Newbie Question

[TunaSki]

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If they have not accumulated 480 months by age 60, they can opt to pay Voluntary Contributions up to age 65 to get the accumulated months another 60 months closer to the 480 months.

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That’s only for national pension part though. So you can opt to voluntarily pay national pension from age 60 to 65 to get your national pension record as close to 480 months as possible. But in order to pay employee pension insurance you have to be an employee.

I am not sure of the cut off age for employee pension insurance though. I’m inclined to say it’s 65? But I’m not too sure, maybe 70? But I’m going to hope that most people who use this forum don’t plan to be employees into the 65s/70s

[CiceroMan]

Thank you all for this: the total from the pension is a whole lotta nothing. about under 300 USD a month....it's not nothing, but in the larger scheme of retirement, it's basically nothing. Although I would love to finish my teaching career in Japan, it's probably better to stay in the GCC, salaries are higher, so savings seems like a better option than relying on govt.pension. Also, as a US citizen, who know how the US will meddle with the Japanese pension.


National pension = ¥204,150 per year (¥17,012 per month)

Employee pension = about ¥289,000 per year (about ¥24,000 per month)

national pension + employee pension = about ¥493,000 per year (about ¥41,000 per month)

Which is still pretty low. But then they would have only contributed 120 months.
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[CiceroMan]

This is intriguing, because the national pension that I was calculating for 480 months was quite high.....it sounds like voluntary contributions is similar to an annuity...pay a large sum to get a fixed income later. Is it possible to contribute x amount so that the pension payout would be close to that 4000 USD a month that I was initially calculating?

I realize my questions sound like I'm totally oblivious. I appreciate everyone's patience and time spent here to reply. What a great group.

If they have not accumulated 480 months by age 60, they can opt to pay Voluntary Contributions up to age 65 to get the accumulated months another 60 months closer to the 480 months.

[/quote]

That’s only for national pension part though. So you can opt to voluntarily pay national pension from age 60 to 65 to get your national pension record as close to 480 months as possible. But in order to pay employee pension insurance you have to be an employee.

I am not sure of the cut off age for employee pension insurance though. I’m inclined to say it’s 65? But I’m not too sure, maybe 70? But I’m going to hope that most people who use this forum don’t plan to be employees into the 65s/70s
[/quote]

[TunaSki]

Thank you all for this: the total from the pension is a whole lotta nothing. about under 300 USD a month....it's not nothing, but in the larger scheme of retirement, it's basically nothing. Although I would love to finish my teaching career in Japan, it's probably better to stay in the GCC, salaries are higher, so savings seems like a better option than relying on govt.pension. Also, as a US citizen, who know how the US will meddle with the Japanese pension.


National pension = ¥204,150 per year (¥17,012 per month)

Employee pension = about ¥289,000 per year (about ¥24,000 per month)

national pension + employee pension = about ¥493,000 per year (about ¥41,000 per month)

Which is still pretty low. But then they would have only contributed 120 months.

[/quote]

But that is only based on 120 months (10 years) contributions, which is what you asked for in your original post.

Basically the more months you pay in, the more annuity you get in retirement.

[Tkydon]

This is intriguing, because the national pension that I was calculating for 480 months was quite high.....it sounds like voluntary contributions is similar to an annuity...pay a large sum to get a fixed income later. Is it possible to contribute x amount so that the pension payout would be close to that 4000 USD a month that I was initially calculating?

I realize my questions sound like I'm totally oblivious. I appreciate everyone's patience and time spent here to reply. What a great group.

If they have not accumulated 480 months by age 60, they can opt to pay Voluntary Contributions up to age 65 to get the accumulated months another 60 months closer to the 480 months.

That’s only for national pension part though. So you can opt to voluntarily pay national pension from age 60 to 65 to get your national pension record as close to 480 months as possible. But in order to pay employee pension insurance you have to be an employee.

I am not sure of the cut off age for employee pension insurance though. I’m inclined to say it’s 65? But I’m not too sure, maybe 70? But I’m going to hope that most people who use this forum don’t plan to be employees into the 65s/70s

No, there is no way you could get US$ 4,000 per month out of Japanese National Basic and Employees' Pensions, even with a full 40 years of contributions.

And if you have only contributed say 120 months by age 65, you would only get a quarter (120/480) of what you would receive if you had contributed for the full 40 years (480 months).

Every year, they send you a postcard detailing your contributions for the year, whether Basic 一般, Employee Kousei 厚年, Government 公年, Private Educator 私学共済年金, any kind of exemption 免状, or Missed Payment, and the projection for how much pension that would you would receive per year in retirement based on the value of your total contributions.

Section 1 shows the total contributions for (1) Basic Pension Contributions during times of unemployment, (2) Employees' Pension - Kosei Nenkin, Public Service Pension, or Private Educators' Pension, and the Total of (1) + (2).

Above that, it shows a projection of the amount of Annual Pension you would receive if you continue the same contributions and take the Pension at age 65, or if you delay taking the pension to age 70 (1.42 times), or age 75 (1.84 times).

You divide that amount shown by 12 for monthly figures (double paid every 2 months).

You can also check the details on NenkinNet
https://www.nenkin.go.jp/index.html
Register:
https://www3.idpass-net.nenkin.go.jp/ne ... 0602SCR.do
Log In:
https://www3.idpass-net.nenkin.go.jp/ne ... 0101SCR.do

If you were a high earner with the absolute maximum Employee Pension contributions,
(currently Y59,475 per month for Gross Income over Y650,000 per month in 2024/5, also matched by your employer)
https://www.nenkin.go.jp/service/kounen ... yogaku.pdf

for about 30 years (three quarters of the 40 years), then you'd likely receive a Monthly pension of about Y140,000 per month, which at the current exchange rate of Y155 is about US$ 900 per month... Even at an exchange rate of Y115 would be about US$ 1,200 per month...

