Pension (Nenkin) in Japan: A Financial Guide
What is the Pension System in Japan?
The pension system (年金 - nenkin) in Japan is mandatory for all residents aged 20-59. It consists of two main tiers: the National Pension (国民年金 - kokumin nenkin) which is the basic pension, and the Employees' Pension Insurance (厚生年金 - kosei nenkin) for company employees.
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How much do you need to contribute to pension in Japan?
Contribution amounts vary based on your employment status and income level:
| Pension Type | Monthly Contribution | Cost Sharing |
|---|---|---|
| National Pension (Basic) | Fixed rate: ¥16,590 per month (FY2023) | Individual pays 100% |
| Employees' Pension | ~18.3% of monthly salary | Employer pays 50% |
Example Monthly Pension Calculation for ¥300,000 Monthly Salary:
- Insurance rate: 18.3% of salary
- Total contribution: ¥54,900 (¥300,000 × 18.3%)
- Employer portion: ¥27,450 (50% of total)
- Employee portion: ¥27,450 (50% of total)
What benefits can you expect from Japanese pension?
Pension benefits depend on your contribution years and type of coverage. Here's what you can typically expect:
- Basic Pension (40 years of contributions): Approximately ¥780,900 per year
- Employees' Pension: Additional amount based on your salary history and years of contribution
- Minimum Requirement: 10 years of contributions to receive any pension
- Lump-sum Withdrawal: Foreign nationals can claim up to 5 years of contributions when leaving Japan
Are there any exemptions or reduced payments?
The National Pension system offers several exemption categories for those with financial difficulties or low incomes. The exemptions are decided on a case-by-case basis, so it is best that you go to your local ward/city office, or pension office in order to apply for a reduction. The exemption does not continue automatically - you must apply each year.
| Exemption Type | Payment Required | Future Benefit Impact |
|---|---|---|
| Full Exemption | 0% | Receives 50% of full benefit |
| 3/4 Exemption | 25% | Receives 62.5% of full benefit |
| Half Exemption | 50% | Receives 75% of full benefit |
| 1/4 Exemption | 75% | Receives 87.5% of full benefit |