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.
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