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Hi Blog. Good news. Until now, if you wanted to qualify for any retirement payout under the Japanese National Pension System (Nenkin), you had to contribute 300 months, or 25 years, of your salary in Japan.
This was an enormously high hurdle for many NJ residents, who would pay in but not always elect to stay the bulk of their working life in Japan. That meant that aside from getting back a maximum of three years’ worth of contributions upon request (see also here), you’d effectively lose your retirement investment as an enormous exit tax. (Incidentally, that was one of the quiet incentives for the racist Nikkei South American Returnee Worker “repatriation bribes” from the government back in 2009 — take the airplane fare home, leave behind your accrued pension. Big win for Japan’s government coffers.)
It made it so that the longer you stayed in Japan, the more of a pension prisoner you became, since if you left the country to work elsewhere, you’d lose, because you hadn’t paid into pension schemes in other countries and wouldn’t qualify.
Totalization Agreements (where countries agree that years worked in Country B count towards working in Country A as well) have eased that burden somewhat. But now the threshold for qualifying at all in Japan has fortunately been reduced. From 25 to 10 years, as of August 2017. Hurrah.
Now still remaining is the issue that the number of Japanese pensioners is increasing due to Japan’s demographically aging society, meaning that by the time you retire you’ll be receiving a smaller piece of the overall pension pie (to the levels where pensioners will live in penury; Japan is already above the OECD average poverty rate (pg. 75). And the minimum retirement age will likely be further increased to make it harder to retire younger. But at least you don’t have to invest most of your working life in Japan just to get something back. Thus, Japan is becoming more aligned with international norms. Good.
Much more information from the OECD on this issue at http://www.oecd.org/pensions/public-pensions/OECDPensionsAtAGlance2013.pdf. Dr. Debito Arudou
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37 comments on “Good news: Japan’s National Pension scheme lowers minimum qualification time from 25 years to 10!”
This actually makes retiring in Japan from overseas a lot more attractive. Conversely, what if you pay in then leave? How much can you get back? Still only the first three years? (which triggered a lot of 3 year only NJ stays, so as not to waste money paying into something they would never collect from)
You can only ever get 3 years back (taxed at 20%), which means that if you pay in for ten or more years it’s probably better to take the eventual pension.
It seems relatively straightforward to claim the pension from anywhere in the world.
Hurrah, now we can live the rich life and collect the grand sum of 15.000 JPY monthly, after paying a total of 2.000.000 JPY as ‘pension tax’ in 10 years, after reaching the age of 65 years. Not even enough to feed one person, not even talking about paying the rent. Of course, If it even exists by then.
Probably a good idea to make your own arrangements alongside nenkin 😉
@Jason, Ah, that is less than we would pay in. OK, on second thoughts then lets not retire in Japan after all, it is a silly place. (Paraphrasing Monty Python and the Holy Grail).
Thanks for that Debito, that’s great news. I’d pretty much given up on this happening, but I still have my PR and 13 years of contributions so I’ll have to fit in a visit to japan and make sure everything is in order before the PR and gaijin cards run out.
(I decided to take a punt and not take the refund when I left japan in 2013, as the 10 year vestment was already planned but not activated at that time. Since I’ve still kept my PR I haven’t yet “left” officially, just taken a long overseas trip in their view. I did make sure to get a >1y re-entry permit.)
In theory, this is good news. As an NJ who has been paying in for six years, I can say that even 15,000 yen per month is way better than nothing, and that it would figure significantly into my retirement budget.
However, the pessimist in me says that after the 2014 ruling on welfare payments to NJ (basically, according to the ruling, NJ are not entitled to it even if they’ve lived in Japan since birth and are PR holders), I’m worried that this logic will eventually be applied to NJ pensioners, as well.
Very few Japanese would care. They’d just think “If the NJ don’t like losing their pensions, they can just go back to their home countries.” The LDP and other far-right-wing parties don’t care what foreigners think or feel because NJ can’t vote. The LDP can piss off 100% of NJ and still get elected virtually every election.
