A reminder about the U.S.-Japan social security totalization treaty.

Regular readers know that this is a topic near and dear to my heart.

I noticed in the Japan Times yesterday that somone (“JM”), an American, had written in to Ashley Thompson with a question about whether he would be able to collect Japanese pension even if he didn’t have the 25 years.

She gave a good answer, but there is a point or two that she should have included.

One is that, if the American citizen had had any years of paying into social security, they are added to whatever time he had put into Japan’s system.

The second point is that there is a “kara kikan” (empty time) rule for permanent residents. Even if JM did not have 25 years with a combination of American and Japanese contributions, he might still get credit for any years in which he was not able to pay into Japan because he was not a permanent resident yet. (I think they count from age 20.)

And the most critical point: If you qualify under totalization, then do not seek kara kikan. If you do, you will be subject to something called the Windfall Elimination Provision, and Social Security will haircut your social security check. That’s the current law, and laws change, but there’s no change for that rule on the horizon.

When I came to Japan, I already had 23 or 24 years in with Social Security. So in my first set of months paying to Japan, I vested in their system—sooner than any 40 something my age did in Japan (since I had contributions from age 15, and they could theoretically only start at age 20).

You don’t get anything for being first-to-vest in your age cohort, if I actually was. Maybe bragging rights.

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3 comments

  1. Ashley · May 10, 2011

    Hi, thanks for the compliment about my article. The reason I didn’t go into detail about the US agreement was because he didn’t explain whether he had worked there or not, what countries he’d worked abroad in, etc., so to go into detail about that situation without his details would have been pointless (but instead brought up that there are the country agreements, which of course, may apply in his case).

    However, you mention kara kikan, but the pension office says kara kikan doesn’t exist for anyone after 1986, as citizens were required to pay into the pension scheme or else lose those unpaid years. Do you have more details about this? I feel as though talking with the pension office to clarify these issues feels like beating a dead horse sometimes, but if you have some other source of information, I’d love to know. Thanks!

    • hoofin · May 10, 2011

      Thanks for your comment, Ashley. I don’t know anyone at the Japan Pension Service, but someone you might want to look up is a fellow on the net who goes by the monicker of “Loophole Lewey” (David Lewis, CPA, in Hawaii).

      An expat who is not a Japanese citizen probably would not be held to the 1986 rule, if that is in fact the rule for citizens of Japan. I thought kara kikan, as it applied to non-citizens, was that the Japanese would, on application, count all the years between Age 20 and the years that the PR receiver got the PR. What I have been saying is that a PR should NOT seek that out, if they otherwise qualify under totalization.

      I think it’s a very important point to get out to the expats in Japan. If they have, say, 16 in America, and 9 in Japan, (25 total years) they would qualify for a partial check from Japan regardless of PR and regardless of kara kikan.

      • Ashley · May 10, 2011

        Thanks – will look him up.

        I did go a bit more into the country agreements in yesterday’s column (if you haven’t seen), but it certainly is a topic that deserves it’s own article, and difficult to combine briefly in something under 700 words! Especially because I need to also think about those that aren’t Americans, and the country agreements differ quite a bit from each other. I agree with you about seeking out totalization first though, but it seems more than likely that expats in Japan would be given that option before they would be offered kara kikan (if it does indeed exist – though I’m not sure the pension office would say it doesn’t anymore).

        The main thing I was trying to address was JM’s specific case, in which there really weren’t enough details to know if and how he qualified for the totalization agreements (especially since he worked abroad and we don’t know in which country or countries) . It seems more likely that would apply than kara kikan (again, if it does still exist), but I’m trying to get more clarification on the kara kikan, mostly because some people have brought it up or asked about it.

        The whole pension system in and of itself seems to be a bit of a mess – especially when I receive comments or emails from people saying they’ve been told something entirely different at their local office…

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