How much income tax will I actually be saving?

[Mialou]

If all of it is taken as a one time payment it could be, yes.

But it is possible to go for a mix of 1 time payment of 1500mans (tax free limit) and the rest in annuities, which can be calculated, on top of normal pension, so that it ends up having nearly 0 taxes. The annuity amount will depend on how much you invested in Ideco and its total value, but also on how much you receive from nenkin (in my case not much because self employee)

[RetireJapan]

Yes, iDeCo can either be taken as a lump sum or in installments, or a combination of the two.

If taken as a lump sum, it is taxed as a retirement bonus (tax free amount up to 15m yen, half of the remainder is tax free, the other half taxed as one time income). I wrote about how my retirement bonus was taxed here: https://www.retirejapan.com/blog/retiring-in-japan/

You can also take iDeCo as a 'pension' paid in installments over a number of years. It would then qualify for the pension tax break in Japan.