If NJ were suddenly stripped of their entitlement to pensions that they’ve earned, the UN and other countries would protest of course, but it would probably have no effect. UN pressure can’t even stop North Korea from testing hydrogen bombs or ICBMs.
I hope that I’m wrong about this possibility. I really hope someone will say something to reassure me. Unfortunately, I doubt this will happen–I suspect that there is a strong possibility of what I pessimistically predict actually happening–that circa 2050, Japan will just say “money is tight, so NJ are no longer eligible for pension payments”–and that they’ll stop paying NJ pension payments, and get away with it.
Hi Charles
I believe it is highly unlikely Japan would strip non-Japanese residents of their pensions (that they have paid into). Unlike welfare (http://www.japantimes.co.jp/news/2014/07/25/national/crime-legal/a-closer-look-at-the-supreme-courts-welfare-benefits-ruling/) pensions are specifically for all residents, not just citizens.
The other problem about that is, with totalization countries, there’s a check being cut in favor of Japanese who didn’t qualify. If some future J-government, say, in December 2041, decided to nix the payments, the other governments could just shut off the payments coming here.
The cross-coverage program is pretty substantial with America already. Canada is the #1 beneficiary of US totalization. Japan is #2.
This new system is a real disaster and I would like to know the benefits the Government gets out of this. Since you need 30 hours + a week to get enrolled in Shakai Hoken, my company decided to give me less work so they don’t have to pay shakai hoken and I go back to kokumin hoken. This has a serious impact on my daily life. I feel ripped off because I won’t even get any pension benefits since there is no agreement with my country. So, in the ned I see myself forced to leave. Result: Japan has one taxpayer less and I am sure many will follow soon.
Yes, many are working P/T and have to pay their own pension
I thought the original scam? of paying a huge amount in, say 15 years, but exiting before the 25 year mark was a real blow to gaikokujin, some racist oyaji bureaucrats must of been ecstatic. I mean, working for 15 then getting a percent of a “lump” sum….wow the people that got screwed on that one. I think Debito posted on this years back (like back in the 90s?) then the totalization agreements came, if your country had one. So its progress, albeit snails pace progress. So if you
pay in for 10 years, at what age can you start receiving payments?
It’s currently 65, but I would be surprised if they don’t put it up in the future in line with many other countries.
You can also take a smaller pension earlier or a larger one later.
This is actually really good news, because it drastically reduces the need some people feel they have for “cashing in” their contributions to Japan, and only get back a fraction of what they had contributed through both shakai hoken (employer system) OR the kokumin nenkin system (public system that the consumption tax supports).
For years, the story that the anti-pension foreigners here have promoted is that the contributions were “wasted” (even if you came from a totalization country!) because vesting only happened after 25 years. Plus, WHO KNOWWWWWS what will happen in the future?????????
The Japanese government could continue to dangle the rebate over the heads of unsophisticated young people, and get them to cash out a benefit worth maybe 900,000 yen on finance measures for a mere 240,000 yen. If a private company were running a scam like that, they’d be getting sued.
Now it’s a little different where an American can work here for 3 years, then go back home and work 7, and be covered by BOTH US social security (which credits the 3 years in Japan) and the Japanese Nenkin system (which credits the 7 years in America).
It also benefits those gaikokujin who are from non-totalization countries, since the vesting happens at 10 years, rather than 25.
Even the Brits, who have some alternative deal with the Japanese, benefit if they pay in for 10 years rather than opt out. They were the biggest trouble-makers about the old system, because they had the option to pay back home in England while working in Japan. So they always would make a lot of noise about any compulsory enrolling of foreigners in Japan. Pure self-interest, without disclosure.
With this change, Japan is finally being fair to its own itinerant workforce, and indirectly to the foreigner community as well.
A question about this quote Hoofin,
“Now it’s a little different where an American can work here for 3 years, then go back home and work 7, and be covered by BOTH US social security (which credits the 3 years in Japan) and the Japanese Nenkin system (which credits the 7 years in America).”
