Japan pension

[JimmyK]

So, I received my Japan pension prediction card in the post, having recently had a birthday. As anyone who’s also been receiving these annual posts will know, they outline what you’ve paid into Kokumin Nenkin and Kosei Nenkin (where applicable) and give you a view of your expected pension payout upon reaching retirement age (or later, if you choose to postpone collection). What I’m curious to know (without having to call up my local pension office) is whether the payment figures presented in these cards describe what you’re entitled to receive at 65 if you stopped paying in now (and waited until 65 to start collecting it), or whether the figures are what you’d receive if you continue to contribute at the same rate between now and 65? Can anyone shed any light on this?

[RetireJapan]

It depends on how old you are. I believe under 55 it is contributions so far and over 55 it is if you continue paying in.

But it should be written on the statement.

[northSaver]

Just a quick question about this since it's come up... I'm always a bit unsure as to whether the projections include fuka nenkin contributions or not. I've assumed they do until now because there's no mention of them anywhere else. Is that a safe assumption? Thanks.

[RetireJapan]

Just a quick question about this since it's come up... I'm always a bit unsure as to whether the projections include fuka nenkin contributions or not. I've assumed they do until now because there's no mention of them anywhere else. Is that a safe assumption? Thanks.

Great question, and I'm not sure. I also assume (heh) they are included, but... should probably find out for sure at some point.

[Moneymatters]

So, I received my Japan pension prediction card in the post, having recently had a birthday. As anyone who’s also been receiving these annual posts will know, they outline what you’ve paid into Kokumin Nenkin and Kosei Nenkin (where applicable) and give you a view of your expected pension payout upon reaching retirement age (or later, if you choose to postpone collection). What I’m curious to know (without having to call up my local pension office) is whether the payment figures presented in these cards describe what you’re entitled to receive at 65 if you stopped paying in now (and waited until 65 to start collecting it), or whether the figures are what you’d receive if you continue to contribute at the same rate between now and 65? Can anyone shed any light on this?

I might be wrong. But on the basis you are 50-59 I think the estimate is based on you continuing to contribute as you do now until age 60.

https://www.nenkin.go.jp/service/nenkin ... kibin.html

If you want to model contributions up to 65 you’ll need yo wander along to the nenkin net site to play with their tool (ooh err.) and see what results you get..

And congrats on that birthday!

[Tkydon]

The projection is based on contributions to date.

If you are unemployed or self-employed, paying the Basic Pension Contribution, then they will stop collecting contributions the month before your 60th. Birthday. If you have not achieved 480 months' credits, you can go to the Pension Office on or after the day before your 60th Birthday to apply to pay Voluntary Contributions to the sooner of 480 months credits or your 65th. Birthday.
This will increase your pension entitlement at age 65.

If you are in employment; company, public sector or private education institution, you will continue to pay, and your employer will continue to pay (50/50), pension contributions based on monthly salary until you leave employment or your 70th. Birthday.

If you are under a certain age (55 maybe), the card looks like this one posted by Ben.

https://www.retirejapan.com/blog/japan- ... date-2024/

As the first photo, there are four columns

Column 1 reads, "Amount of Pension based on contributions until now (Last Year)" - Kore made これまで...

Column 2 reads, "Amount of Pension based on contributions until now (This Year)"
showing the difference based on the last 12 month's contributions

Column 3 reads, "(For Reference) Projection of Future Increase - Amount of Pension based on continued contributions (At Age 65)"
but no number

Column 4 reads, "Maximum Increase 84% - Amount of Pension based on contributions until now (If you delayed taking the Pension until Age 75)"
but no number

After a certain age, maybe age 55, this switches to three columns

Column 1 reads, "Expected Pension (At Age 65)" - no mikomi の見込み...


Column 2 reads, "Increase 42% - Expected Pension (If you delayed taking the Pension until Age 70)"

Column 3 reads, "Maximum Increase 84% - Expected Pension (If you delayed taking the Pension until Age 75)"

It used to be only two columns until they recently introduced the extension to age 75.

As the second photo:
Table 1 shows "Contributions until now".
Table 2 shows "Qualifying Months for purpose of calculating benefits (In principle you need more than 120 months' qualifying contributions)".
Table 3 shows "Pension Benefit (Annual Pension) based on contributions until now. (Future contributions will increase the amount of Pension Benefit. * Please see the illustration.)"
and
"*The portion for Regular Kousei Nenkin includes any amount from Kosei Nenkin Kikin."


The number of qualifying months of Fuka Nenkin is shown as the fourth item in line 1 of Table 2. It is included in the calculation for Basic Pension in Table 3 (1).

[JimmyK]

Cheers. Hit 55, so retirement planning already in full swing! All looks like useful info to get into. I figured they were most likely projections assuming similar contributions up to retirement, but was rather hoping that’s what I’d get if I stopped working/contributing from now until retirement (which was never very likely anyway). Useful reminder that the calculation assumes contributions up to 60, not 65, though I’d need to find someway to bridge that 5yr gap before payments are due. Indeed, if I’m in decent health and could afford to wait until 70, there’s quite a sizable increase in payments. That’s especially important in my case, as I worked 10yrs or so here without any Nenkin payments being made. Partly due to an unscrupulous former employer who had us listed as contract workers (so didn’t pay into the system for FT employees), but also my own ignorance at the time that meant I failed to even consider it. Wasn’t planning to be here that long then. Similar story to others out there, though I’m sure most people were more diligent than I. Anyway, upshot is the best I can probably manage before 60 is 25/40yrs contributions. Contributing voluntarily for a further 5 yrs (assuming I’m no longer employed then) will add a bit more, but no employer contribution by then so I guess it won’t have a big impact. Can’t make back payments either now I believe. Hence, maybe holding out until 70 before starting to draw pension. This all assumes the Japanese government won’t do anything to reduce pension payments in the future too…

[northSaver]

The number of qualifying months of Fuka Nenkin is shown as the fourth item in line 1 of Table 2. It is included in the calculation for Basic Pension in Table 3 (1).

