2017 iDeCo Progress Report

Finally

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This year iDeCo accounts became available to dependent spouses, some company workers enrolled in corporate DC schemes, and… public servants!

I am one of the latter, so years after first getting excited about iDeCo I finally got to open my own account this year.

According to this article, the number of new iDeCo accounts being opened in Japan has really accelerated this year. The numbers still seem really low to me. Lots of people who should have accounts don’t know enough to open one.

You can learn about iDeCo on our iDeCo page.

So what does my account look like after nine months of contributions? I am paying in the maximum 12,000 yen a month, but would happily put away ten times that if they would let me 😉

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As you can see in the screenshot above, I have paid in 103,848 yen so far (I’m guessing this is 108,000 yen net, minus the initial setup fee and the monthly fees). The balance is currently 114,254. Not bad for a few months, although I have even higher hopes for this account over the next 20-30 years.

My income taxes, local inhabitant taxes, and pension/health insurance contributions have all been reduced accordingly automatically, as the iDeCo contributions are taken directly from my paycheck.

I’m struggling to understand how a 10,406 yen gain is 21.61%, but I’m sure they are using some kind of formula that makes sense to someone 😉
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I haven’t changed my initial allocation of 50% world stocks, 30% emerging market stocks, and 20% Japanese stocks. You can see the details in my Application Success post.

So, so far so good. The iDeCo account seems to be working as advertised.

How about you? Did you open an iDeCo account yet? How are you finding it?

26 Responses

  1. How much was the set-up fee and how much is the monthly fee? Taking out over Y4,000 on a 108,000 investment is almost 4% in fees.
    The 21.6% is probably some sort of annualized return adjusted for dividends or something, I’d guess?
    I finally got my iDeco approved, still waiting for the first contribution to be made.

  2. You can see all the fees for various institutions here: http://www.dcnenkin.jp/search/commission.php
    The setup fee is a mandatory 2,777 yen. It’s a one-off, I believe. The monthly fee for Rakuten is 167 yen (best in class). I think I have nine months, so 2,777 + (9*167) = 4280, which looks suspiciously like my missing money 😉

    1. May need to double-check this; I’m pretty sure SBI didn’t charge me any set-up fee, and the monthly fee is zero. Actually I think Rakuten is also at zero monthly fee…?

      2. Technically, of course they are correct in saying that they don’t take a fee. But most people are going to read that as ‘there is no fee’ as opposed to ‘there is a set fee charged by the government and it is this much, but we’re not taking anything on top’. Not quite as catchy.

  3. How much have your taxes and health insurance gone down? Mine have not gone down at all.

    1. You can simulate the tax savings here: http://dc-center.jp/checker/
      Are you having your contribution taken from your paycheck by your employer? If so your monthly income tax should be lower. Local taxes you’ll probably get a refund.
      On my payslips my income tax has gone down by about 1,000 yen a month and my health insurance by about 400 yen a month. I’ll see what this month’s looks like (they do tax refunds in December) in terms of local taxes.

      1. If you are not having them taken from your paycheck you submit the iDeCo certificate to the tax office and get a refund next year.

    2. It doesn’t affect health insurance, only taxable income. We’ve been paying the full whack for a few years (68,000 yen per month) and although I can’t tell you exact savings off the top of my head I know they are substantial. Thanks again RJ for bringing this to our attention 🙂

      2. To an extent, yes. Health insurance for our city is based on gross income minus the operating expenses of our business (we’re self-employed). You can’t include the iDeCo contributions as “operating expenses”, so they don’t reduce your health insurance. You _can_ deduct them for the income tax part of the calculation though.
        As an aside, this is one of the drawbacks of owning rental property with a mortgage. The income from the property can be substantial, but you can’t claim most of the mortgage as an expense (only the interest part). The result is that your heath insurance is bumped up considerably, as if you were actually earning and keeping all that income instead of paying most of it back to the bank.

      3. Drat, you are right 😉
        I just checked with Sendai, and they calculate based on gross income with business and the standard exclusion only. That explains a lot (including why my daughter’s premiums are so high)…
        https://ibb.co/hBPxkG

  4. I’ve only had my iDeCo for a couple of months, but your allocation is exactly the same as mine. One strange thing I have noticed is that the daily fluctuations of the fund values always seems to be the inverse of the funds I am holding in my NISA (like 1550 and 1348). It seems that on days when the NISA funds go up in value, the iDeCo funds go down, and vice versa. I have no idea why that would be though, so it could just be that I am using my accounting software wrong…

    1. Ha, ha, I thought I looked at my account too much (I check it once a month to update my net worth spreadsheet) 🙂
      No idea why that would be the case. Anyone know?

    2. I think it’s down to when the funds are updated. The assets of mutual funds are calculated after the markets close. They don’t show up in my NISA until around 10pm, and appear in my iDeCo during the next day. So, a TOPIX fund in your iDeCo will show represent the index at yesterday’s close. ETFs on the other hand should go up and down with the market and reflect the current value of the index.

      1. Thanks for the reply Fools Gold. It is probably something like that. I guess the moral of the story is that I shouldn’t be checking on the value of my funds every day…

  5. So, as a part-time uni lecturer I could contribute up to ¥68,000 a month, because I pay into the national pension scheme?
    If none of my workplaces allow me to have it taken out of my pre-tax monthly salary, I can get a refund when I do my taxes instead?
    But my city taxes and health insurance premiums are decided by my pre-taxed income right, so would these not be affected by going this route? What would the refund from the tax office entail in this situation?
    Thanks for your help.

    1. As long as you are paying kokumin nenkin in full you should be able to pay in up to 68,000 yen a month.
      Unless you are full-time I doubt an employer would deduct it for you. How it works is that you get a certificate from your provider at the end of the year and submit it to the tax office, who give you a refund. This should also lower your local inhabitant tax and health insurance.

      2. Although I now believe it will not lower your health insurance premiums. Will look into that in more detail in the new year 🙂

  6. I recently realised I don’t pay kokumin nenkin. I’ve never been asked, been to the tax and ward office multiple times and it’s never been mentioned. (Self employed)
    I take it you can’t join iDeco without paying into the kokukin Jenkins?
    Nice site btw, very useful info

    1. Yep, it’s one of the few conditions.
      Might be worth looking into paying it. I think the nenkin payments are tax-deductible too, and it allows you to reduce your taxable income by 700,000+ yen a year 🙂

  7. I have a company DB plan. I also intend to start an iDeCo this month. I think the maximum I can pay in per month is 23,000yen. Can you confirm this?

  8. Hi Bob
    It will depend on the conditions of your DB plan. You should ask your HR department to confirm. It is possible that you will not be able to open an iDeCo account alongside your corporate account.