Pension system obligations and benefits

by Takahiro Fukada

As the social welfare system grows in complexity, non-Japanese in particular are likely feeling a sense of frustration at the lack of information available in their native language.

All foreign workers are obliged by law to join the public pension system, although many are not planning to stay here for 25 years — the minimum that one must pay into the system to receive any pension benefits.

But how much are foreign workers obliged to pay, and what benefits can they receive? What about getting a refund upon leaving Japan?

Here are some questions and answers about the public pension system and non-Japanese residents:

Do foreigners have to join the public pension system?

Yes. According to the Social Insurance Agency, all residents of Japan between the ages of 20 and 59 are required by law to enroll in “kokumin nenkin,” or the national pension system, regardless of nationality.

If you are a regular corporate worker, you and your spouse are also automatically enrolled by the employer for the additional, salary-proportional “kosei nenkin” pension system on top of the kokumin nenkin.

The kosei nenkin premium payment should appear as a deduction on your monthly pay slip.

What are the system’s full benefits?

Kokumin and kosei nenkin pension benefits kick in only after paying into the system for 25 years and, in principle, when one reaches the age of 65.

If you are a corporate worker, you will be paid both kokumin and kosei nenkin benefits.

The annual kokumin nenkin benefit is calculated to be ¥792,100 if you paid into the system for 40 years.

The additional kosei nenkin benefit varies according to salary and premium payments.

How much are the monthly insurance premiums, and how do you pay into the system?

Kosei nenkin contributions are based on a person’s salary, with the premium shouldered equally by employer and insured. The monthly premium an employee pays ranges from ¥7,348 to ¥46,488.

Contributions are deducted from your salary and then paid by your employer into the system. Contributions are also taken from bonuses.

Through March 2009, the monthly premium for the kokumin nenkin is ¥14,410, and must be paid by the end of the following month.

Those not on a payroll can pay in cash at banks and other financial institutions, post offices and convenience stores as well as via account transfer and the Internet.

I’m not planning to stay as long as 25 years in Japan. Can I get the money I paid into the system back when I leave the country?

Yes, but the amount is limited.

For example, a person can expect to get back only between ¥43,230 and ¥259,380 in total from the kokumin nenkin system, depending on the number of months that contributions were paid.

Kosei nenkin refunds are based on the period of contribution and your average salary. To receive a refund, payments must have been made for at least six months.

Before leaving Japan, cancel your alien registration, submit the notice of forfeiture of kokumin nenkin and obtain the claim form at your local municipal office.

After leaving Japan, you can mail the form to the social insurance operation center in Suginami Ward, Tokyo.

Claims are valid for up to two years after leaving the country. My country also has a mandatory public pension system. Do I need to pay premiums into both systems simultaneously?

It depends on whether Japan has a social security agreement with your country.

Japan has concluded such agreements with Belgium, Britain, Canada, France, Germany, South Korea and the U.S. so that contributions do not need to be paid into two countries’ public pension systems simultaneously.

Similar pacts have been concluded with Australia, the Netherlands and the Czech Republic but have yet to be implemented.

If you work at a company in Japan for less than five years, you are only required to join your home country’s pension system and are exempt from paying into Japan’s system.

To receive pension benefits when you retire, each country requires that you be enrolled for a certain period. Under some social security agreements, you are allowed to combine the enrollment periods of both countries’ systems to qualify to receive benefits.

Tokyo is currently negotiating with Spain, and considering doing so with Italy, Ireland and Hungary.

The terms of each agreement are different. More details can be found at www.sia.go.jp/e/ag.html

Which office should I contact for more info on the public pension system?

Your local municipal office or social insurance office will help. Bring your pension handbook, which is provided by your company or the local social insurance agency office. A list of social insurance offices is available at www.sia.go.jp/sodan/madoguchi/shaho/index.htm

Or call (0570) 05-1165. The agency asks that inquiries be made in Japanese.