Well spotted Tkydon! Thanks

[Tkydon]

Cheers. Hit 55, so retirement planning already in full swing! All looks like useful info to get into. I figured they were most likely projections assuming similar contributions up to retirement, but was rather hoping that’s what I’d get if I stopped working/contributing from now until retirement (which was never very likely anyway). Useful reminder that the calculation assumes contributions up to 60, not 65, though I’d need to find someway to bridge that 5yr gap before payments are due. Indeed, if I’m in decent health and could afford to wait until 70, there’s quite a sizable increase in payments. That’s especially important in my case, as I worked 10yrs or so here without any Nenkin payments being made. Partly due to an unscrupulous former employer who had us listed as contract workers (so didn’t pay into the system for FT employees), but also my own ignorance at the time that meant I failed to even consider it. Wasn’t planning to be here that long then. Similar story to others out there, though I’m sure most people were more diligent than I. Anyway, upshot is the best I can probably manage before 60 is 25/40yrs contributions. Contributing voluntarily for a further 5 yrs (assuming I’m no longer employed then) will add a bit more, but no employer contribution by then so I guess it won’t have a big impact. Can’t make back payments either now I believe. Hence, maybe holding out until 70 before starting to draw pension. This all assumes the Japanese government won’t do anything to reduce pension payments in the future too…

Does your card have 3 columns or 4? I assume 3 columns (not shown on Ben's Blog).

Up to 60 only applies if you are Unemployed or Self Employed, only paying the Basic Pension contribution of Y16,980 per month.

It is possible to start receiving a discounted Japanese Pension from age 60 (1 minus Discount % shown).
https://www.nenkin.go.jp/service/jukyu/ ... 21-01.html

or increased from age 65 to 75 (1 plus Multiplier shown).
https://www.nenkin.go.jp/service/jukyu/ ... 21-02.html

70 => 1.42x Benefit at Age 65
75 => 1.84x Benefit at Age 65

I can probably manage before 60 is 25/40yrs contributions

If you are employed, you will continue paying past age 60
If you are unemployed or self-employed, and paying Basic Pension Contribution Y16,980 on your own, then you can extend to age 65, getting an additional 60 months' contributions into the system by age 65 ((30/40years.)

Which country are you from?

If UK, and if you had a period of qualifying contributions to the UK Pension, then you may qualify to pay UK pension contributions. You can apply to HMRC to allow you to contribute back payments to the UK National Pension System at Class 2 for your time in Japan.

If you are not from the US, you can consider Japanese Tax Advantaged Schemes; iDeCo Individual Defined Contribution Pension and Tsumitate NISA Nippon Individual Savings Account. Unfortunately they are not available to US Citizens, due to US PFIC Passive Foreign Investment Company tax rules.

If you are a US Citizen or Green Card Holder, you could still use the Growth Portion of NISA, but you would have to make sure you select non-PFIC instruments. Otherwise, you would have to consider regular taxable investment accounts.

Public Pensions are worth more than employment income as there is an additional Y1.2M (approx) of Tax Free Deductions, both reducing taxable income, and lowering any taxable income into the lower marginal tax bands.

See here for details of the calculation
Page 8 (page 12 of the PDF) - Calculating the Public Pension Plan Deduction (Calculation Table)
https://www.tax.metro.tokyo.lg.jp/book/ ... k2023e.pdf

though for the first 12-18 months of retirement, your Residents' Taxes and Health Insurance Payments will still be based on your last year of employment income ;-(

If you have a spouse who is Japanese, they can also take advantage of iDeCo and NISA Tax Advantaged Savings.

In any case, you should probably save as agressively as you can for the next 10 years.
You will get a tax rebate (or deduction) for iDeCo contributions, so the Government effectively pays a portion of your pension contributions.
National Pension Contributions are also Tax Free, but that is handled by your employer, or you can claim the deductions through your Kakutei Shinkoku Tax Return.

[JimmyK]

My Japan pension prediction card has 4 columns and the amount I’ve contributed and should receive from 65 is stated in the far right column separately. So, I can see how much is from state pension contributions and how much is from employer’s pension. Total expected annual payment is showing at around JPY1.4mill pa, which based on responses to my earlier post seems to be what my entitlement would be assume I continue to make similar levels of contributions between now (55) and when I turn 60. Whilst I might still be employed during this period, there’s also a possibility that I won’t be. In which case, I think it would still be in my interest to make voluntary contributions to the state pension of around JPY16k pm until from whatever point I stop working until I hit 65. I might also try to defer collecting my pension until 70, to take advantage of that increase.

As for UK state pension, I’m a UK national and I’ve been making back payments for the past few years. I was originally rejected for either class 2, or 3, but after some push back and changes to the system, I managed to secure class 3. Not as good a deal as class 2, but still decent. I was rejected for class 2 on the basis of insufficient contributions (I only ever worked a handful of PT jobs before leaving the UK) and I suspect the timing of when I finished working in the UK and moved to Japan. That clause is quite ambiguous as there’s no clear definition of what leaving the UK ‘immediately’ after stopping work means. That’s been mentioned in other posts too. Had 3yrs worth of contributions, but these were almost exclusively through benefits (whilst at Uni, or signing on for unemployment benefit), which are somehow calculated differently. If I thought I could get class 2 I would certainly try again for that, but without knowing exactly why I was rejected for that (and what the precise requirements are for getting it) I can’t see it changing.