pension advice/mis-selling/NISA

[Bubblegun]

I have been looking around the site for a while but never decided to post until now.

I am once again looking to put some of my money away into something like a NISA, or to increase my pension in Japan by paying more into the Gov pension.
I have only about 15 years worth of contributions in Japan so far, and by the time I retire there will only be about 25 years worth of contributions here.As you know that will not be the full period to get a FULL Japanese pension.
So you can see my dilemma. Pay more into the Japanese pension system, and not really get anything out of it, as nobody seems to tell me what I would get for those 25 year contribution, which I think people need to know in order to make informed decisions or pay into a NISA for about 10-15 years? which would be a rather short time.


Thankfully I am
A) paying into the UK NI scheme keeping that option open, but i need to know what I am likely to get from Japan.
B) I keep a property in the UK and current renting it out and this is reducing the capital and interest.
C) I am looking to pay off the first property and take a rental income to supplement my pension in Japan.(
D) I hope to continue to invest in something like a NISA, property or something else.

In relation to making informed decision I am rather jaded due to the Mis-selling of financial products in the UK.
Mostly due to the de-regulation of the financial services in the 1980s 90s~~~.
For example there was the infamous mis-selling of endowment mortgages, so the salesman could get commission, and even though i discussed the "Rumour" of mis-selling, he still down played any risk and still pushed the product and cost us thousands but thankfully I got it back after complaining to the ombudsman.
Next came the deregulation of the pension selling scheme where the companies pushed government workers with a golden pension to contract out, with the policy holder loosing 10s of thousand of pounds.Sadly many of my colleagues were taken in by this, and thankfully they were put back into the scheme.
Next came the PPI scheme, again mis-sold by salemen getting commission from companies to push their products, and thankfully I managed to dodge that bullet mainly because of the pension and endowment scams.
Now there seems to be another mis-selling of car loans in the UK. So you can see why I am rather jaded by the thought of speaking to a SALESMAN.
Ironically every single one of the people who mis-sold us a product was actually a MAN.

So hopefully you will understand I have, hopefully now, a healthy dose of skeptism when it comes to financial services, even more so when Japanese is not easy.

[RetireJapan]

Welcome to the forum! I think you have come to the right place, as the mission of the site is to give people information and empower them so they don't get ripped off

It's relatively easy to figure out what your Japanese pension will be (paying this is not optional by the way, although some people get away with not paying for a while). We wrote a couple of posts about it recently:
https://www.retirejapan.com/blog/the-nenkin-thing/
https://www.retirejapan.com/blog/nenkin-calculations/
You can also go and talk to your local pension office who should be able to give you a rough idea of the value of your eventual pension.

In Japan iDeCo and NISA accounts allow you to pay less tax. Neither of them are investments, but rather accounts that you can buy investments in. You would have to also choose the specific investments yourself.

Generally speaking, if you pay income tax and will be in Japan for the long run, iDeCo can be an excellent option. If you max out your iDeCo account or prefer not to use one, NISA allows you to invest and not pay tax on capital gains or dividends.

We tend to recommend investing as well as paying into nenkin and other pensions. You can start with small amounts and increase your contributions over time as you become more comfortable. A lot of us find it addictive!

[Bubblegun]

Welcome to the forum! I think you have come to the right place, as the mission of the site is to give people information and empower them so they don't get ripped off

It's relatively easy to figure out what your Japanese pension will be (paying this is not optional by the way, although some people get away with not paying for a while). We wrote a couple of posts about it recently:
https://www.retirejapan.com/blog/the-nenkin-thing/
https://www.retirejapan.com/blog/nenkin-calculations/
You can also go and talk to your local pension office who should be able to give you a rough idea of the value of your eventual pension.

In Japan iDeCo and NISA accounts allow you to pay less tax. Neither of them are investments, but rather accounts that you can buy investments in. You would have to also choose the specific investments yourself.

Generally speaking, if you pay income tax and will be in Japan for the long run, iDeCo can be an excellent option. If you max out your iDeCo account or prefer not to use one, NISA allows you to invest and not pay tax on capital gains or dividends.