I’m guessing here that probably “covered by both” does NOT mean one would receive from age 65 full monthly pension income from BOTH countries, right? Thus, “covered by both, payable by either” would be clear.
Meaning, I’m currently assuming that it is both illegal and impossible to receive multiple governments’ full pension bank transfers each month, for example 15,000 yen coming in from Japan pension PLUS for example $600 coming in from the US pension, BOTH at the same time, even though one never held 2 full time jobs concurrently. Double-payout for single pay-in is most likely impossible.
So yeah, I’m going to assume that “covered by both” has the qualification of, “but only can receive your loan-to-the-governments payback from just ONE government, of course.”
So I guess (but would like confirmation) that at age 65 each person chooses which one government begrudgingly agrees to payback the loan (the $20K~$200K, 2M￥~20M￥loan, wow) which you gave to one or multiple governments, for 10 years or 47 years or whatever, total) thus only one government will pay you back your total payment (from age 65 until death, with thus the chance of losing, breaking even, or profiting VERY slightly at an unfair interest rate) or if both countries were to agree to simultaneously pay you back each month after 65, they would both cut the payments appropriately to about half each, since there’s no way governments are so generous to decree that “anyone who paid a little in one country, and a little in another country, although never concurrently, magically get rewarded with double full monthly paybacks, twice as much payout as what merely-stay-in-one-country people receive”… there’s no chance of “covered by both” meaning that, right?
Ha, and even if such an amazing double-payback system were to exist, which it doesn’t and wouldn’t, but even such a “doubled interest-rate” would STILL not be close to a fair interest-rate, considering the immorality of this forced-under-duress non-self-beneficial huge loan-to-the-governments.
These are the same governments who already illegally fraudulently “misappropriated” ALL of the money which all our ancestors’ multiple-generations first had paid, and thus ever since the first generation of payees’ money was stolen and used, every successive generation has been and is being guilt-tripped into feeling it is somehow “natural” for each successive generation to keep afloat this obviously impossible-to-end permanently-increasing-at-a-geometric-rate ponzi-scheme pyramid-loan, from we the people being passed to the protection-racket legitimized-mafia known as your local ruling government. And since these governments illegally spent all of our tax payments from the first citizens until present day, now we have to also pay back all the additional trillions beyond that which the governments borrowed from the world bank and various other banks using our names on our birth certificates as collateral and now we even have to pay the interest for all of these forced loans, and what’s more we have to pay those banks in gold since these global loan sharks don’t accept fiat payments, and not enough gold exists to ever pay it all back? Absurd.
So yeah, I think the revolutionary rebels who refuse-to-sign-any-pension-contract are right to refuse any such forced loan, if they would prefer to save for their own future.
Especially if Japan is refusing to give equal rights to ALL full-time workers of ALL races.
Meaning: Japan must begin forcing ALL Japanese companies to enroll ALL full-time workers into the company-matches-your-payments legally-mandated Shakai Hoken system.
Want happy tax-payers all paying equally? First the government workers must obey the laws, they must prosecute the law violators, they must guarantee equal protection for all tax-payers, regardless of race or nationality.
The solution is not “hey victims, just shut up and pay kokumin nenkin”. The solution is: equal treatment for ALL residents. ALL citizens worldwide are being used as serfs, that’s bad enough, let’s stop the additional insult of Japan allowing Japanese companies to violate Japan’s labor laws when it comes to “non-Japanese” workers.
end rant 🙂
You’ve got about fifteen different propositions in your writing, so don’t mind me for not addressing them all, because a lot just go to the kinds of things that people say who are not in favor of government-sponsored old-age pension insurance. I will provide a link at the end to what I had written five years ago, when US social security was 77 years old. This week, it’s 82.
