to Articles 17 and 18 of the UK-Japan Tax Treaty

https://www.mof.go.jp/tax_policy/summar ... n-UKEN.pdf

a UK Pension paid to a Resident of Japan is Only taxable in Japan, and should be paid out gross before tax from the UK.

So you will have to report it and pay taxes on it Only in Japan, after deduction of the Public Pension Tax Allowance (deductable from the sum of all qualifying Public Pensions) and other allowances and deductions
(currently Y550,000 Individual, about Y1.2M Public Pension Tax Allowance (depends), Y380,000 per Dependent, Y630,000 per Dependent between the ages of 19 and 23, and deductions for Insurance and Medical Insurance Premiums, Medical expenses over Y100,000, Furusato Nouzei, etc..)

You may have to file a form with the HMRC to qualify for Exemption from Withholding.

[Roger Van Zant]

Yes, if you have sources of income that are not your Japanese National Pension, especially overseas pension or income, and you have any deductions that you wish to claim.

I will have the UK state pension in addition to my Japanese pension.
I am pretty sure I get the UK one after UK tax has been deducted.
Will I also have to pay Japanese income tax on this as well?

According to Articles 17 and 18 of the UK-Japan Tax Treaty

https://www.mof.go.jp/tax_policy/summar ... n-UKEN.pdf

a UK Pension paid to a Resident of Japan is Only taxable in Japan, and should be paid out gross before tax from the UK.

So you will have to report it and pay taxes on it Only in Japan, after deduction of the Public Pension Tax Allowance (deductable from the sum of all qualifying Public Pensions) and other allowances and deductions
(currently Y550,000 Individual, about Y1.2M Public Pension Tax Allowance (depends), Y380,000 per Dependent, Y630,000 per Dependent between the ages of 19 and 23, and deductions for Insurance and Medical Insurance Premiums, Medical expenses over Y100,000, Furusato Nouzei, etc..)

You may have to file a form with the HMRC to qualify for Exemption from Withholding.

Thanks for this.
Still twenty years away, but good to have an idea of what to expect.

[Bubblegun]

I didn't know this about delaying our state pension. The break-even point is certainly interesting. Previously it would take 10 years to get that return, but after the changes, it is now 17 years to break even. Basically, we are going to be 85 years old or older if our retirement age is longer before we break even. I wonder if it is worth it. OUCH! The bit at at the end is very god advice.
https://youtu.be/3tUFeEPjmhw?si=mGbFOnh2kCQt0-q9

I am now leaning towards taking it ASAP. Now that I think about it, the default government position it to make everyone delay their pension by pushing up the retirement age to 68. Thereby pushing up the break-even point in favour of the government. I expect this to be brought forward, and to maybe even make it means tested.

[hbd]

After all these erudite posts, a staggeringly basic question, with apologies! Do the figures regarding the state pension being worth 125% and 142% more if one accesses it at ages 68 and 70, respectively, assume that one continues to pay in a monthly contribution from age 60 to 68 or 70? Contributions aren't compulsory after turning 60, so if one retired then but did not plan to pay in any further, would there be any point in delaying receipt of the pension for years?

[Tkydon]

After all these erudite posts, a staggeringly basic question, with apologies! Do the figures regarding the state pension being worth 125% and 142% more if one accesses it at ages 68 and 70, respectively, assume that one continues to pay in a monthly contribution from age 60 to 68 or 70? Contributions aren't compulsory after turning 60, so if one retired then but did not plan to pay in any further, would there be any point in delaying receipt of the pension for years?

Which country's pension?

If you are referring to the Japan National Pension, then:

https://www.nenkin.go.jp/service/jukyu/ ... 21-01.html

If you decide to start taking the Japanese National Pension early:

How much you would receive at 60 will be 70% of the amount you would receive at 65 if you paid no more contributions after age 60.
(1 minus the % shown. e.g. @70 (100%-30%) = 70%)

If you paid no more contributions after age 60, to a maximum of 480 months' contributions, at 65 you would receive 100% of the amount you would receive based on the qualifying months at 60

If you paid additional voluntary contributions after age 60 to age 65, at 65 you would receive 100% of the amount you would receive based on the qualifying months at 65

https://www.nenkin.go.jp/service/jukyu/ ... 21-02.html

If you decide to delay when you start taking the Japanese National Pension:

If you start taking the pension from your 68th birthday, you would receive 125.2% of the amount you would have received at 65.
(1 minus the % shown. e.g. @68 (100%+25.2%) = 125.2%)

If you start taking the pension from your 70th birthday, you would receive 142% of the amount you would have received at 65.

If you start taking the pension from your 75th birthday, you would receive 184% of the amount you would have received at 65.


The amount changes by month from age 60 to age 75...

Alternatively, if you missed applying, you could back-date the starting date, and take a lump-sum payment of the payments between the selected start date and the date of application; e.g. if you applied on your 70th birthday, but back-dated the start to your 68th birthday, you would receive a lump-sum payment of 2 years' payments of 100% of the amount you would have received at 68, which would be 125.5% of the amount you would have received at 65, and ongoing payments of the amount you would have received at 68.

[Moneymatters]

After all these erudite posts, a staggeringly basic question, with apologies! Do the figures regarding the state pension being worth 125% and 142% more if one accesses it at ages 68 and 70, respectively, assume that one continues to pay in a monthly contribution from age 60 to 68 or 70? Contributions aren't compulsory after turning 60, so if one retired then but did not plan to pay in any further, would there be any point in delaying receipt of the pension for years?

Staggeringly basic response.
You don’t need to keep paying in if deferring. The two are not connected. You could stop at 60 if you like. Or contribute to 65 voluntarily if not working..

The reason to defer is just a bet on living longer.
I give you 100 a year from 65.
Or 142 from 70.
That’s 5 years of 100 you’ll miss.(5x100=500).
So you need to live beyond 11.9 years from age 70 (500/42) before you start seeing a profit from deferring..

I think the deferral increase is a bit of a carrot for those expecting a modest pension to keep working and stay economically active longer, productive to society, healthier, Yada-yada.
But obviously it will also be attractive to those with good genes that don’t need the money at 65 and plan to live well into their late 80s and beyond..

Reading this back it maybe isn’t answering your question. Sorry..

[beanhead]

But obviously it will also be attractive to those with good genes that don’t need the money at 65 and plan to live well into their late 80s and beyond..

Reminds me of that Mike Tyson quote about getting punched in the face...

[hbd]

Thankyou Moneymatters. Yes, those sums certainly add up. I think perhaps my question wasn't well worded, so here's another way of putting it: Would one get 142 from age 70 by deferring, merely waiting (while living off other means) those 5 years from retirement at 65, but not contributing a single yen more? Or does the 142% at age 70 figure assume continuing contributions have been made from ages 65 to 70? If one stops work at 65 but pays no more into the system, will the pension amount received every two months be 142% higher than it would be if one started receiving the money at 65?