The Future of Japanese Pension

[KCLenny]

Thanks for the replies everyone.
My wife is British, born and bred. But never worked in the U.K. except for the occasional volunteer job, and very short periods of part time work never last more than a couple of months.
I’ll finish off my application and see what I get first (hoping for class 2). Then I’ll see what position I’m in before having my wife apply for hers or not.
We are technically contributing to Japanese pension in that we are legally in the system but under exemptions so not actually paying (wife 100%, me 50% but not received the payment slips yet).
Currently throwing 10,000 yen into Tsumitate a month so will see what I can do after getting class 2s

[Kiro]

To stay on the topic of Japanese pension, I never quite fully understood the class 3 payments, so may I ask who actually pays for the monthly payments of class 3 spouses (第3号被保険者)? Is the monthly 16,610JPY taken from the working spouse's salary, or is the working spouse's pension contribution reduced by said amount in order to pay for it every month?
It can't be 'free money' right? Someone has to pay for it and the money has to come from somewhere I always thought...
(I have the same question for the monthly health insurance actually, who pays for class 3? Is it taken from the working spouse's salary? In what % if that's the case?)

My wife is quitting her job in a few months, and until she finds a new one, we are wondering if she would get a higher future pension by becoming class 1 and paying herself monthly, or is it better to become class 3 under me, though we don't know if my salary will be reduced by 16,610Y per month for pension (and then an unknown amount for health insurance).

Thanks in advance for helping me sorting this out!

[Roger Van Zant]

To stay on the topic of Japanese pension, I never quite fully understood the class 3 payments, so may I ask who actually pays for the monthly payments of class 3 spouses (第3号被保険者)? Is the monthly 16,610JPY taken from the working spouse's salary, or is the working spouse's pension contribution reduced by said amount in order to pay for it every month?
It can't be 'free money' right? Someone has to pay for it and the money has to come from somewhere I always thought...
(I have the same question for the monthly health insurance actually, who pays for class 3? Is it taken from the working spouse's salary? In what % if that's the case?)

My wife is quitting her job in a few months, and until she finds a new one, we are wondering if she would get a higher future pension by becoming class 1 and paying herself monthly, or is it better to become class 3 under me, though we don't know if my salary will be reduced by 16,610Y per month for pension (and then an unknown amount for health insurance).

Thanks in advance for helping me sorting this out!

Class 2 and Class 3 etc. refer to the UK pension. The Japanese pension doesn't have Class 2 or Class 3.

[Beaglehound]

To stay on the topic of Japanese pension, I never quite fully understood the class 3 payments, so may I ask who actually pays for the monthly payments of class 3 spouses (第3号被保険者)? Is the monthly 16,610JPY taken from the working spouse's salary, or is the working spouse's pension contribution reduced by said amount in order to pay for it every month?
It can't be 'free money' right? Someone has to pay for it and the money has to come from somewhere I always thought...
(I have the same question for the monthly health insurance actually, who pays for class 3? Is it taken from the working spouse's salary? In what % if that's the case?)

My wife is quitting her job in a few months, and until she finds a new one, we are wondering if she would get a higher future pension by becoming class 1 and paying herself monthly, or is it better to become class 3 under me, though we don't know if my salary will be reduced by 16,610Y per month for pension (and then an unknown amount for health insurance).

Thanks in advance for helping me sorting this out!

She will be better off becoming your dependent if she is allowed to. As I understand it, as a dependent the money does in fact come from ‘nowhere’ in that you will have no extra burden for nenkin and health insurance, but your wife will be covered. She will be credited as if she had paid the basic class 1 kokumin nenkin contribution. I say if she is allowed as I don’t know how it works on becoming unemployed, i.e. if her past earnings are taken into account, or if she can immediately become your dependent.

[Kiro]

Apologies, i didn’t know how to put it in English.
I meant 第2号被保険者 and 第3号被保険者

[Kiro]

Thanks Beaglehound.
If not withheld from the working spouse's salary, I still find it hard to believe and to understand where the money comes from in order to pay for all of Japan's 第3 spouses' pension and health insurance.
All that money can't possibly be coming from 'nowhere'?? That's... quite a lot of money we're talking about.
If that is really the case I suppose I should take advantage of it while she is unemployed, though is this really a 'free lunch'?? Where's the catch?
And yes I believe there is an earning limit indeed, I had heard below 1.3M per year if I am not mistaken (or below 1.06M with some other criteria).

[Beaglehound]

Thanks Beaglehound.
If not withheld from the working spouse's salary, I still find it hard to believe and to understand where the money comes from in order to pay for all of Japan's 第3 spouses' pension and health insurance.
All that money can't possibly be coming from 'nowhere'?? That's... quite a lot of money we're talking about.
If that is really the case I suppose I should take advantage of it while she is unemployed, though is this really a 'free lunch'?? Where's the catch?
And yes I believe there is an earning limit indeed, I had heard below 1.3M per year if I am not mistaken (or below 1.06M with some other criteria).

No catch, believe me, I was on my wife’s shakai hoken for a year after coming to Japan. Where the money comes from, perhaps someone else knows, I don’t. The eligibility is weird, when it looked like I was going to exceed the 1.3m per year, my wife asked her company and they said if you have averaged over 108k a month for the past three months and expected that to continue, then you had to come off. That’s why I am not sure in your wife’s situation as clearly she will have earned a fair bit over the previous three months but will not be earning going forward. My guess is she will be able to join immediately but not sure.

[RetireJapan]

Thanks Beaglehound.
If not withheld from the working spouse's salary, I still find it hard to believe and to understand where the money comes from in order to pay for all of Japan's 第3 spouses' pension and health insurance.

It's a bribe from the government to the 'housewife lobby', so yes, it is effectively a free benefit only for middle-class and above spouses.

I'm not a fan. I think it is unfair, as people who are exempt from paying pension due to lack of income don't get a full pension but people married to kosei nenkin enrollees do. It is also a disincentive for spouses to work full-time.

But it is the current system, so if someone is eligible it definitely makes sense for them to take advantage of it.

[Beaglehound]

Thanks Beaglehound.
If not withheld from the working spouse's salary, I still find it hard to believe and to understand where the money comes from in order to pay for all of Japan's 第3 spouses' pension and health insurance.

It's a bribe from the government to the 'housewife lobby', so yes, it is effectively a free benefit only for middle-class and above spouses.

I'm not a fan. I think it is unfair, as people who are exempt from paying pension due to lack of income don't get a full pension but people married to kosei nenkin enrollees do. It is also a disincentive for spouses to work full-time.

But it is the current system, so if someone is eligible it definitely makes sense for them to take advantage of it.

In a nutshell. Hate the system but it’s there…

[Kiro]

This is…insane??! Free pension/insurance as long as the spouse is a ‘salary-man’??
It definitely disincentives spouses to work full-time as you said. I would have thought Japan needs more wives to work full-time…

We did not take advantage of this the last time she was in-between jobs, as we seriously thought her pension and insurance monthly payments would be deducted from my paycheck, so she had applied for 第1 insured person at the city hall, with reduced insurance fee for unemployed people.
But getting a ‘free’ pension/insurance with no catch whatsoever, i suppose this time we will use it until she finds a new position…

She did work full-time this year though and is already above 1.3M JPY, so i will check with my company if she would have to wait until January 2022 or if it can start right away after she quits.

Thanks all!