Covered by both systems means what it says, but you have the wrong conclusion, and that’s probably because you wanted to say other things. Someone who works in Japan for 3 years and pays either kokumin nenkin (public system) or kosei nenkin (employer system) will be covered under that system once they obtain (at least) seven years of coverage in a totalization partner system, like the US, Canada, Australia or over a dozen others.
Let’s use kokumin: this means the person paid in a (tax deductible) 16,000 yen for 36 months, and would be entitled to that fraction of the full check (3/40ths), that I calculate to be about 4,860 yen a month in today’s money. So, for a total of about 576,000 yen pretax, and more like 440,000 yen after tax (since you deduct these payments in the now), in about nine years of retirement they have recouped on a cash-flow basis. (You cannot buy a private life annuity that does that.)
On the US side, the seven years depends on wages. I’ll use $30,000. Heavy math puts a full social security check on a lifetime at $30,000 to be about $1,322, and seven years’ fraction of that is $264. The taxes to support that (which are not deductible) are 10.6% old-age/survivors (OAS) contribution, 1.8% disability (DI) contribution, and 2.9% Medicare tax. A total of 15.3%, and since you can’t separate out the DI and the Medicare from the OAS, you pay the whole 15.3% to get the old age check.
Employers are required to “pay” half that 15.3%, but practically, this means they pay you 7.65% less so that they have the money for their half. Unless you work at minimum wage, where they can’t squeeze out their half.
Self employed people in America have to pay the full 15.3% up to the earnings limit.
So for 10 years of work, you get $264 and also 4,860 yen in dollars. I’ll say $44. Total $308 for 10 years, which seems about right for a 40-year earning career.
You are correct that many Japanese employers play a lot of tricks to prevent people from enrolling in employer insurance. The government does not collect it like a payroll tax, like they do in America. But they also have co-conspirators who are the people who don’t enroll in kokumin nenkin anyway. Because then the game becomes, if ever the employer would be forced to make good, the employee who dodged pension has to come up with their half of the bill (which, no, they weren’t saving in “me own private pension scheme!”).
It wasn’t that employer pension was going to be free to the employee. It was that half was paid by the employer and half by the employee. It’s a cheap excuse if the employee can’t come up with their half and expect to stick it back on the employer for not following the law.
There is also something called “kokumin nenkin kikin”, which operates like a tax-deductible private annuity for people who are enrolled in kokumin nenkin.
I was happy to be in both programs here and there, and am confident the governments will pay out when the time comes where I would qualify. With all the nuttiness surrounding collapse-prone private investing, it is one of the more certain things out there.
It is “built to last”: https://hoofin.wordpress.com/2012/08/15/
But remember, In Japan, when the full-time (over 30 hours per week) worker happens to be non-Japanese (nationality or race), most Japanese companies simply REFUSE to obey the law about signing up full-time workers for the company-pays-half Shakai Hoken (Health and Pension) system.
Meaning, full-time “Suzuki-san” only pays HALF of his monthly pension payments, and only pays HALF of his monthly health payments, plus he receives a bonus twice a year regardless of personal performance, wonderful…
…while full-time “Gaijin-san” is told to “just forget about the fact that the law require companies to pay half of ALL full-time workers’ Health and Pension payments, instead simply go pay out of your own pocket 100% of Non-Shakai-Hoken Health (Kokumin Kenkō Hoken) and 100% of Non-Shakai-Hoken Pension (Kokumin Nenkin) all by yourself.” Such “advice” is given to the “Gaijin-san” by the Japanese companies committing the above racially discriminatory illegal labor action, and even by the Japanese Labor Standards Bureau officers who refuse to penalize those companies’ blatant violations of Labor Law.
The Japanese company presidents refuse to obey the Labor Law, and the Japanese Labor Law bureaucrats refuse to penalize the illegally acting Japanese presidents, but the VICTIMS of this illegal race-based-shakai-hoken-refusal are told the solution is that THE VICTIMS should go pay 100% Kokumin Kenkō Hoken and 100% Kokumin Nenkin: even though those two plans are legally NOT for full-time employees.
JAPANESE full-time employees are NOT refused Shakai Hoken by employers.
