Japanese Pension System – a review for the Zairyu Card

An oldie but goodie: foreigners in Japan are supposed to be enrolled in at least the Japanese National Pension (kokumin nenkin), and have that blue book. From this post two years ago, I surmised that the Japanese would at least have a record of who is in, and who isn’t. It sounds like they’re still not enforcing their own law, though, when it comes to foreigners. BAD NEWS in the month where we recognize the 10th anniversary of the U.S.-Japan Totalization Agreement in effect.

Hoofin

I just want to review this for those who pop in to Hoofin to You on a search about the Japanese pension system. I am still amazed at what people who go to Japan don’t know, and the fact that the Japanese government doesn’t seem to tell them they way they should.

What you see above is a “Nenkin Techo” book — a pension book. You are supposed to sign up for the Japanese pension system and get a book like this (I’m sure they haven’t changed it.)

The idea of the Japanese National Pension is pretty straightforward: you make 480 payments, currently about 15,000 yen a month, and are promised a benefit of about 780,000 yen a year at age 65. You need to make 300 payments to “vest”, which means be eligible to collect.

There are other ways to collect, however. The main one is through totalization

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4 comments

  1. shiburama · October 29, 2013

    Hello and many thanks for the very informative blog. I’m in Japan for 20 years and for various reasons never joined the nenkin or kenko hoken schemes. I recently started my own business (of one person, myself), and would like to quit private foreign insurance and enter the Japanese system. My work is project based and income can be very good one year, crappy the next. Does it make sense to enroll in the shakai system via the company, or eat a penalty and enroll in the kokumin version at the ward office? Any thoughts would be most appreciated.

    • hoofin · October 29, 2013

      Shiburama, I’m not sure that you wouldn’t be faced with the 2-year back enrollment “penalty” either way, when it comes to the health insurance. If, as a self-employed person, you can get into a business-related shakai hoken group, that is likely your best choice. But what I see as a potential hurdle is the fact that that you haven’t been in social insurance while you’ve been in Japan. See? I think you inevitably have to go to the ward/prefecture office and get into the system before you would get to enroll in a company plan. Otherwise, you are going to apply to a employer-related plan (as self-employed), and they are going to want your blue book number.

      Pension is a different animal. Although I don’t have my ear to the ground in Pennsylvania, I happen to know that the Japan Pension Service has temporarily liberalized the rules about coverage in the program. They now will allow 10 years’ back payment. Additionally, there is talk that the vesting hurdle will be ten years–not twenty-five–depending on a possible change of a regulation. The change is tied to whether the consumption tax goes up, and by how much.

      So there, you want to make sure that you enroll, AND that you will be able to have enough time in to get something back. This is probably the most critical point, because any number of Japanese don’t have the 25 years in, especially housewives who thought they were covered under their husband’s-employer’s pension plans. But the problem of coverage gaps, of course, hits long-term foreigners hard as well.

      Good luck to you on this.

      • shiburama · October 29, 2013

        All good points, thanks, and yes I understand what you’re trying to say. I will also consult with a specialist here, and will let you know how it all turns out.

      • shiburama · November 1, 2013

        Hello again. My accountant here believes that although the blue book must be secured first, the shakai hoken people won’t care about the ward office and vice versa. Regarding the kokumin hoken option, I checked with Shibuya-ku and they take two years as a penalty (although it’s written nowhere), and each ku is different.

        Thinking about the total cost over a longer span, for example 7-10 years, I’m unsure which system is the lesser of the evils. The shakai hoken would involve much greater cash outflow from the company each month right now, and the cash has to be there to make that option viable. The kokumin system, putting aside the penalty for a moment, means a slightly lower payment each month but beyond that I can’t see benefits or differences. I have no wife or kids, and probably never will, hope to keep the business running but keep it very small, and plan to stay another 20 years if I can. But still no clue which system is better, wiser, etc. Eager to do the right thing, but absolutely baffled about which direction is better in the long run…

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