Thank you for your welcoming reply.
I thought it interesting because when I asked the pension office a few years ago...and I kinda basically got a standard Japanese answer of we don't know. I would have been happy with knowing what I would have received at todays prices if i had already payed 25 years worth of pension contributions. Unluckily, or should that be purposely, my employers never enrolled me into the Japanese system and if many people are like me they would have assumed that pension payments would have been deducted straight out of peoples pay packet.However it was only after having kids and getting married that I discovered this.By that time, it wasn't worth paying into the Japanese pension because it stated we had to pay 40 years worth to get anything out of it.
Thankfully I could take full advantage of the amnesty and the change in pension rules, introduced by Abe a few years ago and payed 10 years worth of pension contributions, and continued contributing into the Japanese system. Personally i think they best thing they introduced was the my number and from certain reports from some people I know it appears the pension system is starting to reach out to people bank accounts or at the minimum put more pressure on those who never contributed into the system.However it does seem very bureauratic system, when it would be easier, cheaper and better to deduct a percentage from every single worker.


Regarding NISA and iDeCo you said

Neither of them are investments, but rather accounts that you can buy investments in.You would have to also choose the specific investments yourself.

I am assuming the NISA is basically a managed fund and is this more like the UK ISA where I can choose where to put my money in say, high risk, medium risk, low risk investment "groups",
EG high risk would be heavily weighted to Hi tech, Asia and developing economies with possible higher returns whereas low risk would be weighted to say to Europe,Japan,US blue chip companies with lower risk and lower returns, et al.

The choice between Ideco and NISA seems to just add to the complexity of the financial system.Both having advantages and disadvantages, with too many choice making it difficult to actually make a choice.( if you know what i mean).

[RetireJapan]

Fortunately you now vest at the ten-year mark, so your next annual pension statement should show your current projection. My latest one is here: https://www.retirejapan.com/blog/japan- ... date-2018/

Both NISA and iDeCo are self-managed, so you choose what to buy in the account. This means they can be extremely low-cost.

Basically:

-if you are not a US citizen, and you pay income tax, and you plan to retire here, open an iDeCo account and pay in as much as you can up to the limit
-if you can't/don't want to use iDeCo, or want to invest over the iDeCo limit, open a NISA account

See the information pages on the site for more details.

[Sybil]

Ironically every single one of the people who mis-sold us a product was actually a MAN.

Because WOMEN have never mis-sold any financial products to anyone. Ever. Don't make sexist comments, it makes you come across as small-minded.

[Bubblegun]

Because WOMEN have never mis-sold any financial products to anyone. Ever. Don't make sexist comments, it makes you come across as small-minded.

Sorry it wasn't meant to come across that way. I was just trying to explain my experience and the experience of my fellow nurses which is a predominantly female profession, and how we were
A) mis-sold pensions.
B) mis sold endowments.
C) Mis sold PPI,
by SALESMEN and probably how most of the salesmen were men.It was a fact and it was a poor joke.
I'm sure there have been, but I haven't had that experience yet.
Sorry if you felt that way.

[Sybil]

Thanks for the clarification.

Have a good evening.

[adamu]

-if you are not a US citizen, and you pay income tax, and you plan to retire here, open an iDeCo account and pay in as much as you can up to the limit
-if you can't/don't want to use iDeCo, or want to invest over the iDeCo limit, open a NISA account

This is really great, simple advice, and is a perfect counter to the "it's all too complicated" feeling people get when they start to look into this.

Regarding NISA and iDeCo you said

Neither of them are investments, but rather accounts that you can buy investments in.You would have to also choose the specific investments yourself.

I am assuming the NISA is basically a managed fund and is this more like the UK ISA where I can choose where to put my money in say, high risk, medium risk, low risk investment "groups",
EG high risk would be heavily weighted to Hi tech, Asia and developing economies with possible higher returns whereas low risk would be weighted to say to Europe,Japan,US blue chip companies with lower risk and lower returns, et al.

This is a misunderstanding of both the UK ISA and the Japanese NISA. To reiterate what RetireJapan said, neither are funds, both are tax-protected investment accounts. Although the investments you can invest in can be conceptually categorised into risk groups, that's not part of the definition of what a (N)ISA is. It's simply an account that stores your investments. Like a bank account stores your cash, the NISA stores your investments. What you put in it is up to you.

There is one catch, in that most Japanese high-street banks restrict what they will let you put in a NISA, because they want to you buy their own investment products. But if you use one of the big online brokers as recommended here (SBI, Rakuten, Monex), you can buy any investment that is traded on the markets.

But anyway, this thread is about pension advice, and iDeCo is the vehicle for that That's actually more similar to what you described above, because there are only a handful of approved funds to choose from in an iDeCo (rather than anything you want, in a NISA), but the principle is the same: it's a tax protected account that you put investments in.