JAPANESE full-time employees are NOT told to “go join Kokumin Kenkō Hoken and Kokumin Nenkin.”
Non-Japanese full-time employees ARE illegally refused Shakai Hoken by employers.
Non-Japanese full-time employees ARE illegally told to “go join Kokumin Kenkō Hoken and Kokumin Nenkin.”
Well, let’s do the math of Kokumin Nenkin, as Jason rightly pointed out above:
One must pay 16,667 yen a month for 10 years (let’s say, just for example, from age 55 to 65) in this forced savings system, for the CHANCE (depending largely on immigration officers feeling like continuing to renew one’s visa) of possibly receiving 15,000 yen a month from age 65.
Thus, one would pay 2,000,000 yen of Kokumin Nenkin over 10 years
(IF immigration officers allow the foreigner to work in Japan from age 55 to 65)
for the chance of getting back just 1,800,000 yen over 10 years
(IF immigration officers allow the retired foreigner to live in Japan from age 65 to 75).
Lend the J-government 2 million yen
(starting from age 55, for easy math)
then: if they actually allow you (big if)
continued visa renewals for 20 years,
then from age 65 to 75, you still lose:
J-gov pays back only 1.8 million yen.
For the 10 years of forced-savings to even BEGIN to be profitable,
one would need to allowed continued visa renewals for 22 years,
(meaning 10 years working plus 12 years retired)
to begin get back your full 2 million yen investment,
and even at that stage: you only get 0.36% annual interest.
Start loaning the Japanese government 2M yen from age 55,
and maybe at age 77 you MIGHT get that 2M yen loan back,
with a “generous” non-compounded annual interest of 0.36%
If your company were paying half of all these payments
(through the Shakai Hoken system, as legally required)
one would possibly receive a slightly better return-on-investment interest rate,
and one would possibly begin to enjoy that “profit” before year 12 of retirement,
but Kokumin Nenkin payers LOSE money until year 12 of retirement as shown above.
And the above example was the “best case” of magically starting payments from age 55.
If you start paying Kokumin Nenkin in your 20s, 30s, or 40s,
calculate how many decades of retirement it would take to ever get back your decades of investment.
And even if you hope for a fair interest-rate through a very long retirement life (living well past 100) in Japan:
Question 1:
What happens to your money,
when after 9 years of payment…
Japan refuses to renew your visa?
Question 2:
What happens to your money,
when 9 months after turning 65…
Japan refuses to renew your visa?
Well, once you are vested you can receive the pension payments anywhere in the world, so if you had to leave Japan due to visa issues you’d continue to receive the payments wherever you ended up.
Ok, so this one is of a different type: the anecdotal story of the either rare or nonexistent person, who is caught by every technical glitch in the rules. Never mind that this person is highly unlikely to exist, we are going to base all our planning off this. After all, North Korea just might nuke Guam, so none of us should ever go there. And if Hawaii or California is threatened next, then cross those off the list, too. But Tokyo is safe–as long as you don’t have to pay nenkin.
If someone came here from America at age 55, it is overwhelmingly likely that they’d have 10 years in US social security, or something close to 10. Remember, you just need $5,000 in annual earnings to get four credits (“four quarters” back in the day), which will count as one year of coverage in Japan totalization.
So the person above has their totalization-partner time, and the month that it combines to ten years, then a proportionate check will issue on retirement from the Japanese system. You work there, above, which such large numbers. Let’s break it down: a 16,000 yen monthly payment will yield 135 yen of monthly pension benefit. Since the 16,000 is deductible on current taxes, the cash-flow recoup is still under 10 years, which is great for a life annuity.
I don’t know if you mean to ignore the world we live in now, but it is exceedingly difficult to make even a safe 3% return in US dollar investments. Worse in Euro, and practically nonexistent for yen. So the idea that. like back in the 20th century, you can “invest” the money and get 6% a year on a government bond—that’s just not happening.
