Page 3 of 3
Re: National Pension Fund
Posted: Thu Nov 12, 2020 12:54 pm
by RetireJapan
Gareth wrote: ↑Thu Nov 12, 2020 10:10 am
Could you expand on your answer a little bit? Why do you feel iDeCo is so much better? What kind of percentage returns do you reckon are possible?
I reckon with a diversified stock-heavy portfolio in iDeCo something like 5%+ a year is probably possible. That might be conservative given historical performance. You also have direct control of your money, and it belongs to you.
Nenkin kikin, on the other hand, is out of your hands. It is horrendously complicated (check this page out and see if you can understand it without getting a headache:
https://www.npfa.or.jp/system/type_benefit.html). I haven't done the sums, but paying 7,000 a month for 40 years in order to get 20,000 yen a month in retirement might not be the best, particularly if it's not index linked:
https://www.npfa.or.jp/check/table.html
I think the risk of the government changing the nenkin kikin rules or formula is higher than them deciding to confiscate or tax iDeCo.
I will get round to writing a new blog post about this at some point though, and will actually do some calculations for that
Re: National Pension Fund
Posted: Thu Nov 12, 2020 1:56 pm
by adamu
Oh, that's pretty special, even by Japanese standards. They must be eligible for some sort of prize.
Re: National Pension Fund
Posted: Mon Nov 30, 2020 3:16 pm
by Gareth
RetireJapan wrote: ↑Thu Nov 12, 2020 12:54 pm
Gareth wrote: ↑Thu Nov 12, 2020 10:10 am
Could you expand on your answer a little bit? Why do you feel iDeCo is so much better? What kind of percentage returns do you reckon are possible?
I reckon with a diversified stock-heavy portfolio in iDeCo something like 5%+ a year is probably possible. That might be conservative given historical performance. You also have direct control of your money, and it belongs to you.
Nenkin kikin, on the other hand, is out of your hands. It is horrendously complicated (check this page out and see if you can understand it without getting a headache:
https://www.npfa.or.jp/system/type_benefit.html). I haven't done the sums, but paying 7,000 a month for 40 years in order to get 20,000 yen a month in retirement might not be the best, particularly if it's not index linked:
https://www.npfa.or.jp/check/table.html
I think the risk of the government changing the nenkin kikin rules or formula is higher than them deciding to confiscate or tax iDeCo.
I will get round to writing a new blog post about this at some point though, and will actually do some calculations for that
Thanks for your reply. You make some interesting points. I look forward to your blog post!
Re: National Pension Fund
Posted: Tue Dec 15, 2020 7:51 am
by John_conner
Hi guys,
I’ve just turned 40 and have finally become stable in my life (long story).
I’m paying the basic national insurance back in the uk but haven’t paid into the Japanese national pension. Is it worth joking for the next 20 years or is there something better to do with my money?
I’ve just opened a Rakuten trading account and plan to start investing in etfs/vanguard. But also want to make my pensions stronger etc.
I didn’t pay into the national insurance here in Japan as I wasn’t sure of staying but who knows. When I came the company o was with said don’t bother etc I think they didn’t wanna deal.
I’m slowly going through the site and forum and there’s lots of amazing info.
Many thanks
Re: National Pension Fund
Posted: Tue Dec 15, 2020 9:01 am
by RetireJapan
Welcome to the forum!
Paying into UK state pension is a smart move.
All residents of Japan must pay into nenkin or request an exemption based on financial need. They haven't been super strict on enforcement but are slowly ratcheting that up.
You'll be asked to backpay two years of missed payments (the maximum allowed) and will have to pay going forward. If you're paying into kokumin nenkin that means you can use iDeCo to reduce your income taxes and invest for retirement (a great deal). Nenkin payments are also tax deductible.
On balance nenkin is probably worth doing for the cheap annuity and disability insurance.
Re: National Pension Fund
Posted: Wed Dec 16, 2020 2:35 am
by John_conner
Many thanks for your reply.
I was under the notice that if you were paying your UK NI you were exempt from the Japanese pension.
My company have finally taking us under the union health insurance and pension plan and I have to join.
Re: National Pension Fund
Posted: Wed Dec 16, 2020 2:41 am
by RetireJapan
John_conner wrote: ↑Wed Dec 16, 2020 2:35 am
I was under the notice that if you were paying your UK NI you were exempt from the Japanese pension.
My company have finally taking us under the union health insurance and pension plan and I have to join.
Sadly no. There is a pension treaty for UK-Japan, but it just exempts people who have to pay NI (government employees mainly), not people making voluntary payments.
Your company enrolling you in kosei nenkin is a good thing in the long run.
Re: National Pension Fund
Posted: Wed Dec 16, 2020 3:15 am
by John_conner
Thanks for your reply.
That weird cause when I went to my city hall they said no worries if you are from the UK you don’t have to pay here if you are paying back home and you might be asked to supply proof of that.
Re: National Pension Fund
Posted: Wed Dec 16, 2020 3:31 am
by adamu
John_conner wrote: ↑Wed Dec 16, 2020 3:15 am
Thanks for your reply.
That weird cause when I went to my city hall they said no worries if you are from the UK you don’t have to pay here if you are paying back home and you might be asked to supply proof of that.
Probably worth checking with the actual pension office. City hall are only equipped to handle basic enquiries. If UK voluntary payments exempt you from the nenkin, that would be a revelation, but I doubt it.