Then, according to the US Japan Tax Treaty, you would only pay tax on that income in the country where you are living (or the country paying in the case of Government Service Pension), and any difference between that Japan Total Tax and the US Total Tax to the IRS after deduction of Foreign Tax Credits to eliminate Double Taxation...

[Tkydon]

Hi everyone.
This is the formula for Japan pension I saw at https://www.nenkin.go.jp/international/ ... nsion.html
Yen816,000* x ( (1) + (2) + (3) + (4) + (5) ) / 40 years ** × 12 months
If this is the correct formula, then someone who has worked ten years would receive the annual pension of 2,448,000 yen.

1. Does this look correct (plausible?)
2. Doesn't it also take into account salary?

So, let's say average salary is 5 million yen annually, does that annual pension of 2,448,000 yen look about right?

--Thanks

Firstly, the formula is Wrong. It should read:

Yen816,000* x ( (1) + (2) + (3) + (4) + (5) ) / (40 years ** × 12 months)

The 12 Months is below the line...

(1) + (2) + (3) + (4) + (5)

refer to footnotes:

(1) Number of contribution-paid months (no exemption)
(2) Number of full contribution-exempted months*** × 1/2
(3) Number of three-quarter contribution-exempted months*** × 5/8
(4) Number of half contribution-exempted months*** × 3/4
(5) Number of one-quarter contribution-exempted months*** × 7/8

If all contributions qualify as (1), then 120/480
If any contributions qualify as any other than (1), then some fraction of 120/480...

so max (Basic Pension for 120 months contributions)
Yen816,000* x 1 x 120 / (40 years × 12 months)
= 816000 x 120/480
= 816000 x 1/4
= 204,000 per Year

204,000 / 12 = 17,000 per Month Gross before Taxes and Health Insurance (US$ 110 at current exchange rates.)

[Tkydon]

.

[CiceroMan]

That I thought it was both shows how little I know....thank you for clarifying these questions!

Thank you all for this: the total from the pension is a whole lotta nothing. about under 300 USD a month....it's not nothing, but in the larger scheme of retirement, it's basically nothing. Although I would love to finish my teaching career in Japan, it's probably better to stay in the GCC, salaries are higher, so savings seems like a better option than relying on govt.pension. Also, as a US citizen, who know how the US will meddle with the Japanese pension.


National pension = ¥204,150 per year (¥17,012 per month)

Employee pension = about ¥289,000 per year (about ¥24,000 per month)

national pension + employee pension = about ¥493,000 per year (about ¥41,000 per month)

Which is still pretty low. But then they would have only contributed 120 months.

No.

You get National Basic Pension based on months' contributions when you only paid the National Basic Pension, OR Employee Pension based on months' contributions when you only paid the Employees' Pension. You do not get paid both.

If only contributed to the Basic Pension for 120 months, then only ¥17,012 per month
If only contributed to the Employees' Pension for 120 months, then only ¥24,000 per month

If some combination, then some figure between ¥17,012 and ¥24,000 per month.

This is only for the period of 10 years spent in Japan...
Periods spent in other countries will pay for those periods...

[Tkydon]

If you want a high level of income in retirement, then you have to:

1) Save

2) Protect Yourself and Your Family with Insurance(s)

3) Invest

4) Maximize Tax Advantaged Vehicles such as:
a) iDeCo
b) NISA
c) Real Estate
d) Blue Return Entities such as Sole Proprietorship Businesses or LLCs, etc..
e) Furusato Nouzei
etc..

5) Reinvest Tax Refunds

6) Maximize Investment Returns to

7) Maximize Cashflow in Retirement


If you want an income of US$ 4,000 per month (Gross, before Taxes), you'll need to have amassed a Retirement Nest Egg in excess of US$ 1,200,000 if you follow the 3% Rule and count Pension / Social Security...

If you want an income of US$ 4,000 per month (Net, after Taxes), you'll need to have amassed a Retirement Nest Egg in excess of US$ 1,900,000 if you follow the 3% Rule and count Pension / Social Security...

[TunaSki]

Thank you all for this: the total from the pension is a whole lotta nothing. about under 300 USD a month....it's not nothing, but in the larger scheme of retirement, it's basically nothing. Although I would love to finish my teaching career in Japan, it's probably better to stay in the GCC, salaries are higher, so savings seems like a better option than relying on govt.pension. Also, as a US citizen, who know how the US will meddle with the Japanese pension.


National pension = ¥204,150 per year (¥17,012 per month)

Employee pension = about ¥289,000 per year (about ¥24,000 per month)

national pension + employee pension = about ¥493,000 per year (about ¥41,000 per month)

Which is still pretty low. But then they would have only contributed 120 months.

No.

You get National Basic Pension based on months' contributions when you only paid the National Basic Pension, OR Employee Pension based on months' contributions when you only paid the Employees' Pension. You do not get paid both.

If only contributed to the Basic Pension for 120 months, then only ¥17,012 per month
If only contributed to the Employees' Pension for 120 months, then only ¥24,000 per month

If some combination, then some figure between ¥17,012 and ¥24,000 per month.

This is only for the period of 10 years spent in Japan...
Periods spent in other countries will pay for those periods...

This incorrect. If you contribute 120 months to employee pension, then you get ¥17,012 + ¥24,000 per month

That’s because, like I mentioned, every month you pay employee pension, you also pay national pension at the same time included in your employee pension premium.

So for example, if you spent 20 years in Japan. For 15 of those years, you were category 2 (Shakai Hoken) And 5 of those years, you were category 1 (national pension). Then you would get 20 years of national pension, and 15 years of employee pension in retirement