Understanding the Japanese pension system Part 3: How do I collect?

By Alfie Blincowe

If you have been living and working in Japan for more than a year, you might start to ask yourself about the future. Specifically: what happens to all that money I’ve been contributing to the Japanese government every month and will I ever see it again?

In “Understanding the Japanese Pension System Part 1,” we covered what the pension system is and how you pay into it. In “Understanding the Japanese Pension System Part 2,” we explained how much comes off your paycheck every month in order to contribute to the scheme. In our third and final post in the series, we’re going to tell you, as straightforwardly as possible, the options available for collecting that money and more importantly — how to receive it.

How to receive a pension in Japan

First off, you must be 65 years old to receive your full Japanese pension payouts — whether you are residing here or not (Japanese monthly pension payments can be paid anywhere in the world). Assuming you contributed to the scheme for more than 10 years and didn’t opt for a lump-sum payout when leaving Japan (more on that later), upon reaching retirement age you will simply report to your local Japanese pension service office and apply to receive payment.

You will need a “Claim for National Pension/ Employees’ Pension Insurance (For Old Age/ Disability Pension)” form. If you live overseas, you can get a copy of this posted to you by applying from the social security office of your home country or where ever you decide to retire.

Now, you can apply to start receiving your pension early (from age 60), but we would recommend not doing that until you are 65 as starting pension payments early will reduce the benefit payments by 0.5 percent for each month you take early. This means your pension will be reduced by 30 percent if you take it at 60 years old, but only 24 percent if you take it at age 61 and so on until you reach 65 after which there will be no reductions.

Those who paid into the employee pension plan, or kosei nenkin (厚生年金), will receive, on average, 50 percent* of the wage they earned while working. For example, if you were receiving ¥300,000 per month while working, you will receive benefits totalling ¥150,000 per month.

Those who paid into the kokumin nenkin (国民年金), or national pension, will receive benefits totalling ¥779,300 per year. It’s not as much, but people on the national pension plan pay less into the system while they are working, so they receive less when they retire.

Click here to read more.

© GaijinPot

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My wife claims that if you opt to take the pension early (at a reduced rate) then it will never be reduced, whereas if you wait until you are 65 you will be subject to any future pension cuts the government might make.

I don't know if she is correct (she read it in a book), but it's something to consider, especially given the financial state of the government. Another point is that if you take the pension at 60 it will take until you are 76 until you start to lose out to those who waited until they were 65, in terms of the total amount received. If you plan on dropping dead before you reach 76 then taking the pension early is the way to go.

5 ( +5 / -0 )

Useful info, but doesn't fully answer the question in the headline. Many foreigners will probably retire overseas. How do that they collect their pension payments? Through an electronic transfer to a foreign bank or are cheques posted to their overseas address?

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kosei nenkin (厚生年金), will receive, on average, 50 percent* of the wage they earned while working

Wages will increase by years. How it is calculated then?

1 ( +1 / -0 )

I just found these articles - and the Retire site. Thank you!

I have a question concerning the Koseinenkin. It's written that it is roughly 50% of one's salary. Does this refer to one's "gross" salary or to one's "net" salary? 

Does anyone know?

1 ( +1 / -0 )

I wouldn’t hold your breath.

Gaijin are way down the pecking order when it comes to receiving the pension.

0 ( +2 / -2 )

Why is the lump sum payout taxed at 20%, when the income from which it accumulated was taxed at source when the contributions were made, and it was not tax-exempt during the period it "vested"?

I take it you don't fill out your own annual tax returns.

You are taxed on your income minus pension premiums (public and private), health insurance premiums (ditto), the basic personal deduction and various other allowances (dependent allowance, etc).

1 ( +1 / -0 )

I still am curious if I return to the US and lose permanent residency in Japan can I still get my Japanese pension?

Immigration status has or should have nothing to do with it. Your eligibility depends on your contributions. None of the materials I've seen say anything about visas, etc. And you can collect it wherever you are. Plenty of Japanese retirees residing in Malaysia and Hawaii can attest to that.

1 ( +1 / -0 )

I was also wondering if you don't need to actually annually or occasionally visit Japan in order to continue receiving your pension, once you're the age you qualify for it. I do know of a few Japanese retired couples living overseas, but they regularly visit Japan every year and renew their overseas visa on the way back to their countries of residence. I assumed that their pension is paid to their local Japanese bank accounts.

2 ( +2 / -0 )

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