Do the math
After writing the post about my annual nenkin update, I was reminded that I was not fully paid up and thought it would be a good chance to do some digging and maybe get some blog post fodder.
I found out that it is possible to backpay kokumin nenkin up to five years for unpaid portions, and up to ten years for partial payments.
My partial payments were nine years ago, so I am just in time to pay them if I decide to do so (this is entirely voluntary at this point) đ
I called up my local office nenkin office (I would recommend doing this instead of talking to the people in the local ward/city office who frequently aren’t up to speed) and asked about my options.
It turns out you can do everything by mail, so I downloaded the necessary paperwork and then asked a few questions to see if it would be worth my while to pay.
The very pleasant officer told me they couldn’t calculate things exactly over the phone, but each month paid in full would result in a something like 1,600 yen a year increase to your pension.
In my case I paid 1/4 of the pension payments (3/4 ĺ çś menjou, or waiver), so I would get an extra 1,200 yen a year for each top up payment.
My payments were six months in H.20 so as you can see in the table I would have to pay 11,370 yen per month to top it up.
But is it worth my while to do so?
The total payment would be 68,220 yen. This would increase my eventual pension by approximately 7,200 yen a year.
Barring changes to the pensionable age in Japan, I will be able to claim my pension from age 65. Optimistically I will live at least twenty years beyond this, so I will receive an extra 144,000 yen in pension income by making the payment.
However, I could also invest the 68,000 yen. Assuming a reasonable return of 5% above inflation I can see it quadrupling to around 240,000 yen by the time I am seventy years old. Coincidentally, assuming a yield of about 3% in dividends, it would provide me with 7,200 yen a year in income, and I would still have the principal.
So in this case it seems to make more sense for me to keep the money and invest it myself. The combined pension for my wife and me should be over 200,000 yen anyway, which is a safe enough baseline for us to live off. Any extra funds I will put into our investment accounts instead.
How about you? Have you looked into topping up your pension? What’s your plan for retirement income?
A key point – if I’m right, and if I’m not please correct – is that you can only backpay for periods in which you were granted a partial or complete exemption from paying pension. Not for periods where you simply didn’t pay it. I didn’t make any pension contributions at all in my first 2 years here and would like to have at least the option to make up for those now, but don’t believe it’s possible.
Hi Adam
I was told you can play up to the last five years of Hosoda contributions, or the last ten of exempted ones.
They were doing a ‘campaign’ where you could pay ten years of unpaid, but it ended.
And of course by Hosoda I mean unpaid. The autocorrect on my phone is killing me recently!
‘Hosoda contributions’ sounds neatly sinister, like it! And thanks for the correction.
It’s really funny ’cause there is a guy named Hosoda who keeps making unreasonable complaints about my wife’s school, so maybe I wrote it subconsciously đ
I think you’re better off investing the money.
Hi Ben,
Do you know how missed pension payments might affect permanent residence applications? If you’ve already gotten yours, what steps did you take to ameliorate the damage of partial payments?
Not completely sure, to be honest. This website suggests that not paying into the pension scheme at all would negatively affect your application: http://common-s.jp/eijuunenkin.html
They suggest talking to the pension office and trying to get all the missing period filled in.
This page says something similar, and also says that paying into the health system here is also a requirement, and the immigration office may ask to see proof of health insurance payments: http://sue-gyosei.com/?itemid=66
This page says that not paying into the pension could negatively affect your application, but it isn’t clear how long you have to have paid in (ie you could start paying just before applying and it might be okay, as you will be seen to be compliant).
Seems like a bit of a grey area. I guess the first thing would be to talk to the pension office and see what your options are for backpaying. If you have paid everything you are allowed to, there’s not much else you can do about it đ
Thank you for the resources!