Unfortunately, the only way to cover future pensions is to “lend” your money to current retirees and then get “repaid” when you retire. That is how social security has functioned in America since 1935, with only recent years (late 1980’s on) being those where taxes were set higher to create a “surplus” so that Millennials wouldn’t be stuck paying higher payroll taxes to support Boomer social security checks. (The surplus bonds get redeemed by progressive income tax–not payroll tax–or they get rolled over, since US debt is always highly in demand worldwide.)
So if Japan refused to renew a visa, the person is only left in the lurch where they didn’t come from a totalization country, never got Eijuuken, or were actually forced to pay kokumin (I don’t believe it the fictitious employer who tells the employee to go enroll in kokumin, since that would tip the ward office off to the illegality.) In short, Questions 1 and 2 are the least likely scenarios. Hopefully, they get out of Japan before the nuke.
@Anonymous,
There are a few misunderstandings in your posts about how the pension system works.
You don’t recieve pensions from a government, and the pension system is not a loan, so you cannot expect any “paybacks”.
Your 2 questions: Pension payments have nothing to do with your visa status or place of residence. Once you have fulfilled the requirements for recieving a pension, the pension will be sent to your bank account, whereever you are.
You wrote “I’m currently assuming that it is both illegal and impossible to receive multiple governments’ full pension bank transfers each month, for example 15,000 yen coming in from Japan pension PLUS for example $600 coming in from the US pension”. This system is legal and possible. You revieve a pension from both countries, and the amount of the pension is calculated according to the systems of both countries. You do not get twice as much from this system.
@hoofin,
I never understood how the old system worked, before the totalization agreements. so, if somebody worked for 5 years,paid into the kokumin or other pension system, then left at 5. did they cash out a percent of what they paid into or did they get that full 5 year sum back from what I read, it didnt count for anything back in their home country. so, if I understand correctly, they got a percent of the 5 year pay in, the rest the japanese gov kept? so there was like a cap at the 3 year marker? so if you worked for 10, cashed in at 10, you got like a 3 year pay out…as that was the cap amount? if that was the case, talk about getting screwed!
No, before totalization, if they paid five years in Japan, they were offered three as a refund (and that was since maybe 1994). The thinking of the J-government then was that most foreigners didn’t stay here longer than three years, so they were being cashed out. What a favor! And maybe, yes, given everything a quarter century ago, that made sense.
My understanding is that kokumin got rebated in six-month brackets, but the employer system only rebated the employee portion (even though benefits are, as people point out, more generous because there is more money being paid in). So people “cashing in” an employer pension are being disproportionately screwed compared to those who contributed to kokumin.
And this also created the handy excuse for foreigners NOT to pay into kokumin, “since, after all, I’ll just be asking a rebate in a couple years and look at all the paperwork this will save!!!”
What is a lot of times ignored about kokumin nenkin is that the government is the “other half” in a similar way that the employer is under kosei nenkin. An yen life annuity that is cash-flow positive after eight years can’t be bought in the private market. The Japanese are using consumption tax money to cover the other piece of that annuity. So the foreign rebater forfeits their share of all the 8% shohi zei taxes they were paying at the convenience store, Aeon, rental company, etc.
I am surprised that the Japanese government still does the rebates for citizens of totalization countries. It is a total rip-off of the less financially sophisticated consumer—and a boon to the Japanese treasury, since it’s “risk off” their pension fund and 8% kitty. The 1990s policy reason for the rebate has changed. It is a kind of “screw the gaikokujin” inertia that keeps it going. They are being much tougher about health insurance enrollment, and all enrollments are tracked on that sheet you get when you move municipalities, so it’s not like these are any big secrets between the government and Zairyu card holder.
Rereading that, it should start “yes”, they were getting screwed, because they were always limited to the three year maximum refund. August 2017 is the first month where the J-government is actually being fair to short-time workers here who have a totalization piece they can latch onto for the 10. And, of course, for regular Japanese who were stuck in irregular employment—that’s actually a lot more people than the foreign community.
