RetireJapan

Good day,
My friend (Japanese) told me the usual story about National pension, that it shall be small and maybe not paid at all in future, and because of that she invests in private company's pension, instead. Gave me this link but said it's only example because they had English page. Anyway I think all companies like Prudential will match here.
I have couple concerns about private companies though
1. they cost more (I need to pay more)
2. they may go bankrupt and I am not sure how things shall go then, maybe I'll get some amount as an insurance but pension will be gone.

Wonder if this was discussed her already or maybe someone did a research and may share ideas? I vote for National pension here but again - everyone I know vote against
So is private pension good? Especially, instead of national one, not together. Not sure I can handle them both.
(And yes I now about iDeco)
Thanks!!

HeavyMetal wrote: ↑Tue Aug 30, 2022 5:37 pm
So is private pension good? Especially, instead of national one, not together. Not sure I can handle them both.

You don't legally have this choice. You are required to pay into the national pension (except you have an exception, which is rare).

Secondly, read the articles on the main RJ site about the national pension. You will see that the annuity it provides, which is basically guaranteed* is something that you cannot buy privately.

*of course there is political risk and no-one knows exactly how terms and conditions may change 20/30/40 years from now. This has also been discussed in the forum.

It's not an "either or" situation. All people living in Japan aged 20 to 59 must be enrolled in national pension, either directly, through an employer/mutual aid, or as a dependant. Some people will buy supplementary private pension on top of that (like you friend). Link

I'm pretty sure almost all of the posters on this site would say that paying for supplementary pension is a bad idea, as it is likely to provide little returns on your capital. You would be better off investing that money long term for retirement, either in a tax advantaged account like NISA or ideco, or just a normal investment account. That said having a supplementary pension may give you a tax benefit, but I haven't looked into it.

Tony wrote: ↑Tue Aug 30, 2022 11:36 pm Link

See also https://retirewiki.jp/wiki/Japanese_pension_system

Thanks for replies guys,

One note - I do not pay pension for many years and no one asks me to
That's why my question about "instead"

Yes there's a possibility that once I try to enroll with private pension they will do some check up - tell me I have to enroll to national pension first. But I doubt it, somehow - they just need my money after all.

Also my friend manages to pay private pension instead of national (she's Japanese). Don't know how and actually don't care. But that doesn't seem impossible at all.

There is no "not paying pension"

You're either exempted or you're doing pension evasion which is against the law. They can do a bunch of things to compel you to pay going so far as putting a hold on your assets. I am unsure about your residence status but not paying pension is 100% a guarantee to get a permanent residency or citizenship application rejected so tread lightly.

HeavyMetal wrote: ↑Wed Aug 31, 2022 5:25 pm
One note - I do not pay pension for many years and no one asks me to
That's why my question about "instead"

Do you mind if I ask which Visa do you hold?
And the line of job you do?

For me, its deducted directly from my monthly salary.
So, that's the reason I am curious about your residence status and job.

HeavyMetal wrote: ↑Wed Aug 31, 2022 5:25 pm One note - I do not pay pension for many years and no one asks me to
That's why my question about "instead"

Yes there's a possibility that once I try to enroll with private pension they will do some check up - tell me I have to enroll to national pension first. But I doubt it, somehow - they just need my money after all.

Also my friend manages to pay private pension instead of national (she's Japanese). Don't know how and actually don't care. But that doesn't seem impossible at all.

This is true. Enforcement of the pension law has been weak and inconsistent in the past. They are starting to crack down. You may or may not have action taken against you, but even if you do, you will only be asked to backpay 2 years' worth.

In fact, you will only be allowed to backpay two years' worth.

This is because the national pension is actually a good deal. By not enrolling, you are only hurting yourself. It is such a good deal that buying an equivalent product (if you can find a company that will sell you one!) would cost far more than nenkin does.

Go out and try to find an insurance company that will sell you an annuity starting at 65 and running for the rest of your life. I guarantee they will refuse, or charge you multiple times what you would have paid for nenkin (which also includes disability insurance, and survivor pensions if you have dependents).

I probably have enough money that I won't really need my nenkin, but if I could I would put more money into it. That's how good a deal it is.

Yes, it may be changed in the future, but every time I meet someone who isn't paying into nenkin because 'it's a scam/pyramid scheme/will run out of money' they don't understand it and don't have an alternative plan!

Okay, so you're not paying nenkin. Well done. How are you going to pay your living expenses for 30-40 years in retirement?

One of these days, proof of pension and health insurance payments will finally be required for any and all visa renewals.

That Nissay link is an example of a life insurance company.

My understanding is that whole life insurance policies are not a good deal, because they are basically making investments on your behalf, and keeping a large difference as a fee. Better to do the investment part yourself, and if you need life insurance, get term life for the period where it matters.

As far as pension in Japan goes, there is a reason the standard advice here is:

Pay the national pension. Usually through your employer but individually if necessary.
Use iDeCo and NISA for additional tax protected investments.
Use taxable accounts after that.

I doubt any private pension provider is going to perform better than just keeping a few index funds yourself in the long run.

https://monevator.com/is-active-investi ... -sum-game/