Company DC vs Ideco

[KevinC]

Hello All,

I'm still new to this but I've recently been looking into the ideco system and thanks to the Retire Japan guide (highly recommended if your new like me) and the forum I feel much more comfortable and ready to get started as soon as possible.

My company offers a Defined Contribution plan and I've asked my HR team about ideco and my company allows me to do either but not both.

There looks to be pros and cons to the company vs individual DC plans (SBI, Rakuten etc) but I wondered if others have this situation and which they go for?

The company plan looks to have less fund options but does have a higher contribution limit.

[RetireJapan]

I would look at the company DC fund fees (are they similar to what you'd get in iDeCo or much more expensive?), and whether your company does any kind of 'matching' of contributions.

[KevinC]

Thanks for the quick reply. I'll check to see if I can find out about the fees. Most funds available (domestic and international) are with Sumitomo Mitsui and Mitsubishi.

I looked into the match and they offer a one time, one month introduction match.

[mule96]

Company DC:
- DC management Fees are paid by the company.
- Signficant higher limit (should be 55,000 JPY per month).
- Often limited selection of funds.

IDECO:
- Very competitive funds avaiable with the right broker selection
- Small ideco management Fees
- lower limit for company employees (23,000 JPY per month)

Maybe you can ask for the fund lineup for the company. If there are some passiv index funds avaiable (even if is not all world, eg developped countries), then company DC is the way go.

[beanhead]

Company DC:
- Signficant higher limit (should be 55,000 JPY per year).

IDECO:
-
- lower limit for company employees (23,000 JPY per year)

per month, I hope!

[mule96]

Of course per month! corrected.

[mighty58]

There a handy chart at the link below. Companies fall into the one of the top four lines on the chart, and the ¥55,000 mentioned above only applies to one (relatively small) category of companies, so you'll want to confirm with your HR department exactly which category your company falls into. Most companies will fall into line 3 or 4 of the chart, simply by virtue of the fact that they are part of kosei-nenkin system.

Note, however, that there are plans to raise the limit for all categories of company employees to ¥55,000 at some point in the near future, although I'm not sure when this is supposed to happen.

https://www.sjdc.co.jp/faq/system/answer07/

From my personal experience, while the number of funds in my company plan are limited to one fund per asset class, most are index funds as opposed to actively managed, and have (not the cheapest, but) not unreasonable fees in the 0.2-0.4% range.

[mule96]

Are you sure about the reading of the chart? 厚生年金 has imo nothing to do with line 3/4. I have 厚生年金 and I am in line 1. Afaik the top is the most common, but I I don't have a source on that

[mighty58]

I was going by the asterisk/footnote in column 2, but checking the (more official) site below, kosei-nenkin is referred to two times (both as a green box and a white box) and the white box covers the ¥55,000 category... so you're right.
Now I'm confused about the difference between kosei-nenkin kikin and kosei-nenkin hoken.

https://www.mhlw.go.jp/stf/seisakunitsu ... ousha.html

[KevinC]

Thanks for help guys.

You’re right the limit is ¥55,000 per month.

I couldn’t find any info on fees but found the fund list. In total there are 32 to choose from;
- deposits
- balanced lifecycle trusts (balance or target funds)
-domestic equity investment
-domestic bond
-foreign equity
- foreign bonds
- reit funds
Each category has a few choices.