@Hoofin, aside from your unusal use of verbs which made your otherwise quite good points hard to follow (“cashing in” to Japan- you mean get a financial reward? “Vesting”-“an employee accrues non-forfeitable rights over employer-provided stock incentives”? IS that what you meant?)
this irks me: biggest trouble-makers about the old system, because they had the option to pay back home in England while working in Japan. So they always would make a lot of noise about any compulsory enrolling of foreigners in Japan. Pure self-interest, without disclosure.”
Pure self-interest? Why the hell not? Blind loyalty to the Japanese empire?
And equating England with Britain is somewhat ignorant is this day and age. You mean the UK.
@ anonymous ” assuming that it is both illegal and impossible to receive multiple governments’ full pension bank transfers each month, for example 15,000 yen coming in from Japan pension PLUS for example $600 coming in from the US pension, double-payout for single pay-in is most likely impossible.”
All the more so with this new “My number” card- laughably supposed to be to guarantee a “fairer society”. I couldnt even receive a gift payment of 10 000 yen via western union from overseas. Ditto if you become a permanaent resident, this in theory gives the J Gov the right to monitor (you must declare) income from outside Japan.
These are all moves to levy more tax on the NJs.
I have to point out here that becoming a Permanent Resident (status of residence, like a visa) is not the same as becoming permanently resident for tax purposes.
Japan confusingly refers to both using similar English. PR is like a visa and does not change your taxes. Being permanently resident for tax purposes normally kicks in after 5 years and has all kinds of tax and legal effects.
Sendaiben, thanks for the clarification. When I looked into PR (for the visa) though, it did say that I would have to declare overseas income, and I was about to get state support from overseas for something, I declined.
Although frankly, I was losing interest in living in Japan in the future anyway so it was not the only reason, just the final straw.
Sometimes this is referred to as “permanent TAX resident”. If you are from a tax treaty partner country, though, you are taxed under the rules of the treaty, NOT the same way a permanent resident (or citizen) of Japan is taxed. Be careful! There are Japanese tax preparers catering to foreigners who don’t know this.
@ Hoofin, believe it. It is not fiction. It happened to me more than once and many people I knew- “I don’t believe it the fictitious employer who tells the employee to go enroll in kokumin, since that would tip the ward office off to the illegality.”
How would it tip off the ward office? They did ask me why I didn’t get shakai hoken instead, and I just said “my employer doesnt want to pay it” and they gave me a look…but did nothing. Said employer was a big Eikaiwa in the 90s, and the president did end up doing jail time (no it wasnt Nova and Saruhashi) , but not for this minor NJ rights infringement. Of course the ward office didnt care about that. Why, they barely had time for my questions as Real Japanese seniors were waiting behind me! (I think it was for him being a bent lawyer for Ferdinand Marcos, but I digress. )
Just a couple of observations on Hoofin. Although he has made an effort to explain the Jp pension system, kudos to him, he clearly does not understand two of the things he was talking about here.
For a start, he knows nothing about the Australian system which is very different from the Jp system and the American system for starters.
If you work in Australia, your employer deducts an amount called ‘Superannuation contribution’ from your wage/salary and that is put into a fund which you can access at a certain age. It used to be below 60 yrs but will go higher.
As a non Australian I received a good rundown of this scheme from an Ozzie friend. There are no unfair forced contributions like monthly payments of a set fee, and in fact Australians who earn below 20,000 US dollars in salary per year pay just about no or little income tax. They get nearly all of it back.
Why? Because that is a low income. Note how Japan taxes low income earners including foreigners ‘citizens’ tax and again monthly payments of 10 percent of their low income.
Back to superannuation – Japanese people who work in Australia get treated more fairly. They receive their superannuation in a lump sum when they leave Australia and there is no screwing them through rules about they can only receive a set amount and not what they paid in.
They do have to pay taxes on the lump sum.
Australia also has a ‘Pension’ but it is a public one and is a welfare payment. It is for people who did not save their money or had no chance to save money or do not have enough money to live on.
