RetireJapan

Good morning. I have a question about ideco bands that I was hoping someone might be able to help with.

I'm moving from a company which had a DC scheme to a company which doesn't. Therefore planning to transfer everything to an ideco plan. What I'm failing to understand is the banding.

Based on what I've read it seems I would be band 2, max contribution of Yen23k per month (I'll be a full time employee). Is that correct?

What I also can't understand is the logic behind the max contribution levels. Why can self employed contribute Yen68k per month? Don't we all contribute the same to the national pension system - hence I'll be in a less advantageous position than someone self employed who can contribute ~3x to ideco compared to me. Is there something I'm not understanding correctly?

Thanks!

SARS wrote: ↑Wed Dec 20, 2023 12:25 am
Based on what I've read it seems I would be band 2, max contribution of Yen23k per month (I'll be a full time employee). Is that correct?

What I also can't understand is the logic behind the max contribution levels. Why can self employed contribute Yen68k per month? Don't we all contribute the same to the national pension system - hence I'll be in a less advantageous position than someone self employed who can contribute ~3x to ideco compared to me. Is there something I'm not understanding correctly?

23k sounds correct. It’s my limit as a plain old garden salary person.

Don’t know why the limit but assume an attempt to level the playing field as our employer is paying approx 9% of our salary into the employee pension scheme for us. This means wage slaves should get a higher pension. Our 9% contributions are also tax free. And the max we pay in employee pension contributions is about 60k..
So a higher contribution limited for the self employed could be just to encourage them to be more self sufficient in their retirement planning. And isn’t deemed as essential for wage slaves.
I’m not saying I personally think the employee pension scheme alone is enough..

Thanks, that's very helpful.

Moneymatters wrote: ↑Wed Dec 20, 2023 12:40 am
Don’t know why the limit but assume an attempt to level the playing field as our employer is paying approx 9% of our salary into the employee pension scheme for us. This means wage slaves should get a higher pension. Our 9% contributions are also tax free. And the max we pay in employee pension contributions is about 60k..
So a higher contribution limited for the self employed could be just to encourage them to be more self sufficient in their retirement planning. And isn’t deemed as essential for wage slaves.

I never really thought about this, but...

Self-employed person
State pension = 16,000yen ish
Maximum iDeCo = 68,000 yen
Total = 84,000 yen

Salaryman/Shakai hoken payer
State pension = about 60,000yen max
iDeCo = 23,000 max
Total = about 83,000 yen

So there was clearly some method to the madness when these limits were created.

The best deal is iDeCo + company DC.

Unfortunately you have almost no say about whether your company has a DC plan, and if they do it's usually terrible.

adamu wrote: ↑Wed Dec 20, 2023 1:15 pm The best deal is iDeCo + company DC.

Unfortunately you have almost no say about whether your company has a DC plan, and if they do it's usually terrible.

100% in JGBs is not too uncommon. Lol, that should provide for your future...

adamu wrote: ↑Wed Dec 20, 2023 1:15 pm The best deal is iDeCo + company DC.

Unfortunately you have almost no say about whether your company has a DC plan, and if they do it's usually terrible.

I was told that as my company provided DC, I am not eligible for iDeCo.
Am I missing something? I will try to find the source material. It was in the DC provider's explanatory booklet. (Nissay 401k)

goran wrote: ↑Wed Dec 20, 2023 10:37 pm

adamu wrote: ↑Wed Dec 20, 2023 1:15 pm The best deal is iDeCo + company DC.

Unfortunately you have almost no say about whether your company has a DC plan, and if they do it's usually terrible.

I was told that as my company provided DC, I am not eligible for iDeCo.
Am I missing something? I will try to find the source material. It was in the DC provider's explanatory booklet. (Nissay 401k)

From my understanding, you get a ¥55k allowance of which up to ¥20k of that can be iDeCo, but you could go 0% iDeCo and 100% Company DC.

It's still ¥13k lower than the ¥68k category 1 allowance, but you also get the higher Kousei Nenkin. Actually typing this I'm not sure which is the better deal... my hunch is Kousei Nenkin + 20k iDeCo + 35k Corp DC will beat ¥68k iDeCo + Kokumin Nenkin (but never trust a hunch for finances ).

https://www.ideco-koushiki.jp/english/p ... ership.pdf

adamu wrote: ↑Wed Dec 20, 2023 11:18 pm

goran wrote: ↑Wed Dec 20, 2023 10:37 pm

adamu wrote: ↑Wed Dec 20, 2023 1:15 pm The best deal is iDeCo + company DC.

Unfortunately you have almost no say about whether your company has a DC plan, and if they do it's usually terrible.

I was told that as my company provided DC, I am not eligible for iDeCo.
Am I missing something? I will try to find the source material. It was in the DC provider's explanatory booklet. (Nissay 401k)

From my understanding, you get a ¥55k allowance of which up to ¥20k of that can be iDeCo, but you could go 0% iDeCo and 100% Company DC.

It's still ¥13k lower than the ¥68k category 1 allowance, but you also get the higher Kousei Nenkin. Actually typing this I'm not sure which is the better deal... my hunch is Kousei Nenkin + 20k iDeCo + 35k Corp DC will beat ¥68k iDeCo + Kokumin Nenkin (but never trust a hunch for finances ).

https://www.ideco-koushiki.jp/english/p ... ership.pdf


https://www.ideco-koushiki.jp/english/p ... ership.pdf

Got it. My company DC gives the option to fully use 55k. So may be that's the reason they said we weren't eligible for iDeCo.

Yes. The fees for funds in a company DC tend to be are higher than iDeCo I believe. But it's still the case you get ¥55k tax free allowance, rather than just a ¥23k iDeCo allowance if there's no company DC.

Reminding me I should get on my to employer about that again...