Small Enterprise Mutual Aid Plan (小規模企業共済)

[recurser]

I learned about 小規模企業共済 recently in a comment on http://www.retirejapan.info/blog/ideco- ... ion-so-far :

"You might also look into the small and medium business association retirement plan, which allows you to pay in up to 70,000 yen a month of pre-tax income: http://www.smrj.go.jp/skyosai/index.html"

Is anyone doing this? I have been told that as kojin jigyo, I am eligible, but there is almost zero English information available online about this that I can find, and my Japanese isn't good enough to get to the bottom of it.

In particular, where does this 70,000 yen get paid into? Is it possible to eg. put it into a Rakuten Securities fund? Or is it paid into some kind of government fund? Is the entire 70,000 yen tax-deductible in addition to iDeCo payments? If so this seems like a very good deal, effectively doubling my tax-free saving rate.

Any information or personal experiences would be much appreciated!

[RetireJapan]

Hi recurser

Welcome to the forum! You could start with one of the best sources of information in English...

http://www.retirejapan.info/blog/the-me ... aving-plan

My wife just joined, and a couple of our members are in it too, so feel free to post questions after reading the post.

[recurser]

Thanks for the quick reply - that post explains everything perfectly I was searching for Small Enterprise Mutual Aid Plan rather than
Medium-Small Business Association Saving Plan, which threw things off. It might be worth including the former in the article too to give search engines a hint.

"The main (only?) benefit of the MSBASP is to reduce your taxes. You can avoid paying income and local inhabitants taxes now, and pay a lower rate later when you are retired and not earning as much."

If I understand that correctly, it basically it just defers the tax until you retire and spend the savings, at which time it would be taxed - it isn't actually tax-free?

[RetireJapan]

It's treated as 退職金 (retirement bonus). There is a tax-free allowance for this based on how long you pay into the scheme. Your accountant should be able to run the numbers for you

[workbalance]

Someone mentioned that you could borrow money against Small Enterprise Mutual Aid Plan (小規模企業共済) from the chamber of commerce . If you can and the rate is low, you could possibly then use the money to put into your NISA. Has anyone borrowed money using there Small Enterprise Mutual Aid Plan (小規模企業共済)?

[RetireJapan]

Someone mentioned that you could borrow money against Small Enterprise Mutual Aid Plan (小規模企業共済) from the chamber of commerce . If you can and the rate is low, you could possibly then use the money to put into your NISA. Has anyone borrowed money using there Small Enterprise Mutual Aid Plan (小規模企業共済)?

Ha, ha, I like how you think! Anyone tried this?

[workbalance]

I went and asked and the answer is no.

[workbalance]

Just had a look back and it is the 倒産防止共済 (Bankruptcy prevention Kyosai) which you can borrow against.

http://www.smrj.go.jp/tkyosai/index.html

[RetireJapan]

Thanks for checking that out.

I get the feeling Japan is very aware of the risks of people borrowing money to invest with

It seems to be a condition for pretty much every loan I have seen.