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Pension and Social Security

For those who leave Japan, there are several tasks to complete. One of the most important things to do concerns the Japanese pension.

Workers in Japan must pay into the Japanese pension system, unless they have coverage in a foreign system sponsored by their employee. To receive a Japanese pension, people must have worked 25 years in Japan, which may be reduced to 10 years in 2017. For most short-term workers in Japan, receiving a Japanese pension is impossible. Therefore, workers should consider either transferring credits to the foreign system or a lump-sum withdrawal.

To maximize monetary benefits, most workers should consider the following:
  • How long will you work, and how much will you make?
For transferring credits, consider that most US workers pay more into the SS system than they need to receive benefits. For younger people with relatively high Japanese incomes and kosei nenkin coverage, a lump-sum withdrawal may make more sense. However, disability and survivorship payments are very important for those with families.
  • Can you depend on people to help you while you are out of Japan?
A lump-sum withdrawal results in a payment of 80% of total after taxes. To receive the last 20%, a representative is necessary to fill out a kakutei shinkoku tax declaration, receive the money in a Japanese bank account, and wire it to a foreign bank account.

Procedures for Receiving a Lump-Sum Withdrawal Payment

  1. Get your employer to withdraw you from Japanese pension systems.
  2. Inform city hall that you are leaving Japan in order to be delisted as a resident.
  3. Fill out the lump-sum claim form.
  4. Designate someone as a tax representative with the nouzeikanrinin no todokedesho Notification of Tax Agent form, available at city halls.
  5. Leave Japan, but bring your blue pension book, claim form, and tax agent form. Also bring information regarding the tax agent, employment, and related contact/address information.
  6. Send in your claim form, pension book, certified bank information, and copy of passport showing all entry/exits to Japan to the Tokyo pension office:

    Social Insurance Operation Center, Takaido-nishi 3-5-24, Suginami-ku, Tokyo 168-8505
    (〒168-8505 東京都杉並区高井戸西 3丁目 5番 24号社会保険業務センター)

  7. Get the Notice of Lump Sum Withdrawal Payments (支給決定通知書) and make a copy. This will get you 80% of your money in your US bank account.
  8. Send the original Notice of Lump Sum Withdrawal Payments (支給決定通知書) to your tax representative and go through a kakutei shinkoku tax declaration (確定申告).
  9. The tax people will refund the last 20% of your money to your tax representative. The money can only be deposited in a Japanese bank account.
  10. Have your tax representative send the money over to you by wire.

Please note that bank information needed includes documents that show your bank name, name of bank branch office, branch office’s
address, your account number, and show that the applicant (yourself) is the account holder (any supporting documents issued by your bank). For payments remitted to your bank located
in Japan, your name (account holder’s name) in Japanese KATAKANA characters needs to be registered with the bank. Please note you cannot receive payments at a Japan Post Bank
account.

Lump-Sum Payment Calculation

A lump-sum payment is maximized at three years and differs based on either basic kokumin nenkin or employer-contributed kosei nenkin pension plans.

Lump-sum applications must be made within two years of declaring Japanese non-residency and of withdrawing from the pension system. Payments cannot be received if any disability, unemployment, or other benefits have previously been claimed. Claimants must have at least 6 months of contribution into the pension system to receive any benefits.

National Pension System

The amount that can be expected for kokumin nenkin is listed in the following table and is calculated using this formula (as of 2015):

¥7,625 x (1) + (2) + (3) + (4)

    (1) Number of contribution-paid months (no exemption)
    (2) Number of three-quarter contribution-exempted months × 3/4
    (3) Number of half contribution-exempted months × 1/2
    (4) Number of one-quarter contribution-exempted months × 1/4

Payments

Between 6 and 11 months       ¥45,750
Between 12 and 17 months     ¥91,500
Between 18 and 23 months     ¥137,250
Between 24 and 29 months     ¥183,000
Between 30 and 35 months     ¥228,750
36 months or more                 ¥274,500

Be aware that pension payments are decided yearly and will change with every year, generally increasing.

Employees' Pension Insurance

The amount that can be expected for kosei nenkin is listed in the following table and is calculated using this formula:

(1) + (2) x Multiplier

    (1) 1.0 x Average monthly salary (yearly income and bonuses / months worked) for work after 4/2003.
    (2) 1.3 x Average monthly salary for work before 4/2003

Multiplier values

Between 6 and 11 months       0.5
Between 12 and 17 months     1.0
Between 18 and 23 months     1.5
Between 24 and 29 months     2.1
Between 30 and 35 months     2.6
36 months or more                 3.1

Be aware that pension payments are decided yearly and multipliers change with every year, generally increasing.

Procedures for Enrolling in Social Security with Japanese Credits


Advice

Talk to a worker at a Japan Pension Service for information tailored to your individual situation.




Japanese Pension System Information

  1. Eligibility starting at 25 years of work.
  2. Benefits depend on average salary--make more money, get more pension.
  3. Unclear "karakikan" allowances for permanent residents that allow for eligibility with less than 25 years of work, but also reduced pension income and payments.
  4. Agreements with various countries that allow pension payments to count towards foreign social security or pension systems, as well as elimination of double pension benefits.
  5. Lump-sum pension withdrawals equivalent to up to three years of work: around ¥286000 for the basic kokumin nenkin system or 3x the average monthly salary for the employer-supported kosei nenkin system (for those enrolled in shakai hoken).

US Social Security Information

  1. Social Security eligibility starting at 40 credits, with up to 4 credits earned per year (10 years of work).
  2. Benefits depending on average salary--make more money, get more pension (up to a limit).
  3. Agreements with Japan for pension/social security equivalency (1 SS credit is 3 months of Japanese work) and reception of benefits from either Japan or the US.
  4. No double pension benefits.
  5. Japanese credits count towards US Social Security, but not towards Medicare.
  6. SS retirement payment eligibility starting at 40 credits, disability eligibility starting at 6, and survivorship eligibility based on age.

Japanese Pension Retirement Payments

For those who are eligible for a Japanese pension and have worked and made pension payments for 40 years in total, benefits are ¥780,100 / year as of 2015.

The full calculation is based on this formula:

¥780,100 x ( (1) + (2) + (3) + (4) + (5) ) / 40 years * × 12

    (1) Number of contribution-paid months (no exemption)
    (2) Number of full contribution-exempted months** × 1/3
    (3) Number of three-quarter contribution-exempted months** × 1/2
    (4) Number of half contribution-exempted months** × 2/3
    (5) Number of one-quarter contribution-exempted months** × 5/6

* Shorter for some people, depending on date of birth

** Depending on your income or according to the National Pension Act, you may be granted an exemption of full- or partial- amount of contribution payment.

If your contribution is exempted in April 2009 and later, please apply the formula below;

    (2) Number of full contribution-exempted months × 1/2
    (3) Number of three-quarter contribution-exempted months × 5/8
    (4) Number of half contribution-exempted months × 3/4
    (5) Number of one-quarter contribution-exempted months × 7/8

US Social Security Retirement Payments

For those claiming a Social Security benefit, the calculation can be confusing and difficult. Please refer to the appropriate publications (See SSA Publication No. 05-10070).

The full calculation follows these steps:

  1. Find Earnings x Index Factor (up to yearly maximum)
  2. Sum the top 35 years.
  3. Divide by 35 years x 12 months (420)
  4. Follow the formula:

( (1) + (2) + (3) ) x 0.75

    (1) First $0-826 x 0.9
    (2) Second $826-4,980 x .32
    (3) Third $4,980-35-year-sum x 0.1

Social Security payouts are affected by retirement age and other factors.