Very exciting
Well, it’s that time of year again. My 年金定期便 (pension statement) just arrived, so here are the latest numbers. You can read about the background to the nenkin system in last year’s post, so I’m not going to repeat everything here again. We’ll just be talking about changes and updates from last year.
As you can see in the picture above, I have made another year of contributions, taking my total months paid in to 214. You need to pay in for 120 months in order to be able to claim a pension from Japan (ten full years of payments).
The twelve months of kosei nenkin payments have increased my yearly pension from 788,404 yen to 843,612 yen, an increase of 55,208. I could pay in for another 19 years, which at this rate would add just over one million yen to my annual pension and give me a pension of around two million yen.
My wife will probably receive around one million yen a year in pension, giving us a pretty decent income floor of 3 million yen a year.
I think we could live on that if we had to, and should be able to supplement it with income and drawdowns from our investments. I think the worst case scenario for nenkin is that they will reduce the eventual payments by about a third, which would be unfortunate but not really affect us too badly.
I’m also paying into the UK state pension voluntarily, which should provide us with an extra million yen a year or so.
If you have not paid in enough to claim a pension yet (under 120 months) your pension statement will not show projected payouts yet.
You can also check your pension online by making an account at the Nenkin Net website (confusingly the website address is not nenkin.net but rather nenkin.go.jp).
If, like me, you are a member of a kyosai you will not be able to see your information online but instead would have to ask the kyosai itself for the information, or wait until you receive your update in the mail each year (around your birthday).
How about you? How’s your pension situation?
Sorry to be critical, but there are different components to many people’s pensions, and it’s not until your third paragraph that it becomes clear (sort of, to someone who already has a hint of what you’re talking about) that you’re talking about **kosei nenkin** as opposed to something else–some other aspect of your nenkin entitlement.
And not the basic 国民年金 entitlement–which is all many people have–and how that may combine with what you’re talking about here. (That’s what I was expecting you to talk about.)
That was left out completely. And that’s a big gap, IMNSHO.
I could ask some other questions, but that’s that main thing.
Well, the details are in last year’s post, as I wrote in the second sentence… 😉
This seems like such a small amount compared to the states 401k and other retirement accounts.. If I’m living in Japan, but have access to all of the retirement accounts in the states through my employer, would it be best to just put all my retirement savings into a 401k/IRA/HSA, instead of the japanese pension that keeps going up in age? My wife would be able to contribute to the pension plan, but I’m thinking to just add it to the us accounts through my employer.
Do you have to contribute for a whole 40 years only to get 2 million yen a year?!? I could have 2 million usd if I contributed for 40 years…
The wife wants to invest in Japan, but I think that’s a bad idea If I have access to the US retirement accounts.
Opinion? Knowledge? I can’t find much about the japanese retirement.
Well, the main thing would be that paying into nenkin is a legal obligation for all residents of Japan so it is not optional.
What you do with any extra money is worth considering. For US citizens there appear to be few good options in Japan, so investing using existing US accounts tends to be a popular choice.
I’ve heard of Japan taxing all international assets over ¥50000000 as a permanent resident. How does that effect, US retirement accounts, would I basically get taxed in both Japan and the US?
That is not quite correct. People who are permanent residents for tax purposes (generally speaking, resident in Japan for five years or more) need to pay tax on worldwide income.
In addition to that, Japan requires residents to declare (not pay tax on) overseas assets worth more than 50 million yen. Wrote about it a bit here: http://www.retirejapan.info/blog/tax-status-in-japan
The US-Japan tax treaty means that in principle you will never pay double taxes, just the higher of the two. Taxes paid in one country can be deducted from the other.
My colleague and I were wondering this about Japanese pension, and I couldn’t find the answer in this or your previous post: does the pension pay out a fixed amount until one’s death? Or is there a fixed number of months they will pay out the pension (e.g., according to how many months one has paid into it)?
The pension is paid until you die, so it is a form of annuity, and insurance against living for a long time.
This makes it a valuable way of diversifying your other investments.
Thanks, good to know! I really appreciate all the work you put into this blog and website.
Absolutely my pleasure 🙂