It is non-contributory – yes, non contributory. It is funded by the government through taxpayer monies.
There is no harsh law forcing a compulsory payment each month on people who earn low incomes. Or any kind of incomes.
The Australian system is very different from the American system, too.
As for Permanent Residency in Japan as a taxation status – that exists, everybody. Nope, it’s not for real Permanent Residents only, for example people with real legal status of PR.
The Japanese Government cynically puts us all in the category of PR for tax purposes if we have lived in Japan 5 years out of the last 10.
How convenient, don’t the Japanese love to have their sushi and eat it too. Gaijin as soto but when it comes to taxes we are classified as ‘citizens’ and ‘permanent residents’.
This in effect means if you get a family inheritance when you are living in Japan, then the tax authorities reserve the right to make a claim on it as they can tax your worldwide income.
Even if you don’t import the money, they feel they have the right to know about it and to take a slice or more. You have to give them an accounting of all your worldwide money.
Dear Hoofin, hopefully these facts tell you why so many foreigners quite rightly oppose paying into nenkin in Japan.
Hello, on this site I don’t think I went into the minutiae of the Australian system. I blogged about Australia and the “super” many years ago on my own site. There may be some details that I did not elaborate on, but I am sure that I prefaced my comments then and there.
I am aware that a basic pension is offered in Australia that is non-contributory, AND that is clawed-back in the presence of other resources available to the retiree there. Canada also has a basic pension that is publicly funded, separate from the CAP; and technically, America has the SSI program which is not a benefit based on the level of contributions.
If your comments were meaning to imply that I don’t know anything, then I feel your comment was inappropriate. If your comments meant to say that I don’t know EVERYthing, then, yes of course. Who does?
Some people make a lot of excuses for not paying a tax, or following a rule. This is age-old, and more knowledge is not going to fix that. Those kind of people will just move to yet another excuse.
I don’t think there are many “rightly” posed justifications for dodging a tax or a contribution that functions as a tax. Thoreau had some, for example, yet he still ended up in the pokey. Capone thought he could write his own rules about taxes, too.
If people don’t pay their nenkin, to me, it’s not my dish of dog food as a retiree if they do or not. But the Japanese government moving to 10 year qualification (“vesting” of sorts) is a great move. It removes a lot of the uncertainty and speculation as to whether young people would ever meet the qualification test. It frees from a trap those people who, say, paid in 7 years and then somehow couldn’t get the remaining 18 years. Now they’d just need three.
Just a note re my post – the 10 percent I referred to is the kokumin kenko hoken for health. Again much more than many Australians pay, and if they are low income earners they either don’t have any obligation at tax time when the health levy is calculated or a small one.
So much for ‘low taxing Japan’. That is a myth.
This is not 10% (or 9.69%) of every yen of income. In most prefectures that I know, it’s a percentage of the taxable income. In Japan, there are significant exemptions, and the national rate is really very low compared to other countries.
Yes, the tax burden falls more at the local/prefectural level for modest earners, and you don’t get freebie tax coverage at those levels, either.
I don’t see where this is a social crisis, just another tricky day. One of the two of life’s certainties . . .
Here’s a comment I posted on a Facebook page I run for expats in the Kumamoto area:
Has this really been missed by English-language media? If so, it strikes me as a major oversight.
https://www.facebook.com/Kumamotoi/photos/a.129499733790134.25925.123734781033296/1569024859837607/?type=3&theater
I wouldn’t call us media, but I believe RetireJapan.info is the only website writing about saving, investing, and retirement in English for residents of Japan.
We wrote about the pension change in April.
I wrote about this several years ago, but I am in a far corner of the internet.
https://hoofin.wordpress.com/2013/03/05/japanese-pension-eligibility-to-go-to-10-years-from-25-depending-on-consumption-tax/
Hoofin
If you ever feel like writing for readers in Japan, I’d love to run a guest post from you. Drop me a line through the site if you are interested.