Some questions

[Jamo]

Hi, here's a few questions I've been pondering. Many thanks in advance!

1. My wife is a company employee and we are in the process of setting up an iDeco for her. From what I can tell in the documentation, her employer will make payments for her. Am I right in assuming that this means her income tax savings will be automatically calculated and reflected in her take-home salary?

2. Can your iDeco be rebalanced by selling, and can capital gains be realized, at any time? They say that "investment returns are reinvested tax-free", but if a fund doesn't pay distributions, or we can't sell a fund to realize a gain, I'm not sure of the merit in this...

3. I read that the money is paid to the National Pension Fund Association, which I found was set up to complement the National Pension system. In Japan anything with the words "national pension" in it, or anything related to government-controlled finances, makes me nervous. However this system seems much more safe, in that we see our money going in and accumulating (like a regular investment fund). So we have a solid figure for our account balance, which can only be affected by market movements (and not the Japanese pension system failing). Am I on the right track?

Cheers

[RetireJapan]

Hi Jamo

Good questions

In order:

1. Your wife can ask her company to deduct the iDeCo payments directly from her salary, in which case all the tax savings are calculated and done automatically. The company can choose not to do that though, in which case the payments would be taken from her bank account and she would have to submit some paperwork to the tax office.

2. You can rebalance in the account and change your monthly purchases, etc.

3. As iDeCo is an defined contribution account, the funds are held in your name. I think the chance of the government taking them is similar to the chance of them taking people's money from post office accounts, etc. ie pretty low.

[Jamo]

Thank you very much!

[weeklan]

Hi Jamo

Good questions

In order:

1. Your wife can ask her company to deduct the iDeCo payments directly from her salary, in which case all the tax savings are calculated and done automatically. The company can choose not to do that though, in which case the payments would be taken from her bank account and she would have to submit some paperwork to the tax office.

2. You can rebalance in the account and change your monthly purchases, etc.

3. As iDeCo is an defined contribution account, the funds are held in your name. I think the chance of the government taking them is similar to the chance of them taking people's money from post office accounts, etc. ie pretty low.

Hi Ben, I would like to piggyback on this and follow up on question 1.

Is there any difference between a) the company taking out your contributions to iDeCo automatically and b) the payments to iDeCo being deducted by your bank account. I assume there are none other than with the latter you need to make the end-of-fiscal-year tax adjustments yourself?

[RetireJapan]

If you can get the company to do it your tax is automatically lower every month. You don't have to worry about certificates then.

I think that is the only difference. I asked my uni to deduct and they didn't object, although I know some companies don't want to deal with the extra admin. It's up to the company whether they want to provide this service for their employees.

Of course, if you are paying kokumin nenkin, this isn't an option.

[weeklan]

Thanks for the reply.

Yes I think the company may oblige provided that I set it up correctly. So once you establish a provider does that provider provide the forms to be filled which you can then hand to HR, is that how it works in order to get setup having the payments deducted automatically?

[Akatani]

I think I read that there's a 5000yen fee if you change jobs.

[RetireJapan]

So once you establish a provider does that provider provide the forms to be filled which you can then hand to HR, is that how it works in order to get setup having the payments deducted automatically?

You apply to the provider, they send you eligibility forms your employer is legally obliged to fill in along with forms to choose how you want the payments deducted. Once submitted they go to the government for approval.

[RetireJapan]

I think I read that there's a 5000yen fee if you change jobs.

I believe the transfer fee: http://www.dcnenkin.jp/search/commission.php

is to change providers, or to change company DC schemes into something else. I don't think it applies to changing jobs or payment options.