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Plan for the Future! Pension in Japan. Registering Series Pt 3.

Ahoy there!
 
  This is the third part of our 'Registering at Japanese City Hall' series.  Today we are going to talk a bit about taking care of pension in Japan and talking about some of the options that comes with it.

  National Pension (called “Nenkin” in Japanese) – Japanese national pension is often called “Pension Insurance (called “Nenkin Hoken” in Japanese)”.  Every Japanese adult citizen from the age of 20 to 60 as well as every foreigner living in Japan has an obligation to pay for pension fee.

  For many foreigners who come to Japan, the decision to pay into pension will typically be approached in a few ways depending on how long you intend on being / have been in Japan.  This is just how I see people's reactions based on my experience helping teachers and foreign employees in Japan for the last 5 years.  Let's look at a few cases.

 Case 1: "I am here to work for a year and see how I like it."
  In the case of a teacher (Like an ALT) or other worker that just arrived in Japan and most likely has a large amount of moving fees to worry about as well as other financial concerns and debts burdening them (Like school loans or perhaps sending money home to care for a loved one, etc.) Pension is seen as a burden by many.  Typically many of the new arrivals to Japan don't have a lot of experience living independently let alone in a foreign country and being asked to pay a fair amount of money every month for something that may (Or may not depending on your point of view on social security, pension, etc.) help you 20, 30, or even 40 or more years in the future is often seen as a rip off.  I think there are plenty of cases for and against such a point of view, but please read on because you can get some of that money back!

  Case 2: "I have been in Japan a few years and am on the fence about my future."
   In this case, the foreigner in question has been paying into pension (Regardless if they like it or not) for at least a few years, typically 5 or more.  By now their lifestyle and expenses have maintained a sort of balance and pension is just another number that is sapped from their check and accounted for with budgeting. It is an annoyance to some, but a "necessary evil" to the short term, but starting to look more like something nice to rely on in the long term.  If you have only been in Japan and paying pension for about 5 years, then you are right on the edge of what you can get back from the government should you decide to go back to your home country.  This might be the ideal time to 'jump ship' for some if you are timing the lump sum you can receive back from the pension office, but there are pros and cons to staying even longer.

  Case 3: "I have been in Japan for a long time and will probably retire here."
    In this case, many foreign folks have been paying into pension for a while now.  Most likely they will continue to do so until they retire!  If you pay into pension for 20 years or longer, you have the option of stopping payments and receiving that money in a variety of ways.  Sometimes a lump sum and sometimes a monthly payment that lasts for a number of years.

  We will need to go into greater depth about pension in the future so please look forward to that.  Regardless of what case is closest to your situation, let's talk a bit about how much pension actually costs.

 For the first year you pay into pension, the fee is roughly 16,260 yen per month (Assuming that you didn't earn any income in the prior fiscal year); however, from the second year on, the fee amount will vary depending on your annual income from the previous year.  Also, the amount of pension that you pay into the system will inform the pension office how much they will be able to pay out should you decide to stop pension early and get a lump sum repayment from the pension office.

  Regarding the Pension lump sum repayment, this is a lengthy process and (seemingly) made such a way to dissuade foreigners from attempting to get the money they paid into pension back.  After paying into pension for more than a year, you have the option to get a lump sum repayment (Usually less than 50% of what you paid in) when you leave the country.  You will need to go to the pension office and go through the process and most likely need someone in Japan who you trust to help you with this.  Ideally a Japanese person who will not be leaving.  You can claim up to 5 years of what you paid in, based on the most recent 5 years that you paid into the system.  For people living here for more than 5 years, this will come off as a huge rip off if they plan on leaving 10 or 15 years after working here.

  While at that point, it might be worth continuing to work and live here until you can get your full retirement after 20 years of paying in, there is also another option.  There are a number of countries that have similar pension services like the 401k in the states that you can transfer (some of) your pension over to.  The process is lengthy and no doubt will have you visiting the pension office countless times, but it is possible.  We can go into that subject at a later date.  So consider those options and visit your local pension office if you want more details.  Some of the information that they offer is even in English! 

  If you are not willing to pay for the pension fee, you do have an option, but it is not guaranteed by any means.  You can apply for an exemption so that you don't have to pay the pension fee.  This is called 'Menjyo'.  However, please remember that this exemption can usually be made only for the first year. From the second year you must start paying for the pension fee, or you can attempt to apply for another menjyo. (Which you have to apply for every year if you intend to avoid paying pension as long as possible)  If you apply for a second exemption, they will either ask you to pay none, or perhaps only a percentage of the payment.  Typically you will have to pay around 25% the second year, 50% the third, and eventually up to 100% payment the longer you are in Japan.  But this really depends on the city and they can refuse your request for an exemption in almost any case so be mentally prepared to pay for it regardless.  Especially from the second and third years working in Japan.

  I could understand that Japan wants pension to be paid by employees who live in Japan for more than a year or two and they offer repayment for a portion of your pension up to five years which isn't terrible.  Especially when many people just consider the pension payment money that is thrown away and taken by the government.  That lump sum, while a huge pain to take care of, will come as a very welcome reprieve for those who head back home and need some money in the meantime while looking for work or reestablishing themselves.

  If you are going to be in Japan for more than 5 years, then you need to seriously start thinking about pension and if you will retire in Japan or at the very least continue working until you have been there for 20 years (At least) to get a more reasonable payment than the lump sum.

  While we didn't talk about too many specifics today, I hope that you were able to gain a little insight on the pension system in Japan and how it can affect foreign residents who have lived, worked, and paid into the system for a few years.  This article was written in October of 2018, and many of these laws are being discussed quite hotly in many of the political realms in Japan. So be sure to check out the up to date information directly from the source or speak to a pension office for information that takes into account your personal situation directly.
 
 Feel free to let us know what you think by shooting an e-mail to us at contact@ships-inc.co.jp!

 Set sail to a new life, may ships take you on the seas, through the skies, and over the land towards my place in Japan.

Until next time, from all of of here at myplaceinjapan.net take care!

Phil