- National Pension (Japan)
The Japanese national pension is a pension system that all registered residents of Japan, both Japanese and foreign, are required to enroll in. Since January 1, 2010 it has been managed by the Japan Pension Service.
In 1942 the Workers Pension Insurance Act was enacted, and in 1944 the name was changed to Employees’ Pension Insurance Act. It was amended substantially in 1954, and in 1961 the National Pension Act created universal pension coverage for residents of Japan.
Types of members
- Category 1 – All registered residents of Japan who are aged between age 20 or under age 60, but do not fit into either category 2 or 3 (i.e. typically the unemployed, self-employed, or employees of very small companies). People in this category should go to the National Pension counter at their local municipal office. (People in this category are enrolled in the national health insurance scheme).
- Category 2 – Workers who are enrolled by their employer in Employees Pension schemes (such as the Kigyō Nenkin Rengōkai (企業年金連合会) Pension Fund Association, successor to Kōsei Nenkin (厚生年金)), or Mutual Aid association (such as the Shigaku Kyōsai (私学共済) Private School Mutual Aid Association). These pension contributions include the basic national pension. Pension contributions are deduced from the workers’ salary by the employer. (People in this category are enrolled in an employee health insurance scheme).
- Category 3 – People aged between 20 to 60 years old who are dependent on category 2 people. Category 3 members are not required to pay contributions, their cost is paid by the person they are dependent on.
Once a person has enrolled in the national pension they will receive a pension handbook with a social security number, which serves as proof of identity. If the pension handbook is lost, category 1 members can apply at the local municipal office for it to be reissued. Category 2 members can ask their employer or the local Japan Pension Service office. Category 3 members must as through the employer of the category 2 member they are dependent on.
The monthly contribution amount for the national pension from April 2010 to March 2011 is ¥15,000. Contribution for each month must be paid by the end of the following month. Contributions can be paid at banks, post offices, or convenience stores, as well as by bank transfer or online.
If members have trouble paying due to low income or other reasons they should apply for exemption from contribution payments at their local municipal office. The pension office will examine their previous year’s income and other factors and may give a total or partial exemption from payments.
Payment exemptions Type of exemption Contribution amount Amount of old age basic pension Full exemption ¥0 4/8 1/4 payment (3/4 exemption) ¥3,780 5/8 1/2 payment (1/2 exemption) ¥7,550 6/8 3/4 payment (1/4 exemption) ¥11.330 7/8 Contribution postponement for low income youth ¥0 ¥0 Special payment system for students ¥0 ¥0
Failure to make partial payments after an arrangement has been made will be regarded as nonpayment rather than partial exemption. Periods of non-payment may not be included in calculating the old age basic pension that the member will receive in the future. In addition, non-paying members will not be entitled to the disability basic pension and survivors basic pension in the case of unexpected circumstances.
People in their 20s can use the contribution postponement system for low income youth.
Students can use the special payment system for students. Generally speaking, students at Japanese schools overseas are not eligible for the special payment system for students.
Recovery of past exempted contributions
Payments making up for payments that the member was exempted from in the past can be made for up to 10 years afterwards. If they are bought fully up to date, the members old age basic pension will be calculated in the same manner as for full contribution payments.
Pension benefits offered by the national pension system
- Old age basic pension
Pension benefits are paid from age 65 to persons who satisfy certain conditions, such as having paid their national pension contributions for 25 years or more. The benefit amount per year, as of Financial Year 2010, for members who paid contributions for 40 years is ¥792,100.
- Disability basic pension
Members can receive the disability basic basic pension if they experience sickness or injury resulting in a grade 1 or grade 2 disability during the time they are covered by the national pension. As of Financial Year 2010, the annual amount for grade 1 is ¥990,100 and the annual amount for grade 2 is ¥792,100.
- Survivors basic pension
The survivors basic pension is provided to family members (spouses who care for children, or dependent children themselves) of national pension members who pass away. The benefit amount is ¥1,020,000 (as of financial year 2010, for a wife with one child). For naturalized citizens of Japan, the period of time between April 1, 1964 and the day prior to them become citizens in which they lived overseas will be included in the 25 year qualifying period for the old age basic pension. However, this time will not be used in calculating the benefit they will receive.
Both the disability basic pension and the survivors basic pension have set contribution payment requirements. Such benefits can’t be received unless these requirements are met.
Lump sum withdrawal payments
Foreign residents who have contributed to the national pension for 6 months or more (not including as category 2 or 3 members) and who have not contributed for 25 years, can claim a lump-sum withdrawal payment within two years of leaving Japan. However, even if a Japanese or foreign resident has not contributed for 25 years, if their country has a reciprocal social security agreement with Japan, some such agreements allow the number of years of contributions in both countries to be totalized in determining eligibility. Even if there is no such reciprocal agreement, they may be able to receive a pension based on "kara kikan" (period spent outside Japan after age 20) if they become permanent residents before the age of 65. 
The amount of the lump sum withdrawal depends on the amount of months that contributions were paid for:
Lump sum withdrawal payments Total contribution-paid period Benefit amount Between 6 and 11 months ¥45,300 Between 12 and 17 months ¥90,600 Between 18 and 23 months ¥135,900 Between 24 and 29 months ¥181,200 Between 30 and 35 months ¥226,500 36 months or more ¥271,800
The total contribution period paid period is calculated as follows: Total number of months paid + (number of months of one quarter contribution paid x 0.25) + (number of months of half contribution paid x 0.5) + (number of months of three quarters contribution paid x 0.75). Application procedures for lump sum withdrawal payments When canceling their alien registration, pension members should file a notice of forfeiture of national pension, and get a claim for the lump-sum withdrawal payment. After leaving Japan the claim form should be sent to the Japan Pension Service.
The reason for the lump sum not increasing after 36 months of paying into the pension scheme are unclear, but may relate to the JET Programme, where young foreign graduates come to Japan to teach English in public schools. Until 2006, JET participants could only work in the program for three years and it appears the lump sum rules were crafted with this in mind.
Social Security Agreements
Some countries have concluded bilateral agreements with Japan to eliminate dual coverage in pension systems and allow enrollment periods in foreign pension system to be counted when calculating eligibility and benefits to be paid.   Social Security (mandatory health insurance, employment insurance, and pension contribution) payments by employees are typically about ¥40,000 per month.
- Japan Pension Service
- ^ Japan Pension Service The Point of the pension plan, page 11 Retrieved on January 18, 2011.
- ^ Pension Fund Association website (in English) Retrieved on Oct. 24th 2011
- ^ Private School Mutual Aid website (in English) Retrieved on Oct. 24th 2011
- ^ a b Private School Mutual Aid website English Summary of International Social Security Agreements Retrieved on Oct. 24th 2011
- ^ Private School Mutual Aid website Premium exemption 'gap years' in pension payments Retrieved on Oct. 24th, 2011
- ^ The Japan Times 'Gap years' in pension payments Retrieved on July 5th, 2011
- ^ The Japan Times Your Golden Handshake, August 10th 2004 Retrieved on January 21st 2011
- ^ Social Insurance Agency website International Social Security Agreements Retrieved on July 5th 2011
- ^ Japan Pension Service website Country list in Japanese Retrieved on January 21st 2010
- ^ MOFA website (Social) Insurance (payments for JET-scheme people) Retrieved on July 21st 2011
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